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2020 DIGILAW 301 (AP)

HRT Builders v. State Of AP

2020-04-28

D.V.S.S.SOMAYAJULU

body2020
ORDER: 1. This Writ Petition is filed by the petitioner-HRT Builders seeking the following relief: “….to issue a Writ, Order or Direction more particularly one in the nature of Writ of mandamus declaring Ad-interim orders issued by 1st Respondent vide G.O.Ms.No.21, Home (General-A) Department, dated 28.01.2019 to the extent of attaching the properties belonging to the Petitioner herein at Sl.No.4 & 5 of Annexure to the impugned G.O. as illegal, arbitrary, unjust, without jurisdiction, contrary to provisions of ‘The Andhra Pradesh Protection of Depositories of Financial Establishments Act, 1999”, violative of principles of Natural Justice, besides being violative of Article 21 and 300A of Constitution of India and consequently set-aside the same and pass such other orders as this Hon’ble Court deems fit and proper in the interest of justice.” 2. The petitioner before this Court claims to be the purchaser of properties under two sale deeds bearing Nos.459 of 2014 and 460 of 2014 respectively from a company called “Agri Gold Farm Estates India Pvt. Limited” (in short “Agri Gold”). 3. This Court has heard Sri Challa Gunaranjan, learned counsel for the petitioner and the learned Advocate General appearing for the respondents. 4. The case of the petitioner before this Court is that the petitioner has acquired both the properties under two registered sale deeds bearing Document Nos.459 and 460 of 2014, dated 20.01.2014 from the vendor company-Agri Gold. Ever since then the petitioner claims to be in possession and enjoyment of the property. The petitioner after securing necessary statutory approvals has commenced the construction of a residential apartment complexes called “HRT Sanjana” and “HRT Manasvi”. One flat in HRT Manasvi, in the second floor, was sold to third party on 23.07.2018. Later, when the petitioner attempted to sell another property viz., a flat in first floor of the HRT Manasvi, the Sub-Registrar did not permit the registration. On enquires, the petitioner came to know that the property could not be registered as the State had issued G.O.Ms.No.21 of 2019, dated 28.01.2019, attaching the property under Section 3 of “the Andhra Pradesh Protection of Depositories of Financial Establishments Act, 1999” (in short “Act 17 of 1999”) attaching the immovable properties of the vendor’s company, which sold the property to the petitioner under two registered sale deeds mentioned above. The said company is accused of many crimes throughout the States of AP and Telangana more particularly of defrauding hundreds of small depositors. Learned counsel for the petitioner submits that the petitioner is a bona fide purchaser for a value, having acquired the properties in the year 2014 itself. It is his contention that the transactions are legal and valid alienations for due consideration supported by Board Resolution of the vendor company. He also points out that the G.O. was issued in the year January, 2019 which is years after the sales were completed. According to him, the G.O. does not, apply to the facts and circumstances of the case since by the date of issuance of the said G.O., the property did not vest in the Agri Gold and that they were already divested their title. Apart from that learned counsel also submits that there was clear non-application of mind by the respondents in attaching the property. He states if they had applied their mind and examined the facts, they would have realised that the properties do not vest with the said Agri Gold company, which is the accused in many of these cases. Learned counsel for the petitioner relies upon the judgment reported in M/s.The Mandanapalle Hospitals (P) Ltd., v The Government of A.P. and Ors., and argues that it is only the appropriate Court under Section 8 of the Act 17 of 1999 that can attach the property since by then the property has already been sold. Relying upon the judgment of the Court, learned single Judge of the High Court of Andhra Pradesh reported in K. Radhika v Government of Andhra Pradesh and Others learned counsel argues that even if there is alternative remedy available the Writ Court can go into the issues raised. He lastly submits that the respondents did not have power to attach the property, because by the date when the sale was made in favour of the petitioner, there was no crime pending nor was it registered. Therefore, learned counsel prays for appropriate writ in the nature of mandamus setting aside the action of the respondents. 5. In response to this, learned Advocate General representing the State argues that the petitioner has mischievously invoked the jurisdiction of this Court. Therefore, learned counsel prays for appropriate writ in the nature of mandamus setting aside the action of the respondents. 5. In response to this, learned Advocate General representing the State argues that the petitioner has mischievously invoked the jurisdiction of this Court. According to him the provisions of Section 3 read with 7 and 8 of Act 17 of 1999 given adequate protection to the petitioner and that if the grievance of the petitioner is that the respondent-State did not have the authority to attach the property he will have to approach the appropriate / designated Court and raise the issue. Learned Advocate General submits that in view of the large scale fraud that was committed by the Agri Gold, the entire State of Andhra Pradesh (as it was) has been affected and the State of Andhra Pradesh had to step in to address the grievance of the depositors, who had been defrauded in a very systematic manner. Learned Advocate General points out that the thousands of crores of the public’s money was involved in this fraud and that the crime has state-wide ramifications. Learned Advocate General submits that the decision in K. Radhika case (2 supra) cited by the learned counsel for the petitioner in fact makes it clear that the petitioner will have to approach the designated Court, which has been established under the Act 17 of 1999. He points out that there are disputed facts viz., whether the transaction in question is a genuine transaction or not? and Whether the said Agri Gold company had in fact acquired the property out of the deposits made by the general public? He points out that a case of this nature requires investigation into the facts and also evidence. Hence he submits that it is the special Court alone that has jurisdiction to decide this case. He relies upon the judgment reported in Jakri Hussain Kosangi and Ors., vs. State of Andhra Pradesh and Ors., and argues that the Act 17 of 1999 has been given overriding effect and that it prevails over all laws. He also relies upon W.P.No.1810 of 2020 and the order passed therein, wherein another learned single Judge of this Court directed the petitioner therein to approach the special Court. He also relies upon W.P.No.1810 of 2020 and the order passed therein, wherein another learned single Judge of this Court directed the petitioner therein to approach the special Court. Learned Advocate General also points out that the Encumbrance Certificates still show that the property is in the name of the Agri Gold only and that therefore a Writ is not maintainable. For all the above reasons he prays that the writ must be dismissed. 6. This Court after hearing both the learned counsel notices that the State had to step in by issuing a G.O. in view of the large number of cases, which are registered against the Agri Gold Company. Reading of the G.O., which is the subject matter of this Writ, shows that the registration of the crimes started in the year 2014 itself and continued across the State of Andhra Pradesh. The large number of sale deeds, which were executed by the Agri Gold Company or by its Directors, are listed in the said G.O. It is also mentioned in paragraph-3 that the Agri Gold company diverted the deposits to various sister concerns and companies. The properties that are the subject matter of the Writ are located in Kedareswarapet, Vijayawada. The G.O. refers to Kedareswaripet in paragraph-6. 7. Apart from that the Act 17 of 1999 clearly states under Section 3 as follows: 3. Attachment of properties on default in respect of deposits. The properties that are the subject matter of the Writ are located in Kedareswarapet, Vijayawada. The G.O. refers to Kedareswaripet in paragraph-6. 7. Apart from that the Act 17 of 1999 clearly states under Section 3 as follows: 3. Attachment of properties on default in respect of deposits. -Notwithstanding anything contained in any other law for the time being in force,- (i) Where, upon complaints received from a depositor or depositors, that any financial establishment defaulted or is likely to default in the return of deposits in cash or kind after maturity, or in any manner agreed upon; or (ii) Where the Government have reason to believe that any financial establishment is acting in a manner prejudicial to the interests of the depositors with an intention to defraud the depositors; and if the Government are satisfied that such financial establishment is not likely to return the deposits in cash or kind after maturity, or in any manner agreed upon, the Government may, in order to protect the interests of the depositors of such financial establishment, pass an ad-interim order attaching the money or other property alleged to have been procured either in the name of the financial establishment or in the name of any other person from and out of the deposits collected by the financial establishment, or if it transpires that such money or other property is not available for attachment or not sufficient for repayment of the deposits, such other property of the said financial establishment, or the promoter, manager or member of the said financial establishment, as the Government may think fit, and transfer the control over the said money or property to the competent authority”. 8. A reading of this Section shows that it starts with a non-obstante clause and states that notwithstanding anything in any document in force, if the Government is satisfied that the financial establishment is acting in a manner prejudicial to the interest of the depositors or that it is unlikely to return the deposits the Government may pass an ad-interim order attaching the property alleged to have been procured either in the name of the financial establishment or in the name of any other person from out of the deposits collected. Section 6 deals with the establishment of a Special Court. Section 7 (3) enables the Special Court to deal with the attachment of property. Section 6 deals with the establishment of a Special Court. Section 7 (3) enables the Special Court to deal with the attachment of property. Section 7 (3) gives an option to any person, who has an interest in the property attached, to make an objection before the Special Court before an order is passed making the attachment absolute. This option is given to any person, who claims an interest in the property to raise an objection to the attachment notwithstanding the fact that no notice has been given to him. Lastly, Section 8 of the Act also gives an option to the Special Court to deal with the transferees of property and also attach the same. Therefore, a reading of these relevant sections of this Act shows that the State can pass an order of interim attachment if it is of the opinion that the properties, which are sought to be attached, are purchased out of the deposits made by the public. A person whose property has been attached by the State in the above said manner has also been given an option to appear before the Special Court and seek an order of raising the attachment. This necessarily would mean that the purchaser of the property can convince the Court that the sale transaction entered into by him is a genuine transaction and/or that the property has not been purchased from out the deposits claimed by the financial establishment. 9. While it is true that the existence of an alternative remedy is not by itself a ground for this Court to refuse to exercise jurisdiction, still when disputed questions of fact and law arise and there is an effective alternate judicial remedy, this Court by virtue of principle of judicial restraint should not entertain such a Writ. 10. A learned single judge of this court in the case of K. Radhika (1 supra) has already clearly held that there is an efficacious alternative remedy provided under the Act, particularly under Section 7 (3) and 7 (5) of the Act 17 of 1999. Once an objection has been raised by a party under Section 7 (3) and under Section 7 (5) the Special Court is given power to investigate the same, receive evidence and exercise all the powers of the Court in dealing with the suit. Once an objection has been raised by a party under Section 7 (3) and under Section 7 (5) the Special Court is given power to investigate the same, receive evidence and exercise all the powers of the Court in dealing with the suit. Section 7 (6) states that after the investigation under Section 7 (5) the Special Court shall pass an order making the interim attachment absolute or varying the same or even cancelling the attachment. Therefore, it is crystal clear that the petitioner has an effective and efficacious alternative remedy .The petitioner can approach the Special Court, that has been established, ventilate his grievance and seek an appropriate order. The judgment of the learned single Judge in W.P.No.1810 of 2020 mentioned above also to the same effect. 11. Whether the purchaser is bona fide purchaser for a value or not, whether the properties can be attached or not are all matters, which in the opinion of this court are within the exclusive jurisdiction of the Special Court that has been established to hear and decide such cases. Even in the rejoinder filed, in reply to the pleas raised the petitioner merely reiterates what has been stated earlier that he is a bona fide purchaser for a value etc and nothing more. 12. In that view of the matter, this court is of the opinion that as there is an efficacious alternative remedy available in the form of Special Court and the said Special Court has also been given the power to take evidence and deal with the objections raised, this Court is of the opinion that the Writ Petition is misconceived. The respondents have gone on record that the learned Principal District and Sessions Judge, Eluru, would be an appropriate authority and the proper Court to deal with the matter and that after the affidavit was filed before the said Court by the State, notices were also ordered to Agri Gold Farm Estates India Pvt., Ltd., Therefore, it is clear that the petitioners will have to approach the said Court for redressal and agitate their case. 13. For all the above mentioned reasons, the Court finds no merits in the present writ petition. Accordingly, the Writ Petition is, dismissed. No order as to costs. 14. As a sequel, Miscellaneous Applications, if any, pending in this Writ Petition shall also stand dismissed.