Court Rules Attachment Lapsed Due to Competent Authority's Non-Compliance with Statutory Timeline
In a significant ruling, the Kerala High Court, presided over by Justice Bechu Kurian Thomas, has quashed a provisional attachment notice issued under the Banning of Unregulated Deposit Schemes Act, 2019 (BUDS Act). The notice was challenged by Alkarsf Apparels Private Limited, a company conducting a cloth manufacturing unit on the attached property, claiming it was issued without legal basis as the statutory timeline for confirming such attachments had lapsed.
The case arose when Alkarsf Apparels, along with others, was served a notice by the Village Officer, acting on the District Collector's provisional attachment of property within the Kerala Industrial Infrastructure Development Corporation (KINFRA) Apparel Park. This action was linked to proceedings against 'M/s. Nirmal Krishna Ltd./Nirmal Krishna Benefit Fund Ltd.', entities accused of collecting large deposits from the public and absconding without repayment.
The petitioners, represented by Senior Advocate M. Ramesh Chander, contended that they were merely occupants of the property under consent from KINFRA and had no involvement with the alleged deposit-taking fraud. They argued that the provisional attachment was invalid as the Competent Authority failed to seek confirmation from the Designated Court within the 30 to 60-day period specified under Section 14 of the BUDS Act.
Justice Thomas, in his judgment, highlighted the mandatory nature of the timelines prescribed in Section 14 of the BUDS Act, stating that the attachment lapses if not confirmed within the stipulated period. The Court emphasized that the Competent Authority did not approach the Designated Court for confirmation, thus rendering the provisional attachment ineffective.
Further, the judgment clarified that the provisional attachment notice under BUDS Act is not a revenue recovery notice but a notice of proceedings by the District Collector. Despite this, the Court maintained the writ petition's validity, acknowledging the notice's adverse impact on the petitioners' property rights.
The ruling also touched upon the possibility of initiating fresh proceedings under the BUDS Act, contingent on compliance with legal requirements. The Supreme Court had previously dismissed an appeal against a similar decision, affirming that new proceedings could only be initiated if permissible by law.
In conclusion, the Kerala High Court's decision underscores the importance of adhering to statutory timelines in legal proceedings, particularly under special statutes like the BUDS Act, which aim to regulate and prevent fraudulent deposit schemes.
Bottom line:-
Provisional attachment under the Banning of Unregulated Deposit Schemes Act, 2019 (BUDS Act) lapses if the Competent Authority fails to approach the Designated Court for confirmation within the stipulated timeline under Section 14 of the Act.
Statutory provision(s): Banning of Unregulated Deposit Schemes Act, 2019 Sections 7(3), 14, 15; Limitation Act, 1963 Section 5.
Alkarsf Apparels Private Limited v. State of Kerala, (Kerala) : Law Finder Doc id # 2863080
