HIGHRICH ONLINE SHOPPE PRIVATE LIMITED & OTHERS v. THE COMPETENT AUTHORITY UNDER THE BANNING OF UNREGULATED DEPOSIT SCHEMES ACT, 2019 & THE DISTRICT COLLECTOR, THRISSUR

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE P.G. AJITHKUMAR** **FRIDAY, THE 21[ST] DAY OF JUNE 2024 / 31ST JYAISHTA, 1946 CRL.APPEAL NO. 784 OF 2024** **AGAINST THE ORDER DATED 27.04.2024 IN CRMP NO.2460 OF 2024 OF THE ADDITIONAL SESSIONS COURT(ADHOC)-III,** ## **THRISSUR** ## **APPELLANTS/RESPONDENTS:** - **1 HIGHRICH ONLINE SHOPPE PRIVATE LIMITED, DOOR NO.TC41/1030/14, SECOND FLOOR, KANIMANGALAM TOWER, VALIYALUKKAL, THRISSUR, REPRESENTED BY ITS MANAGING DIRECTOR, PIN – 680027.** - **2 KOLATT DASAN PRATHAPAN. AGED 43 YEARS, S/O. DASAN, KOLATT HOUSE, KARUVAN VALAVU, ERAVU P.O., THRISSUR, PIN – 680620.** - **3 SREENA PRATHAPAN, AGED 35 YEARS, W/O. KOLATT DASAN PRATHAPAN, KOLATT HOUSE, KARUVAN VALAVU, ERAVU P.O., THRISSUR, PIN – 680620.** **BY ADVS. P.A.MOHAMMED SHAH RENOY VINCENT SHAHIR SHOWKATH ALI ABEE SHEJIRIK FASLA N.K CHELSON CHEMBARATHY MUHAMED JUNAID V. ADITH KRISHNAN.U. FATHIMA AFEEDA P. SHERIN SHERIYAR AFEEFA NAFEESA C.C.** 2 Crl.Appeal No.784 of 2024 ## **RESPONDENTS/PETITIONER & ADDL.R2:** **1 THE COMPETENT AUTHORITY UNDER THE BANNING OF UNREGULATED DEPOSIT SCHEMES ACT, 2019, HOME SECRETARY, SECRETARIAT, THIRUVANANTHAPURAM, REPRESENTED BY PUBLIC PROSECUTOR, HIGH COURT OF KERALA, KOCHI, PIN – 695001.** - **2* DISTRICT COLLECTOR, THRISSUR DISTRICT COLLECTOR OFFICE, CIVIL STATION, AYYANTHOLE, THRISSUR - 680003.** ***ADDL.R2 IMPLEADED AS PER ORDER DATED 05.06.2024 IN CRL.M.A.2/2024 IN CRL.A.784/2024.** **SHRI.P.NARAYANAN, SPL. G.P. TO DGP AND ADDL.P.P. SHRI.SAJJU.S., SENIOR G.P. SMT.SEENA C., PUBLIC PROSECUTOR** **THIS CRIMINAL APPEAL HAVING COME UP FOR FINAL** **HEARING ON 12.06.2024, THE COURT ON 21.06.2024 DELIVERED THE FOLLOWING:** 3 Crl.Appeal No.784 of 2024 ## **P.G. AJITHKUMAR, J.** **----------------------------------------------------------Crl.Appeal No.784 of 2024 ----------------------------------------------------------Dated this the 21[st] day of June, 2024** ## **JUDGMENT** This is an appeal filed under Section 19 of the Banning of Unregulated Deposit Schemes (BUDS) Act, 2019. The appellants challenge Annexure A9 order of the Special Court, Thrissur. As per the impugned order, a petition filed by the respondent-Competent Authority seeking to confirm the provisional order of attachment and permission to sell the attached properties of the 1[st] appellant-company was allowed. The petitions filed by the appellants seeking to release the properties from attachment and allow them to reopen the supermarket in question were dismissed. The appellants challenge the said common orders both on legal and factual grounds. 2. Heard the learned counsel for the appellants and the learned Special Government Pleader. 4 Crl.Appeal No.784 of 2024 3. The 1[st] appellant is a private limited company and appellants No.2 and 3 are its Managing Director and Director respectively. The 1[st] appellant was conducting a supermarket and online business under the name and style Highrich Online Shoppe Pvt.Ltd. It was conducting a deposit scheme also under the guise of trading of grocery products, personal care, etc. Following the allegation that the said scheme was violative of the provisions of Prize Chits and Money Circulation Schemes (Banning) Act, 1978 (PCMCS Act), Crime No.1070 of 2023 was registered in Cherpu Police Station. Annexure A2 is a copy of the F.I.R. 4. The appellants collected a huge sum of money through the said business. They therefore allegedly had committed the offences punishable also under Sections 3 r/w 21, 4 r/w 22, 5 and 6 r/w 23 of the BUDS Act. The respondents allege that the appellants illegally had collected an amount of more than Rs.3000 crores and they laundered that money. Following registration of such a crime, the Competent Authority under the BUDS Act ordered under 5 Crl.Appeal No.784 of 2024 Section 7(3) of the BUDS Act provisional attachment of all the movable and immovable properties of the appellants. Annexure A3 is the copy of the order. 5. The 2[nd] respondent District Collector, Thrissur submitted Crl.M.P.No.2460 of 2024 before the Special Court under Sections 14(1) and 15 of the BUDS Act seeking confirmation of the order of attachment and permission to sell the attached properties. There was a delay of 71 days in filing that petition. Therefore, the 2[nd] respondent, through the Public Prosecutor filed Crl.M.P.No.2514 of 2024 under Section 5 of the Limitation Act, 1963 to condone the delay. The appellants filed objections to both the said petitions. It was contended that Section 5 of the Limitation Act was not applicable and the delay was not liable to be condoned. The procedural irregularities and lack of reasons in the order of attachment were pointed out to defend the plea for confirmation of the attachment and permission for sale. 6. In the meantime, the appellants filed Crl.M.P.No.2390 of 2024 with a prayer to lift the attachment 6 Crl.Appeal No.784 of 2024 ordered by the Competent Authority in terms of Annexure A3. They also filed Crl.M.P.No.2392 of 2024 claiming a relief that they be allowed to reopen the supermarket on the premises that it was necessary for protecting the interest of the customer. The respondents filed objections to both those petitions. 7. The Special Court considered all those petitions together and passed the impugned common order. Holding that Section 5 of the Limitation Act is applicable, the delay was condoned. The Special Court also found that the appellants collected money from the customers in violation of the restrictive provisions contained in the BUDS Act and the appellants siphoned off the money so collected. Accordingly, it was held that the attachment ordered by the Competent Authority was for sufficient reasons and permission to sell the attached properties was liable to be granted. Apropos that order the petition filed by the appellants for lifting the attachment and permission to reopen the supermarket were dismissed. 7 Crl.Appeal No.784 of 2024 8. The learned counsel for the appellants would submit at the outset that no application under Section 14(1) of the BUDS Act beyond a period of 60 days could be entertained and the Special Court has no jurisdiction to condone the delay by applying Section 5 of the Limitation Act. In support of that contention, the learned counsel for the appellants places reliance on the decisions of the Apex Court in **Union of India v. Popular Construction Co. [(2001) 8 SCC 470], Commissioner of Customs and Central Excise v. Hongo India (P) Ltd. and others [JT 2009 (7) SC 83], M/s Radha Krishnan Industries v. State of Himachal Pradesh and others [2021 SCC OnLine SC 334]** , etc. The learned Public Prosecutor, on the other hand, would submit that Section 5 of the Limitation Act applies to the case on hand and in order to buttress that plea he places reliance on **Brahampal @ Sammay and another v. National Insurance Company [(2021) 6 SCC 512]** and **G.Ramdoss v. Competent Authority/District Revenue Officer and others [2023 SCC OnLine Mad.3770]** . 8 Crl.Appeal No.784 of 2024 9. The learned counsel for the appellants would further submit that the attachment has a drastic effect and therefore strict interpretation of the provision enabling the attachment should have been adopted. It is submitted that when an act is allowed by the law to be done in a particular manner, it can be done in that manner alone. Section 7(3) of the BUDS Act enables the Competent Authority alone to order attachment and take steps for getting the attachment absolute and to sell the attached properties. By virtue of Section 14(1) of the BUDS Act the Competent Authority can order attachment only if there is sufficient reason, which shall be reflected in its order. 10. The learned counsel for the appellants would submit that Annexure A3 does not contain any reason, leave alone sufficient reason, to arrive at a conclusion that the properties of the appellants were to be attached. Annexure A2 F.I.R. was registered on the basis of the complaint of a person having objectionable credentials and the allegations in it alone are absolutely insufficient to support an order of attachment. 9 Crl.Appeal No.784 of 2024 Therefore, it is contended that the attachment as per Annexure A3 is illegal. Annexures A5 and A6 petitions were submitted by or on behalf of the District Collector, who is not the Competent Authority for the purpose of Section 14(1) of the BUDS Act. It is accordingly submitted that the Special Court went totally wrong in confirming the attachment and granting permission to sell the attached properties. 11. The learned Special Government Pleader made a strenuous attempt to justify the attachment as per Annexure A3 order and also the order of the Special Court contained in Annexure A9. 12. The Special Court considered the period of limitation specified in Section 14(1) of the BUDS Act as 60 days and took the view that there is no express exclusion of application of Section 5 of the Limitation Act. Holding that the reason stated in Annexure A6 application sufficient, the delay was condoned. Section 14(1) of the BUDS Act reads,- “14. Application for confirmation of attachment and sale of property.- (1) The Competent Authority shall, within a period of thirty days, which may extend up to sixty days, 10 Crl.Appeal No.784 of 2024 for reasons to be recorded in writing, from the date of the order of provisional attachment, file an application with such particulars as may be prescribed, before the Designated Court for making the provisional attachment absolute, and for permission to sell the property so attached by public auction or, if necessary, by private sale.” 13. The period of limitation prescribed is 30 days and the Special Court is empowered to extend the period upto 60 days for the reasons to be recorded in writing. Applicability of Section 5 of the Limitation Act has to be considered in the light of the said provision, which enables the court to extend the period of limitation upto 60 days. 14. In **G.Ramdoss** (supra) the Madras High Court held that Section 5 of the Limitation Act would be applicable to proceedings before the Special Court under the Tamil Nadu Protection of Interest of Depositors (In Financial Establishment) Act, 1997. The period of limitation fixed under Section 4(3) of that Act is 60 days. No provision is provided in the said provision for extension of the period. It was held in that context that Section 5 of the Limitation Act did not get 11 Crl.Appeal No.784 of 2024 excluded by the application of Section 29(2) of the Limitation Act. It was held that even the usage that the competent authority ‘shall’ file the application within 60 days would not exclude application of Section 5 of the Limitation Act. 15. In **Brahampal @ Sammay** (supra) the question was concerning applicability of Section 5 of the Limitation Act to appeals filed beyond the prescribed period of 90 days under Section 173 of the Motor Vehicles Act, 1988. There the Apex Court held that the Motor Vehicles Act being a beneficial legislation and no provision for extension of the period is provided in the Statute, the Appellate Court can extend the period of limitation by applying Section 5 of the Motor Vehicles Act. 16. The said proposition of law is not applicable to the instant case for, the provisions of Section 14(1) of the BUDS Act itself provides for extension of the period. Similar question was considered in a slew of decisions by the Apex Court. In **Union of India v. Popular Construction Co [(2001) 8 SCC 470]** the Apex Court considered the question of 12 Crl.Appeal No.784 of 2024 applicability of the provisions contained in Section 5 of the Limitation Act to the proceedings under Section 34(3) of the Arbitration and Conciliation Act, 1996 (Conciliation Act). The proviso to Section 34(3) provides three months' period for making an application. The court, if satisfied on sufficient cause shown, may entertain the application within a further period of thirty days, but not thereafter. It was observed that as far as the language of Section 34 of the Conciliation Act is concerned, the crucial words are "but not thereafter" used in the proviso to sub-section (3). Accordingly, it was held that this phrase would amount to an express exclusion within the meaning of Section 29(2) of the Limitation Act and would, therefore, bar the application of Section 5 of that Limitation Act. Parliament did not need to go further. To hold that the court could entertain an application to set aside the award beyond the extended period under the proviso, would render the phrase "but not thereafter" wholly otiose. It was held that no principle of interpretation would justify such a result. 13 Crl.Appeal No.784 of 2024 17. The said principle was dilated by a three Judge Bench of the Apex Court in **Consolidated Engineering Enterprises v. Irrigation Department [(2008) 7 SCC** ## **169].** Following is the relevant discussion: "53. Sub-section (3) of Section 34 of the AC Act prescribes the period of limitation for filing an application for setting aside an award as three months from the date on which the applicant has received the arbitral award. The proviso thereto vests in the court discretion to extend the period of limitation by a further period not exceeding thirty days if the court is satisfied that the applicant was prevented by sufficient cause for not making the application within three months. The use of the words "but not thereafter" in the proviso makes it clear that even if a sufficient cause is made out for a longer extension, the extension cannot be beyond thirty days. The purpose of proviso to Section 34(3) of the AC Act is similar to that of Section 5 of the Limitation Act, which also relates to extension of the period of limitation prescribed for any application or appeal. It vests a discretion in a court to extend the prescribed period of limitation if the applicant satisfies the court that he had sufficient cause for not making the application within the prescribed period. Section 5 of the Limitation Act does not place any outer limit in regard 14 Crl.Appeal No.784 of 2024 to the period of extension, whereas the proviso to subsection (3) of Section 34 of the AC Act places a limit on the period of extension of the period of limitation. Thus the proviso to Section 34(3) of the AC Act is also a provision relating to extension of period of limitation, but differs from Section 5 of the Limitation Act, in regard to period of extension, and has the effect of ” excluding Section 5 alone of the Limitation Act. (underline supplied) 18. The law thus explained is that when the special provision enables the court, in a case where the appellant or applicant was prevented by sufficient cause from presenting the appeal or application within the prescribed period, to allow it to be presented within a further period fixed therein, the appeal or application has to be submitted within that period and not thereafter. The intention of the legislature in including such a provision for extension of the period of limitation is to completely exclude application of Section 5 of the Limitation Act. 19. In the light of the proposition of law that emerges from the aforesaid decisions, Section 14(1) of the BUDS Act can be interpreted only in the way that there is exclusion of 15 Crl.Appeal No.784 of 2024 application of Section 5 of the Limitation Act. Therefore, the view taken by the Special Court that the delay could be condoned applying Section 5 of the Limitation Act is incorrect. Crl.M.P.No.2514 of 2024 which was filed seeking to condone the delay of 71 days therefore was to be dismissed. 20. The delay could not be condoned and therefore Crl.M.P.No.2460 of 2024, which was filed under Section 14(1) read with Section 15 of the BUDS Act beyond the period of 60 days, was to be dismissed. When the said petition is liable to be dismissed on the ground of limitation, the contentions put forth by either side on the merits are not liable to be considered. True, when the petition seeking confirmation of the attachment and permission to sell the properties is dismissed, the petitions filed by the appellants seeking to remove the attachment and allow them to reopen the supermarket need consideration. The Special Court did not consider those petitions, Crl.M.P.Nos.2390 and 2392 of 2024 on merits. It is therefore quite undesirable for this Court to consider those petitions on the merits. The 16 Crl.Appeal No.784 of 2024 appellants can move the Special Court for that purpose. It is, however, made clear that dismissal of the petition filed by the respondents seeking confirmation of the attachment and permission to sell being on the ground of limitation alone, there shall not be any bar for initiating a fresh proceedings by the Competent Authority in the matter in accordance with law. This Crl.Appeal is allowed with the aforesaid observations. Sd/- ## **P.G. AJITHKUMAR, JUDGE** dkr 17 Crl.Appeal No.784 of 2024 ## **APPENDIX OF CRL.A 784/2024** ## **PETITIONER ANNEXURES** - **ANNEXURE A1 THE TRUE COPY OF THE MEMORANDUM OF ASSOCIATION OF THE APPELLANT NO.1 COMPANY** - **ANNEXURE A2 A TRUE COPY OF FIR NO.1070/2023 OF CHERPU POLICE STATION, THRISSUR RURAL DATED 18.09.2023** - **ANNEXURE A3 A TRUE COPY OF THE PROVISIONAL ATTACHMENT ORDER PASSED BY THE RESPONDENT DATED 21.11.2023** - **ANNEXURE A4 THE TRUE COPY OF THE CRL. M.P. NO. 2390/2024 FILED BY THE APPELLANTS BEFORE THE ADDITIONAL SESSIONS COURT - III, THRISSUR DATED 11.03.2024** - **ANNEXURE A5 THE TRUE COPY OF THE CRL. M.P. NO. 2392/2024 FILED BY THE APPELLANTS BEFORE THE ADDITIONAL SESSIONS COURT - III, THRISSUR DATED 11.03.2024** - **ANNEXURE A6 THE TRUE COPY OF THE CRL. M.P. NO.2460/2024 FILED BY THE RESPONDENT BEFORE THE ADDITIONAL SESSIONS COURT - III, THRISSUR DATED 16.03.2024** - **ANNEXURE A7 THE TRUE COPY OF THE CRL. M.P. NO.2514/2024 FILED BY THE RESPONDENT BEFORE THE ADDITIONAL SESSIONS COURT - III, THRISSUR DATED 16.03.2024** - **ANNEXURE A8 THE TRUE COPY OF THE OBJECTIONS FILED BY THE APPELLANTS IN CRL. M.P. NO.2460/2024** - **ANNEXURE A9 THE CERTIFIED COPY OF THE ORDER PASSED BY THE ADDITIONAL SESSIONS COURT - III, THRISSUR IN CRL. M.P. NO.2460/2024 DATED 27.04.2024** 18 Crl.Appeal No.784 of 2024 **ANNEXURE A10 THE TRUE COPY OF THE TAX INVOICE ISSUED TO A MEMBER OF THE 1ST APPELLANT COMPANY DATED 08.09.2023 ANNEXURE A11 THE TRUE COPY OF THE TAX INVOICE ISSUED TO A MEMBER OF THE 1ST APPELLANT COMPANY DATED 12.09.2023**