M/S NEW HORIZON SUGAR MILLS LTD. versus GOVT. OF PONDICHERRY TH. ADDL. SEC. & ANR.

Citation: [2012] 8 S.C.R. 874 · Decided: 27-09-2012 · Supreme Court of India · Bench: ALTAMAS KABIR · Disposal: Dismissed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

[2012] 8 S.C.R. 874 
A 
MIS NEW HORIZON SUGAR MILLS LTD. 
B 
v. 
GOVT. OF PONDICHERRY TH. ADDL. SEC. & ANR. 
(Civil Appeal Nos. 6673-6674 of 2009) 
SEPTEMBER 27, 2012 
[ALTAMAS KABIR AND J. CHELAMESWAR, JJ.] 
CONSTITUTION OF IND/A, 1950: 
c 
Art. 254 (2), Seventh Schedule, List-I/ - Entries 1, 30 and 
32 read with List /, Entries 43, 44, 45 and 97, and List Ill, 
Entries 1, 8, 13 and 21 - Validity of Pondicherry Protection of 
Interest of Depositors in Financial Establishments Act, 2004 
(Act 1 of 2005) - Held: The power to enact the Pondicherry 
0 
Act, the Tamil Nadu Act, and the Maharash"tra Act is relatable 
to Entries 1, 30 and 32 of the State List, 'which involve the 
business of unincorporated trading and money-lending -
Since the object of Tamil Nadu Act, Maharashtra Act and 
Pondicherry Act are same and/or similar in nature, and the 
E validity of Tamil Nadu Act and Maharshtra Act having been 
upheld by Supreme Court, validity of Pondicherry Act must 
also be affirmed - One has to keep in mind the beneficial 
nature of the three legislations which is to protect the interests 
of small depositors, from unscrupulous individuals and 
companies, both incorporated and unincorporated - Tamil 
F Nadu Protection of Interests of Depositors (in Financial 
Establishments) Act, 1997 - Maharashtra Protection of Interest 
of Depositors (in Financial Establishments) Act, 2005. 
Art. 254(2) - Rule of repugnancy - Exception - Held: 
G Clause (2) provides that in a given situation where a law of a 
State is in conflict With the law made by Parliament, the law 
so made by the State Legislature shall, if it has received the 
assent of the President, prevail in that State - In the instant 
case, the Pondicherry Act had received the assent of the 
H 
874 
NEW HORIZON SUGAR MILLS LTD. v. GOVT. OF 
875 
PONDICHERRY TH. ADDL. SEC. 
President attracting the provisions of Art. 254(2) of the 
A 
Constitution. 
Pondicherry Protection of Interest of Depositors in 
Financial Establishments Act, 2004 (Act of 2005) - s.2(d) -
'Financial establishment' - Held: The expression 'any person' 8 
in s.2(d) would a/so include a company incorporated under 
the Companies Act, 1956 and, consequently, would also 
include a company such as the appellant Mill, which accepts 
deposits from investors, not as shareholders of such 
company, but merely as investors for the purpose of making 
profit - Accordingly, the expression 'person' in the Act includes C 
both incorporated as we// as unincorporated companies -
Companies Act, 1956 - ss. 58A, 58AA and 58AAA - Banking 
Regulation Act, 1949 - s. 15. 
The appellant-Mill' two Directors, namely 'VK' and D 
'VB', who were brothers, were also the Directors of Mis 
PNL Nidhi Limited ('PNL'), a concern accepting the 
deposits of investors under various schemes. The 
appellant availed credit facilities from the Indian Bank and 
when it failed to make the payments, the Bank initiated 
E 
recovery proceedings wherein the properties offered as 
security were auctioned. One of the depositors filed a 
complaint alleging that the said two Directors had 
misappropriated the money belonging to 'PNL' and 
diverted the same for their own trade. The Chief Judicial 
F 
Magistrate attached various properties standing in the 
names of 'VK' and 'VB'. The Government also issued 
GOMs. No.12 dated 18.2.2006 under the Pondicherry 
Protection of Interests of Depositors in Financial 
Establishments Act, 2004 (Act 1 of 2005), ordering G 
attachment of the properties acquired by 'PNL'. A criminal 
revision petition and various writ petitions were filed 
challenging the order of the Chief Judicial Magistrate. The 
Single Judge of the High Court lifted the order of 
attachment and directed the Registrar, Registration H 
876 
SUPREME COURT REPORTS 
[2012] 8 S.C.R. 
A Department to register the sale Certificate issued in favour 
of the auction purchaser. The appellant-Mill was directed 
to approach the Debts Recovery Tribunal regarding its 
claim of refund of the access amount retained by the 
Bank. It was also made clear that as far as the properties 
B included in the impugned orders were concerned, it 
would be open to third parties to approach the 
Designated Court under Act 1 of 2005. However, while 
upholding the validity of Act 1 of 2005, the Single Judges 
limited its operation to Unincorporated Institutions. 
c Aggrieved, the appellant-Mills and its Directors filed Writ 
Appeal Nos.1142 to 1144 of 2006 and the Government of 
Pondiche

Excerpt shown. Read the full judgment & AI analysis in Lexace.