STATE REPRESENTED BY THE PRJNCIPAL SECRETARY TO GOVERNMENT, HOME (POLICE XIX) DEPARTMENT AND OTHERS versus K. S. PALANICHAMY AND ORS.

Citation: [2017] 4 S.C.R. 34 · Decided: 09-05-2017 · Supreme Court of India · Bench: N.V. RAMANA · Disposal: Appeal(s) allowed
Cited by 2 judgment(s) · see the full citation network in Lexace
Open in Lexace · Ask the AI about this case
Judgment (excerpt)

[2017] 4 S.C.R. 34 
A 
STATE REPRESENTED BY THE PRJNCIPAL SECRETARY TO 
B 
c 
D 
E 
F 
G 
H 
GOVERNMENT, HOME (POLICE XIX) DEPARTMENT AND 
OTHERS 
v. 
K. S. PALANICHAMY AND ORS. 
(Criminal Appeal No. 933of2017) 
MAY09,2017 
[N. V. RAMANA AND PRAFULLA C. PANT, JJ.) 
Tamil Nadu Protection of Interests of Depositors (In Financial 
Establishments) Act, 1997: 
ss. 3 and 4 -Ad-interim order u/s. 3 -Attaching the immovable 
properties of the partners of a financial institution (respondents) -
Passed by State Government - On the basis of complaint against 
the financial establishment filed by the depositors - Petition uls. 482 
Cr.P.C. by the respondents - High Court set aside the order u!s. 3 
holding that before passing order u/s. 3, the Government is required 
to· take steps u/s. 4 by identifying the properties - On appeal, held: 
As per the procedure u/ss. 3 and 4, the State Government has power 
to set the process into motion by passing ad-interim attachment and 
thereafter appoint competent authority uls. 4(1) to take further 
' 
recourse uls. 4(3) and (4) - Therefore, the order of the State 
Government is in consonance with the provisions of the Act. 
Words and Phrases: 
'Financial establishments' - Meaning of, in the context of 
Tamil Nadu Protection of Interests of Depositors (In Financial 
Establishments) Act, 1997. 
Allowing the appeal, the Court 
HELD: 1.The Statement of Objects as well as the relevant 
provisions of the Tamil Nadu Protection of Interests of Depositors 
(In Financial Establishments) Act, 1997 shows that its object was 
to ameliorate the situation of thousands of depositors from the 
clutches of.Financial Establishments which deceives the investors 
by offering high rates' of interest on deposits and committed 
deliberate fraud in repayment of the principal and interest after 
34 
STATE REP. BY THE PRINCIPAL SECRETARY TO GOVT. v. 
35 
K. S. PALANICHAMY 
maturity of such deposits. Sub-section (3) of Section 2 defines 
the Financial Establishments. It is an undisputed fact that the 
present respondents very much fall within the ambit of financial 
establishment as defined under the Act. (Para 10] [39-B-C] 
2. It is clear from the reading of Section 3(i) of the Act, that 
whenever complaints are received from a number of depositors 
against a Financial Establishment, which defaults or fails to return 
the deposits or fails to provide services for which the deposits 
have been made by the depositors, then the State Government is 
empowered to initiate proceedings by passing (l</-illterim order 
for attachment of the properties of the Financial Establishment 
. or any other persons as mentioned there under. The present 
case falls under Section 3(i) of the Act. Thereafter the 
Government is at liberty to transfer the. cc;mtrol of tJie aforesaid 
money or property to the competent authority. [Para 12] [40-E-F] 
3. As per the procedure envisaged under Section 3 and 4 
of the Act, unequivocally the power. to set the process into motion 
vests with the State Government by passing an (l</-interim 
attachment order and thereafter the Act mandates appointment 
of competent authority under Sub-section (1) of Section 4 of the 
Act, to take further recourse as per the procedures laid down 
under Section 4 of the Act. (Para 14] (41-C-D] 
4. It is not correct to say that before passing an order under 
Section 3 of the Act, Government has to take steps under Section 
4 of the Act by identifying the properties. The language employed 
under Sections 3 and 4 of the Act is plain, unambiguous. While 
enacting the provisions, the legislature has consciously given 
the discretion for passing an (l</-interim order. It is evident from 
the language used in the section by inserting "Government may". 
In the present case, even before the other provisions are 
complied with, the High Court erroneously interfered with the 
(Id-interim orde! which defeats the very purpose of the p;ovision 
which is incorporated to safeguard the interest of the investors. 
(Para 15] (41-E-F] 
5. The order passed by the State Government under Section 
3 of the Act attaching the immovable properties standing in the 
name of respondents, basing on the complaint of investors and 
A 
B 
c 
D 
E 
F 
G 
H 
d6 
SUPREME COURT REPORTS 
[2017] 4 S.C.R. 
A 
directing the competent authority to take recourse as per the 
procedures contemplated under Sub-section (3) and (4) of Section 
4 of the Act is valid and is very much in consonance with the 
provisions o
Excerpt shown. Read the full judgment & AI analysis in Lexace.