Attachment under BUDS Act must be confirmed by Court
The delay in filing application for confirmation of the provisional attachment of property by the Competent Authority, under Section 14(1) of the Banning of Unregulated Deposit Schemes (BUDS) Act, 2019 (BUDS Act), to the Designated Court cannot be condoned, as Section 5 of the Limitation Act is not applicable to the Section, says the High Court of Kerala, in paragraph 19 in the judgement in Highrich Online Shoppe Private Limited v The Competent Authority.
Section 14 of BUDS Act stipulates confirmation in 30/60 days
The confirmation of the provisional attachment of the property ordered by the Competent Authority will have to be confirmed by the Designated Court under Section 14(1) of the BUDS Act, within a period of 30 days or an extended period of further 30 days for reasons to be recorded in writing, says the law.
Competent Authority can initiate fresh proceeding
The paragraph 20 of the judgement of the High Court of Kerala, however, allows initiation of fresh proceedings by the Competent Authority in the matter in accordance with law.
SLP filed by Highrich Online Shoppe got dismissed
The Highrich Online Shoppe Private Limited, aggrieved by the High Court judgement, approached the Supreme Court with a Special Leave Petition (Crl) No: 13495/2024, registered on 27-09-2024, was not got admitted, but dismissed outright on 30-09-2024, thereby leaving the High Court order final.
Therefore, the Designated Court will have to decide whether a fresh proceeding can be initiated by the Competent Authority when the provisional attachment falls due to delay in confirming it within the stipulated 60-day period.
HC says attachment of malafide properties be by Court
In Aibitha Beevi Ancharapattil and Ors. v District Collector, Kannur and Ors, the High Court of Kerala says that the power to attach a property transferred mala fide to someone else, is vested solely in the Designated Court. under Section 16 of the BUDS Act.
The Section 16 of the BUDS Act confers authority on the Designated Court and none other to deal with cases relating to mala fide transfers.
To decide whether a transfer is mala fide or not, it may, in some cases, involve taking of oral and documentary evidence and an adjudication on the same, which essentially is a judicial function which can only be done by a court alone.
But the Competent Authority or Officers appointed under Section 7 (2) has only been given the power to provisionally attach the property acquired either in the name of the deposit taker or in the name of any other person(s) on behalf of the deposit taker; that means any benami purchase.
Very wide powers have been given to the Designated Court to order properties attached under Section 7 as well as under Section 16 to be sold and its proceeds distributed among the depositors even before the deposit takers are found guilty by a competent court.
That means, the malafide transfer can only be attached by the Designated Court u/s 16 of the BUDS Act whereas the Competent Authority can provisionally attach the benami property which needs to be confirmed by the Designated Court within 30 or an extended time of 60 days, u/s 7 of the BUDS Act.
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