Ensure Object Of Tamil Nadu Protection Of Interests Of Depositors Act Is Achieved: Madras High Court Takes Note Of Insufficient Manpower, Asks Govt To Evolve Mechanism

The victims/complainants in two cases of cheating registered on the file of the Economic Offence Wing, Dindigul, had filed the petition seeking a direction for expediting the investigation.

The Single Bench of Justice B. Pugalendhi held, “The cases are pending for years together in the FIR stage itself. It is not known as to when the final report would be filed. It is not known as to how much time it would require for the trial Court to conclude the trial. After 20 years, it is not known whether the victim would reap any benefit. The Government has to evolve a mechanism to ensure that the victims are addressed and the object of the Act is achieved.”

Advocate R.Balakrishnan represented the Petitioner while Government Advocate (Crl. Side) M.Sakthi Kumar represented the Respondent.

Factual Background

The accused companies [M/s.Udhayam Chits Private Ltd., and other sister concerns, as well as M/s.PG Marketing and Agro Tech Company Ltd.] had collected deposits from a large number of persons to fund its business operations. The company offered that they would return the matured amount with huge interest, but they cheated the depositors. Hence, the cases came to be registered. In the criminal case registered as Crl.OP(MD).3155/2024, the Deputy Superintendent of Police, Economic Offence Wing, Ramanathapuram, had filed a status report that there were more than 300 victims in this case and the accused persons had cheated to the tune of Rs. 10 Crore. There were 13 accused in this case.

In the criminal case registered as Crl.OP(MD).5962/2024, the Judge of the Special Court for TNPID Act Cases, Madurai, had filed a report that the properties of the accused had not been identified by the investigation agency as required u/s.3 of the TNPID Act and therefore, the trial Court was not in a position to conduct the trial further.

Reasoning

The Bench, at the outset, explained that the Tamil Nadu Protection of Interests of Depositors (TANPID) Act, 1997, was enacted to regulate financial establishments that were exploiting depositors by promising high returns and subsequently defaulting on repayments, leading to widespread public distress. Many such entities had emerged in Tamil Nadu, targeting middle-class and poor investors often leaving them without any effective recourse, leading to societal and economic suffering of the common public. To address this crisis, the government introduced legislation in the public interest to protect depositors' rights. The Economic Offences Wing in the State of Tamil Nadu started functioning with effect from January 1, 2000.

The Bench noted that the Economic Offences Wing is under the impression that they are supposed to act/prosecute only after a case has been reported before them. They have to understand that they are also liable to prevent such offences. If any Company is offering interest above the rate of interest prescribed by the Reserve Bank of India, the Economic Offences Wing must ascertain from the Company as to whether they have any registration or authority to collect the deposits and as to whether they are having means to give such higher returns.

“By the TNPID Act, Special Courts have been constituted to deal with the offences of such nature. Provisions have been made to seize the properties and bank accounts of the accused and to realize the amount. Though this Act is in existence from the year 1997, very few people have benefitted out of this Act and got their money back. It appears that mainly because of the outdated procedures, not matching with the present technological age, delay occurs in attachment of properties. Most of the victims, like the petitioners, are waiting with a hope that at one point of time, they will get their money back”, the Bench said.

“The mere registration of an FIR alone would not serve any purpose. The object of TNPID Act is to ensure that the victims got back their money. But, the data, which is available as provided by the Economic Offences Wing, discloses that not even 10% of the amount has been disbursed to the victims. The Government is having a moral responsibility to ensure that the victims got back their money”, it added.

The Bench took note of the fact that there is no sufficient manpower for the Department for the volume of work. “It appears that they have not been provided with any vehicles. The Additional Public Prosecutor has also expressed the difficulties faced by the investigation agency in collecting the revenue records and the genuineness certificate from the Tahsildar and the guideline value from the Sub Registrar. The Government is expected to address the difficulties faced by the investigation agency. At the same time, the investigation officer has to understand that there is no need to refer all the 10000 depositors as witnesses and to examine as witnesses during the trial. The prosecution can rely on few witnesses and in the event if those few witnesses turn hostile, necessary applications may be filed to produce the other witnesses”, it noted.

Addressing the issue relating to the Public Prosecutors having to restrict from calling the investigation officers for every hearing, the Bench ordered, “The Secretary to Government, Home Department shall ensure for providing video conference facility to the Office of the Law Officers, at least at the High Court and District Court level to preserve the time of the investigation officers in the Court waiting unnecessarily from morning to evening. The Public Prosecutor shall issue a Circular to that effect, restricting the law officers under the conditions in which they have to summon the investigation officers to the Court.”

Thus, passing a direction for expedited investigation in both cases, the Bench disposed of the Petitions.

Cause Title: A.Paramasivam & Anr. v. The Inspector of Police & Ors. (Neutral Citation: Crl.OP(MD)Nos. 3155, 5962 of 2024)

Appearance:

Petitioners: Advocates R.Balakrishnan, S. Sankarapandi

Respondents: Government Advocate (Crl. Side) M.Sakthi Kumar

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