RABIBAI MOHAMAD ISMAIL Vs. STATE OF MAHARASHTRA

JUDGEMENT

(1.) These two appeals have been filed under Section 11 of the Maharashtra Protection of Interest of Depositors (In Financial Establishments) Act, 1999 (hereinafter referred to as "the MPID Act" ). Criminal Appeal No.451 of 2020 is filed by the appellant claiming to be a small investor, who is aggrieved by orders dated 22/10/2020 and 03/11/2020 passed by the Designated Court for cases arising from the MPID Act at Mumbai. Criminal Appeal No.88 of 2021 has been filed by the State of Maharashtra, through the Competent Authority appointed under the MPID Act, challenging orders dated 16/10/2018 and 23/04/2019 passed by the aforesaid Designated Court. These appeals raise a common question as to the manner in which the Designated Court under Section 7(4) of the MPID Act is supposed to distribute money realized from assets attached under the provisions of the MPID Act. It is contended that when the Designated Court under the aforesaid provision is required to ensure equitable distribution of such money amongst the depositors, it can be distributed in a graded or preferential manner in terms of the object of the MPID Act and not merely equally or on prorata basis.

(2.) On 30/09/2013, a First Information Report ( "FIR" ) bearing No.216 of 2013 was lodged at the behest of one Pankaj Saraf at M.R.A. Marg Police Station, Mumbai, for offences punishable under Sections 409, 465, 467, 468, 471, 474, 477(A) and 120B of the Indian Penal Code ( "IPC" ). The investigation in respect of the said FIR was taken over by the Economic Offences Wing ( "EOW" ) and it was renumbered as EOW CR No.89 of 2013. The provisions of the MPID Act were applied on 03/10/2013 and the case stood transferred to the aforesaid Designated Court. The Home Department of the Government of Maharashtra appointed the Competent Authority as contemplated under Section 5 of the MPID Act and consequent action of attachment and liquidation of assets was undertaken by the Competent Authority, as a consequence of which, funds stood deposited in the account of the Competent Authority.

(3.) The original informant filed an application on 21/10/2016 before the Designated Court praying for equitable distribution of the funds collected as per Section 7(4) of the MPID Act. On 03/11/2017, the State, through the Competent Authority, filed its reply to the said application and, thereafter on 06/07/2018, an additional reply was filed. In this additional reply, it was brought on record that the funds collected through liquidation of assets were distributed during the period 2014-15 in such a manner that the entire outstanding amounts of 608 investors, whose outstanding amounts were less than Rs.2 lakhs were paid and 50% of the outstanding amounts of 6445 investors, whose outstanding amounts were more than Rs.2 lakhs but less than Rs.10 lakhs were also paid. Insofar as 5682 investors, whose outstanding amounts were more than Rs.10 lakhs, were concerned, about 6.5% of the outstanding amounts were paid to them. After placing on record such details, the Competent Authority submitted before the Designated Court that it should be permitted to equitably distribute the funds available in the account of the Competent Authority.