Karnataka High Court
Mr. Abdul Rahman Baig vs The Competent Authority on 3 June, 2025
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 3RD DAY OF JUNE, 2025
PRESENT
THE HON'BLE MRS. JUSTICE ANU SIVARAMAN
AND
THE HON'BLE MR. JUSTICE RAJESH RAI K
MISCELLANEOUS FIRST APPEAL NO. 948 OF 2024
(KPIDFA)
BETWEEN:
MR. ABDUL RAHMAN BAIG
S/O OBEDULLA BAIG
AGED ABOUT 38 YEARS
R/AT No.301, 3RD FLOOR
CRESCENT HEIGHTS
AMC LAYOUT
BENGALURU-560 032
...APPELLANT
(BY SRI. ABHILASH RAJU, ADVOCATE)
AND:
1. THE COMPETENT AUTHORITY
FOR M/S. AMBIDANT MARKETING PRIVATE LIMITED
3RD FLOOR, MINI V.V. TOWER
PODIUM BLOCK
DR. AMBEDKAR VEEDHI
BENGALURU-560 001
REPRESENTED BY ITS COMPETENT AUTHORITY
DR. ASHOKA D.R.
JOINT SECRETARY
AGED ABOUT 39 YEARS
2. M/S. AMBIDANT MARKETING PRIVATE LIMITED
REGD. OFFICE AT No.9A
K.H.B. MAIN ROAD
KANAKANAGARA, R.T. NAGAR POST
-
2
BENGALURU-560 032
REPRESENTED BY ITS MANAGING DIRECTOR
SYED FAREED AHMED
S/O D.S. JALALUDDIN
AGED ABOUT 58 YEARS
R/AT No.374, KUSHAL NAGARA
OPPOSITE HANIFIYA MASJID
VENKATESHAPURAM
BENGALURU-560 045
3. SABIRA BEGUM
W/O SYED FAREED AHMED
AGED ABOUT 50 YEARS
TRUSTEE OF
M/S. AMBIDANT TRUST MANAGEMENT
R/AT No.302, 3RD FLOOR
CRESCENT HEIGHT
AMC LAYOUT
BENGALURU-560 032
AND
No.345, 2ND CROSS
RAMA TENT ROAD
NEAR HANIFA MASZID
KUSHAL NAGAR
BENGALURU-560 045
4. NABEELA BEGUM
W/O SYED AFAQ AHMED
AGED ABOUT 26 YEARS
TRUSTEE OF
M/S. AMBIDANT TRUST MANAGEMENT
R/AT No.345, 2ND CROSS
RAMA TENT ROAD
NEAR HANIFA MASZID
KUSHAL NAGAR
BENGALURU-560 045
...RESPONDENTS
(BY SRI. VEERESH R. BUDIHAL, ADVOCATE FOR R1;
V.C.O. DATED 21.03.2024 - SERVICE OF NOTICE TO
R2 TO R4 ARE DISPENSED WITH)
THIS MFA IS FILED U/S.16 OF THE KARNATAKA
PROTECTION OF INTEREST OF DEPOSITORS IN FINANCIAL
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ESTABLISHMENTS ACT, 2004, AGAINST THE ORDER DATED
06.06.2023 PASSED IN MISC. No.994/2022 ON THE FILE OF THE
XCI ADDITIONAL CITY CIVIL AND SESSIONS JUDGE,
BENGALURU, (CCH-92), ALLOWING THE PETITION FILED
U/S.5(2) OF THE KPIDFE ACT, 2004 AND ETC.
THIS MFA HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT ON 06.03.2025 AND COMING ON FOR
PRONOUNCEMENT OF JUDGMENT THIS DAY, ANU SIVARAMAN
J., PRONOUNCED THE FOLLOWING:
CORAM: HON'BLE MRS. JUSTICE ANU SIVARAMAN
and
HON'BLE MR. JUSTICE RAJESH RAI K
CAV JUDGMENT
(PER: HON’BLE MRS. JUSTICE ANU SIVARAMAN)
This MFA is filed assailing the order dated 06.06.2023
passed by the XCI Additional City Civil and Sessions Judge
and Special Judge for KPIDFE cases, Bengaluru (CCH-92) in
Misc. No.994/2022.
2. We have heard Shri. Abhilash Raju, learned
counsel for the appellant and Shri. Veeresh R. Budihal,
learned counsel for respondent No.1. Notice to respondents
No.2 to 4 are dispensed with vide order dated 21.03.2024.
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3. The brief facts of the case are:
The appellant was managing a small business of
supplying stone materials, he wanted to purchase a flat to
reside with his family in Bengaluru. Respondents No.3 and 4
offered to sell the schedule property for a total sale
consideration of Rs.40,00,000/- and the appellant has
accepted the said offer. In furtherance to that, the appellant
had transferred an amount of Rs.20,00,000/- through NEFT
(Rs.10,00,000/- by way of NEFT UTR
No.ANBBN18219522495 dated 19.03.2018 and
Rs.10,00,000/- by way of NEFT UTR
No.ANBBN18219522810 dated 19.03.2018) and agreed to
pay the balance sale consideration before execution of the
sale deed. Respondents No.3 and 4 have acknowledged the
receipt of the advance sale consideration. They have entered
into an agreement for sale on 25.01.2019 and the same was
registered in Book-1 No.KCH-1-05353-2018-19 in the Office
of Sub-Registrar, Gandhi Nagar, Bengaluru. Subsequently,
the appellant had performed his part of contract and paid
the balance sale consideration. Respondents No.3 and 4
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have executed a sale deed on 04.02.2019 in favour of the
appellant and the same was duly registered in the office of
Sub-Registrar, Gandhi Nagar, Bengaluru. The Bruhat
Bengaluru Mahanagara Palike (BBMP) has issued Form-B,
Property Register Extract incorporating the name of the
appellant as owner of the schedule property on 04.04.2019
and accepted Property Tax.
4. Respondent No.1 had issued a notice dated
20.10.2023 to respondents No.3 and 4 calling upon them to
hand over possession of the schedule property and the same
was affixed on the door of schedule/house property. Said
notice disclosed provisional attachment by the Government
of Karnataka under Section 3 of the Karnataka Protection of
Interests of Depositors in Financial Establishments Act,
2004, (‘KPIDFE Act‘ for short). Then, it came to the notice
of appellant that respondent No.2 was alleged to be involved
in fraudulent transaction and had failed to return the
deposits on maturity to depositors.
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5. The appellant had challenged the notice dated
20.10.2023 in Writ Petition No.24108/2023 before this Court
and this Court had disposed of the said Writ Petition on
08.11.2023, permitting the appellant to make a
representation to respondent No.1 for appropriate reliefs. In
compliance with the order dated 08.11.2023 passed by this
Court, the appellant had submitted his representation to first
respondent on 22.11.2023.
6. The first respondent has issued an endorsement
dated 11.01.2024 without extending an opportunity of
hearing to the appellant. The said endorsement was
questioned before this Court in Writ Petition No.2029/2024
and this Court has disposed of the Writ Petition on
20.01.2024 by granting liberty to the appellant to approach
the Special Court and respondent No.1 was directed not to
precipitate the matter for a period of four weeks from the
date of the said order. However, the trial Court on
06.06.2023, passed an order making the interim order of
attachment absolute which is under challenge herein.
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7. The learned counsel appearing for the appellant
contends that respondent No.1 was fully aware of the
registered agreement of sale. Without issuing notice to the
appellant and without making any inquiry or investigation
into the transaction, the respondent committed a grave
error in law, without application of mind or proper
investigation by issuing the Notification dated 31.01.2019.
The said Notification neither discloses the names of
respondents No.3 and 4 nor the appellant; the amount of
sale consideration is mentioned as Rs.50,00,000/- but sale
consideration paid by the vendors of the appellant was
Rs.44,90,000/- as mentioned in the sale deed dated
04.02.2019. It is further contended that in the notification,
column of “details of documents” says that “A-2 – Afaq wife’s
name”. Mrs. Nabeela Begum (wife of Syed Afaq Ahmed) is
the one who conveyed the property to the appellant, which
is available in the sale deed, neither the details of the sale
deed nor the name of title holders was shown by way of
description of documents. It clearly indicates the non-
application of mind on the part of respondent No.1.
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8. The action of interim attachment of the schedule
property, without an enquiry over its true owner and
extending an opportunity of hearing has resulted in violation
of right of appellant to hold immovable property. The action
on the part of the 1st respondent is violative of the rule of
audi-alteram-partem has resulted in vexing the appellant
with malafide intention. No materials are produced to show
that the money used by the appellant’s vendors-in-title was
from the alleged scam. Therefore, the order dated
06.06.2023 is arbitrary, illegal, violative of principles of
natural justice and without authority of law. Further, it is
contended that the copy of proceedings or order dated
06.06.2023 was not made available to appellant even after
the submission of the representation dated 23.11.2023,
therefore, denying the reasonable opportunity to question
the order of the Special Court which is said to be the basis
and foundation for the endorsement dated 11.01.2024,
which amounts to denial of justice. The endorsement dated
11.01.2024 is not a speaking order since it lacks in material
particulars and does not make reference to representation
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dated 23.11.2023, more particularly, the payment of
consideration amount in the year 2018, much prior to the
alleged notification dated 31.01.2019. Even the sale deed
was also registered much prior to the Notification.
Endorsement dated 11.01.2024 states that schedule
property was purchased by the appellant after the interim
order for attachment dated 31.01.2019 and hence property
stood vested with competent authority. Said aspect is
incorrect in view of the agreement of sale dated 25.01.2019,
the endorsement must necessarily fail for not furnishing the
information or the factum of involvement of respondents
No.3 and 4.
9. The learned counsel for respondent No.1
contended that the appellant claims to be in possession of
schedule property since the date of execution of sale deed in
his favour i.e., from 04.02.2019. However, he neither
appeared before the Special Court nor filed any objections to
the prayer sought by the respondent seeking an order
making the ad-interim attachment issued by the
Government of Karnataka under Section 3(2) of the KPIDFE
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Act as absolute. The appeal is filed along with an application,
seeking the leave of this Court to file an appeal as interested
party and he is aggrieved by the impugned order. Appellant
sought to set aside the impugned order and remand the
appeal to the Special Court for fresh consideration after
affording an opportunity of hearing to the appellant on the
ground that he has an interest in and over the property in
question. Both the Interlocutory Applications seeking leave
to file an appeal and also the appeal under Section 16 of the
KPIDFE Act deserves to be dismissed because Section 12(3)
of the KPIDFE Act clearly says that even where no notice has
been served upon any person by the Special Court, if any
person is claiming any interest in the property the ad-
interim and provisional attachment of which is sought to be
made absolute, such person shall have to appear before the
Special Court and object the same.
10. It is further contended that notification issued by
the Government under Section 3(2) of the KPIDFE Act was
published in two newspapers having wide publication and it
was also affixed on a conspicuous place of the property and
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the same is not disputed by the appellant. This aspect is
admitted by the appellant in his appeal memorandum.
11. Though this being the situation appellant had
chosen not to appear before the Trial Court or object to the
ad-interim attachment being made absolute. Hence, the
order passed by the Special Court cannot be found fault
with. Section 12(4) of the KPIDFE Act says that Special
Court shall pass an order making the order of attachment
absolute and found that no cause is shown and no objections
are made by the respondents.
12. It is further contended that no averment can be
found that the appellant was ignorant or that he had no
opportunity to know about the notification issued under
Section 3(2) of the KPIDFE Act by the Government of
Karnataka. Hence, it is presumed that the appellant was
aware about the ad-interim attachment. Hence, appellant
ought to have appeared before the Special Court and filed
the objections. This being the situation now the appellant
cannot claim that he has not been afforded with an
opportunity of hearing. The statute has given an opportunity
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to the appellant to object the attachment being made
absolute and it is the appellant who has chosen not to utilise
the same. Hence, he cannot claim that he was denied an
opportunity and also he cannot claim for remand of the
matter.
13. It is well settled principle of law that nullus
commodum capere potest de injuria sua propria. It means
no man can take advantage of his own wrong. In support
of the said contention, learned counsel appearing for
respondent No.1 has relied upon the dictum of the Apex
Court in “Muncipal Committee Katra & Ors. v. Ashwani
Kumar” by judgment dated 09.05.2024 passed in Civil
Appeal No (s).14970-71/2017. He further contended
that if the opportunity of hearing is not availed, it cannot be
said that the order was passed without affording an
opportunity of being heard. In support of the said
contention, the learned counsel has relied upon the dictum
of Gujarath High Court in the case of Vinayakrao S. Desai
v. Interlink Petroleum Ltd. & Ors. reported in (2001)
GLR 3 2649.
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14. The primary contention raised by the proposed
appellant is that the order of the Special Court was passed
without notice to him and that it is therefore bad in law. It is
contended that the agreement for sale of the apartment is
question was executed on 25.01.2019 and the provisional
attachment under Section 3(2) of the KPIDFE Act was issued
only on 06.06.2023. Further, the attachment was notified in
newspapers only on 21.02.2019, much after the sale deed
itself was executed on 04.02.2019. It is contended that the
competent authority, which filed the application under
Section 5(2) of the KPIDFE Act, ought to have made the
purchaser a party to the proceedings before the Special
Court and the failure to do so has resulted in denying him an
opportunity to defend the case.
15. The learned counsel for respondent
No.1/competent authority takes us through the provisions of
the Act and contends that admittedly, the attachment of the
property was given wide publicity by publishing Section 3(2)
Notification in two newspapers having wide coverage.
Further, the notice of the petition under Section 5(2) of the
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KPIDFE Act was also affixed on the apartment which the
petitioner claims ownership and possession of. Therefore,
drawing our attention to Section 12(3) of the KPIDFE Act.
It is contended that it was for the appellant to appear before
the Special Court and raised his contentions, if any, which
he failed to do so. It is submitted that the Sale Deed relied
on by the appellant is void ab initio in terms of Section 3(2)
of the KPIDFE Act since it was admittedly entered into only
after the Notification had been issued under Section 3(2) of
the KPIDFE Act, which reads as follows:-
“3(2) Not withstanding anything contained in any
other law for the time being in force,-
(i) where, suo moto or based on the market
intelligence reports or upon complaint received from any
depositors or otherwise, the Secretary to Government,
Revenue Department is satisfied that any financial
establishment has failed,-
(a) to return the deposit after maturity or on
demand by depositor; or
(b) to pay interest or other assured benefit; or
(c) to provide the service against such deposit;
or;)
(ii) Where the Government has reason to believe
that any Financial Establishment is acting in and
detrimental to the interest of the depositors with an
intention to defraud them; or
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(iii) Where the Government is satisfied that such
Financial Establishment is not likely to return the
deposits or make payment of interest or other benefits
assured or to provide the services against which the
deposit is received.
the Government may, in order to protect the
interests of the depositors of such Financial
Establishments, after recording reasons in writing, issue
an order by publishing it in the official gazette, attaching
the money or property believed to have been acquired
by such financial establishment either in its own name or
in the name of any other person from and out of the
deposits collected by the financial establishments, and
where it transpires that such money or other property is
not available for attachment or not sufficient for the
repayment of the deposits, such other property of the
said financial establishments, or the personal assets of
the promoters, partners, directors, managers or
members or any other person of the said Financial
Establishments.”
16. Section 5 provides for the appointment of an
officer not below the rank of an Assistant Commissioner to
be the Competent Authority for the purposes of the Act.
Section 5(2) of the KPIDFE Act reads as follows:-
“5(2) The Competent Authority shall, within thirty
days from the date of receipt of the order made under
section 3, apply to the special Court for further order of
attachment absolute.”
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17. Section 5(3) of the KPIDFE Act provides for an
application supported by affidavits stating the grounds on
which the order is made under Section 3 and the amount of
money or other property believed to have been acquired
from out of the deposits and the details of persons in whose
name such property is believed to have been invested or
acquired or any property attached under Section 3.
18. Section 7 of the KPIDFE Act provides for an
assessment of assets and deposit liabilities in respect of the
financial establishment and the submission of a report to the
Special Court.
Section 12 of the KPIDFE Act reads as under:-
“12. Powers of Special Court regarding
attachment.- (1) Upon receipt of an application under
section 5, the Special Court shall issue to the Financial
Establishment and to any other person if any, whose
property is attached by the designated authority under
section 3, a notice accompanied by the copies of the
application and affidavits and of the record of evidence, if
any, calling upon them to show cause on or before a
date to be specified in the notice why the order of
attachment should not be made absolute.
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(2) The Special Court shall also issue such notice,
to all other persons represented to it as having or being
likely to claim, any interest or title in the property of the
Financial Establishment or the person to whom the notice
is issued under sub section (1), calling upon all such
persons to appear on the same date as that specified in
the notice and make objection if they so desire to the
attachment of the property or any portion thereof on the
ground that they have interest in such property or
portion thereof.
(3) Any person claiming an interest in the property
attached or any portion thereof may, notwithstanding
that no notice has been served upon him under this
section, make an objection as aforesaid to the Special
Court at any time before an order is passed under sub-
section (4) or sub-section (6).
(4) The Special Court shall, if no cause is shown
and no objections are made on or before the specified
date, forthwith pass an order making the order of
attachment absolute, and issue such direction as may be
necessary for realization of the assets attached and for
the equitable distribution among the depositors of the
money realized from out of the property attached.”
19. It is therefore clear that on a provisional
attachment being made in respect of a property, notice is to
be issued to the financial establishment and to any other
person whose property is attached under Section 3.
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20. In the instant case, at the time of the provisional
attachment under Section 3, admittedly, the properties
stood in the name of Respondents No.3 and 4, who were put
on notice. Though Section 12(2) of the KPIDFE Act provides
for issuance of notice to other persons “represented to it” as
having or being likely to claim any interest or title in the
property, the appellant has no case that there was any such
representation made to the Special Court that the appellant
has any interest or title in the property. Section 12(3) of the
KPIDFE Act specifically provides that any person having any
interest in the property can approach the Special Court
notwithstanding the fact that no notice had been served
upon him and such person can also raise an objection.
21. In the instant case, admittedly, notice had been
served by affixture on the apartment in respect of which the
appellant claims title by virtue of the Sale Deed entered into
after the Section 3(2) Notification has been issued. It was
therefore always open for him to approach the Special Court
and raise his objections. Admittedly, he did not do so.
Further, apart from stating that he had not been issued with
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notice, appellant has no contention that he was unaware of
the proceedings or that he was prevented from approaching
the Special Court and raising his objections. Having perused
the appeal, we notice that no tenable contentions as against
the order of the Special Court have been raised apart from
contending that notice was not issued to the purchaser. In
the light of the specific provision of the statute, we are not
inclined to accept the contentions raised.
22. In the result, we are of the opinion that the
contentions raised in the appeal are devoid of merits.
Therefore, the appeal fails and the same is accordingly
dismissed.
All pending interlocutory applications shall stand
disposed of.
Sd/-
(ANU SIVARAMAN)
JUDGE
Sd/-
(RAJESH RAI K)
JUDGE
cp*
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