Telangana High Court
Soma Sai Baba, And Another vs The State Of Telangana, And 4 Others on 27 February, 2025
Author: B. Vijaysen Reddy
Bench: B. Vijaysen Reddy
HONOURABLE SRI JUSTICE B. VIJAYSEN REDDY
WRIT PETITION No.31760 OF 2021
ORDER :
1.1. The petitioners claim to be absolute owners and possessors
of the land and building premises bearing House No.3-1-263 (Old
House No.1-35/C/17) consisting of ground + three upper floors on Plot
No.17, admeasuring 289 square yards in Survey Nos.36, 37, 38 and 39,
situated at Mythrinagar Colony, Bahadurguda Village, Saroornagar
Mandal, Ranga Reddy District, having purchased the same under the
registered sale deed bearing document No.1665/2020 dated 24.02.2020
from one Mr. Kacham Kiran Kumar (hereinafter referred to as
‘accused’), Son of Kacham Venkataiah, who earlier purchased the
same under the registered sale deed bearing document No.5227 of
2013 dated 19.08.2013 from one Mrs. P. Sirisha, wife of Mr. Surender
Reddy.
1.2. The petitioners are aggrieved by the impugned G.O. Rt.
No.923, Home (Passports) Department, dated 22.06.2021, issued by
respondent No.1 – the State of Telangana, represented by its Principal
Secretary, Department of Home, Secretariat Buildings, Hyderabad,
whereby subject property has been provisionally attached under
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Sections 3 and 5 of the Telangana Protection of Depositors of
Financial Establishments Act 1999 (for short ‘Act 1999’).
1.3. The relevant portion of the impugned order of attachment
reads as under:
“In the circumstances reported by the Commissioner
of Police, Hyderabad City, in his letter read above,
Government have examined the matter carefully and hereby
issue an ad-interim order under Sections 3 & 5 of the
Telangana Protection of Depositors of Financial
Establishments Act, 1999, for the attachment of immovable
properties of Sri Kacham Kiran Kumar (A-1) in
Cr.No.49/2020 of CCS, DD, Hyderabad as shown in the
Annexure appended to this order.”
1.4. Consequently, respondent No.2 – the Commissioner of
Police, Hyderabad City, Telangana, requested respondent No.4 – the
Commissioner & Inspector General of Registration & Stamps,
Telangana, Hyderabad, to take further action to disallow any further
transactions pertaining to the subject property and other attached
properties.
1.5. It is stated that Crime No.49 of 2020 of the Central Crime
Station, Detective Department, Hyderabad, was registered on the
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complaint lodged by one Mr. Nazeer Ahmed wherein it was alleged
that himself along with two others deposited chit amount of
Rs.76,00,000/- (Rupees seventy six lakhs only) in a chit business
organised by the accused. Instead of returning the money deposited,
the accused sold out his house, the subject property, and avoided
payment of amount. During the course of investigation, the accused
confessed to have run illegal chit fund business and cheated gullible
public to a tune of Rs.4,90,00,000/- (Rupees four crores ninety lakhs
only).
1.6. The case of the petitioners is that they have purchased the
subject property from the accused by paying valuable consideration
and are in possession of the same. The petitioners do not have
knowledge of the alleged crime and chit business being done by the
accused. The subject property was purchased by the accused almost a
decade ago vide registered sale deed bearing document No.5227 of
2013 dated 19.08.2013 from one Mrs. P. Sirisha. The ad-interim order
of attachment under the impugned G.O. is illegal and in clear violation
of provisions of the Act 1999, more particularly, Section 8 of the Act
1999 as the Special Court alone is empowered to pass order of
attachment of property which is in the hands of transferee.
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W.P. No.31760 of 2021
2.1. The case of the respondents is that the subject property
claimed by the petitioners is crime property in Crime No.49 of 2020
registered for the offences under Sections 406 and 420 of the Indian
Penal Code 1860 (IPC) and Section 5 of the Act 1999 and Section 76
of the Chit Funds Act 1982. The petitioners purchased the subject
property from the accused knowing pretty well that it is a crime
property. The accused constructed building in the subject property
with the ill-gotten money. On receipt of complaint from one
Mr. Nazeer Ahmed regarding chit fund amount fraud committed by the
accused to the tune of Rs.76.00 lakhs, crime was registered. It was
found that the accused has sold the subject property for a sale
consideration of Rs.3,20,00,000/- (Rupees three crores twenty lakhs
only). During interrogation, the accused pleaded guilty and admitted
that he cheated the chit members and depositors for his personal needs
and pharma business.
2.2. It is submitted that investigation revealed that the accused
has started several chit groups and accepted deposits from the gullible
chit members without any valid licence for the last fifteen (15) years
and collected deposits from LWs.1 to 19 to a tune of Rs.23,33,258/-
(Rupees twenty three lakhs thirty three thousand and two hundred and
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W.P. No.31760 of 2021
fifty eight only) in the guise of pharma business to provide huge profits
in a short period. When the accused was in financial crisis in pharma
business, he decided to close the chit business by duping the innocent
chit members and pharma investors. When the chit members started
demanding for return of their chit amounts, the accused hatched a plan
to windup chit business and he transferred some properties to his
brother’s name, disposed of some properties and shifted to Bangalore
along with his family members. The accused cheated the chit members
approximately to a tune of Rs.2,73,30,000/- (Rupees two crores
seventy three lakhs and thirty thousand only) for his wrongful gain and
committed breach of trust by misappropriating the chit / deposit
amounts.
2.3. Based on the letter dated 06.04.2021 addressed by
respondent No.2, respondent No.1 vide the impugned G.O. Rt. No.923
dated 22.06.2021 issued ad-interim order under Sections 3 and 5 of the
Act 1999 for attachment of immovable properties of the accused in
Crime No.49 of 2020.
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3. Heard Mr. K. Vivek Reddy, learned senior counsel,
representing Mr. M. Pratheek Reddy, learned counsel for the
petitioner, and Mr. Mahesh Raje, learned Government Pleader for
Home, and perused the material on record.
4. The learned senior counsel appearing for the petitioner
submitted that the issue involved in this writ petition is squarely
covered by the judgment of the erstwhile High Court of Andhra
Pradesh in M/s. The Madanapalle Hospitals (P) Ltd. v. The
Government of Andhra Pradesh, Home Department 1. By referring
to Sections 3 and 8 of the Act 1999, the learned senior counsel
submitted that Section 3 of the Act 1999 deals with power of the
Government to attach the subject property which is in the hands of the
accused – financial establishment; Section 8 of the Act 1999 deals with
the power of the Special Court to order attachment of properties which
are in the hands of transferees / purchasers. The subject property is
admittedly purchased by the petitioners who are a third party and
transferees. The accused is no more having interest in the subject
property. Thus, the impugned G.O. is unsustainable.
1
2009 SCC OnLine AP 200
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5. The learned Government Pleader for Home submitted that
remedy available to the petitioners is to approach the competent Court
under the provisions of the Act 1999 and seek release of the attachment
order or approach this Court under Sections 397 and 482 of the Code
of Criminal Procedure 1973. A detailed enquiry is necessary to be
conducted to find out complicity of the accused and whether purchase
of the subject property by the petitioners is bona fide transaction or
not? The accused has fraudulently transferred the subject property to
the petitioners with crime proceeds. Thus, attachment of property
under the impugned G.O. is valid. The petitioners have to wait for the
outcome of the criminal proceedings.
6. In The Madanapalle Hospitals’ case, it was held as follows:
“Section 8 of the Act empowers attachment of the
properties, which are in the hands of transferees from
financial establishments. Recourse can be had to this
provision if it is found that the properties, which are
attached from the financial establishments, are not sufficient
to meet the liability towards the depositors or the chit
subscribers. A significant difference between Section 3 on
the one hand, and Section 8 on the other, is that the power to
effect attachment under the former is conferred upon the
Government, whereas in case of the latter, the power is
conferred upon the Special Court constituted under Section
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W.P. No.31760 of 20216 of the Act. Further, before any property, which is in the
hands of transferee is attached, the Special Court is required
to issue notice to the affected parties. It is only when a
finding is recorded by the Special Court that the transfer
was made, otherwise than in good faith, and not for valuable
consideration, that the attachment under Section 8 of the
Act can be ordered. In the instant case, the property that
was already sold by the fourth respondent in favour of the
petitioner is sought to be attached through the impugned
G.O. issued by the first respondent. Since the petitioner
answers the description of a transferee, steps, if at all, would
have to be taken against it only under Section 8 of the Act.
It has already been mentioned that the Special Court alone
is conferred with the power to take steps under Section 8 of
the Act. Therefore, the impugned G.O. is patently without
jurisdiction. The writ petition is accordingly allowed and
the impugned G.O. is set aside. … … …”
7. It is not in dispute that the subject property was purchased by
the petitioners (third party) under a registered sale deed bearing
document No.1665 of 2020 dated 24.02.2020 which discloses that sale
consideration of Rs.82,76,500/- (Rupees eighty two lakhs seventy six
thousand and five hundred only) was paid by them and the petitioners
are in possession of the subject property. The issue involved herein is
the jurisdiction of respondent No.1 in passing the ad-interim
attachment order in terms of Sections 3 and 5 of the Act 1999. Section
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8 of the Act 1999 confers power on the Special Court to pass an order
of attachment which is in the hands of transferee/s. Hence, this Court
does not have any hesitation to hold that decision of this Court in The
Madanapalle Hospitals’ case referred supra is squarely applicable to
the facts of the case.
8. Therefore, the writ petition is allowed setting aside the
G.O. Rt. No.923, Home (Passports) Department dated 22.06.2021
issued by respondent No.1 attaching the subject property.
The respondents are given liberty to invoke the provisions of the Act
1999 and seek for attachment of the subject property in accordance
with law. At the same time, the petitioners are also given liberty to
raise legal contentions opposing attachment of the subject property
including applicability of the provisions of the Act 1999 to the chit
fund transactions. No order as to costs.
As a sequel thereto, miscellaneous applications, if any, pending
in the writ petition stand closed.
______________________
B. VIJAYSEN REDDY, J
February 27, 2025.
PV
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