1. The order in Crl.M.P. No.4093/2023 dated 15.05.2024 on the files of the Additional Sessions Court-IV, Thalassery (the Designated Court) under the Banning of Unregulated Deposit Schemes Act, 2019 [hereafter referred as ‘BUDS Act, 2019’ for short] is under challenge in this appeal filed under Section 19 of the BUDS Act, 2019, at the instance of respondent Nos.1 and 2 in the above petition. As per the order impugned, the learned Designated Court allowed Crl.M.P. No.4093/2023 filed under Section 14 of the BUDS Act, 2019 to make the provisional attachment order issued by the Competent Authority as absolute.

2. Heard the learned counsel for the appellants, the learned Public Prosecutor and the learned counsel appearing for the additional 3rd respondent. Perused the order under challenge and relevant materials available.

3. The genesis of the case would throw light on the facts that, the accused persons formed a company named Kannur Urban Nidhi Limited and collected unauthorised deposits from large number of common depositors. In order to siphon of the huge amount of money collected, they have also created another company named ATM Private Limited. The huge amount of money collected from the common depositors were misappropriated by the accused persons.

4. While assailing the impugned order, the learned counsel for the appellants argued that, as per Section 7(3) of the BUDS Act, 2019, the Competent Authority notified by the Government is empowered to provisionally attach the deposits held by the deposit taker and the money or other property acquired either in the name of the deposit taker or in the name of any other person on behalf of the deposit taker from the date of the order, in such manner as may be prescribed, but Section 7(3) does not empower the Competent Authority to attach the property, for which the deposit taker has not right.

5. It is also submitted by the learned counsel for the appellants that, as per Rule 4(2) of the Banning of Unregulated Deposit Schemes Rules, a provisional attachment shall be published in the news paper. In the instant case, no such publication has been effected. According to the learned counsel for the appellants, when a third party’s property is attached under the BUDS Act, 2019, the Designated Court cannot confirm the attachment by invoking power under Section 15 of the BUDS Act, 2019 on getting application filed under Section 14 of the BUDS Act, 2019. Therefore, the properties attached as Serial Nos.1 and 2 in the instant case are not liable to be attached under the provisions of the BUDS Act, 2019. Therefore, the confirmation of the attachment as per the order impugned is liable to be revoked and set aside.

6. The learned Public Prosecutor taken attention of this Court to paragraph Nos.12 to 16 of the order impugned to contend that, the learned Designated Court found that Serial Nos.1 and 2 properties were assets held by the deposit taker in the name of other persons i.e. the appellants herein, who are none other than the wives of Sri.Abdul Jaleel and Sri.Shoukathali, arrayed as accused in large number of cases relating to misappropriation of money in Kannur Urban Nidhi Limited. Therefore, Serial Nos.1 and 2 properties, for which confirmation of attachment was granted by the Designated Court under the BUDS Act, 2019, are properties which would come within the purview of Section 7(3) of the BUDS Act, 2019 and the attachment order is liable to be confirmed.

7. Sri.Aroon Kumar P.K, who is one among the depositors, got impleaded as the additional 3rd respondent. The learned counsel appearing for the additional 3rd respondent submitted that the findings of the Designated Court to treat Serial Nos.1 and 2 properties as the properties held by the deposit taker in the names of his relatives could be justified from the findings entered into by the learned District Judge and also from the conclusions reached by the Investigation Agency in S.C. No.141/2025 filed before the Special Court under the Prevention of Money Laundering Act, 2002 [hereinafter referred as ‘PMLA, 2002’ for short], Kozhikode, registered based on this crime and she has read out paragraph No.11(viii) to (x) to substantiate her contentions. Paragraph No.11(viii) to (x) are extracted hereunder:

                  (viii) Further it has been ascertained that funds to the tune of Rs. 60 lac was transferred from bank account number 08350200000425 of Kannur Urban Nidhi Limited to the bank account of Abdul Jaleel PM.

                  The said funds were subsequently utilized towards purchase of house at Nannammukku Village, Kanjiyur Desam, Edappal, Malappuram held in name of Smt. Amina Mohammed w/o Abdul Jaleel P M. Smt Amina Mohammed is sister of wife of Sh.Shoukathali M M. Further Shoukathali in his statement u/s 50 of PMLA, 2002 has admitted that the payment towards purchase of said house was made from the funds received from KUN. Further Sh.Shoukathali has also admitted that he has utilized the funds received from KUN and ATM towards his personal/business expenses and for renovation of house situated at Nannammukku Village, Kanjiyur Desam, Edappal, Malappuram. He has also admitted that currently he is residing at the said house.

                  (ix) During further course of investigation, it has been ascertained that 11 cent of land at Sreekrishnapuram Village, Ottappalam Taluk, Kadambazhippuram Sub district, Palakkad District was purchased in name of Jaseena K.P w/o Shoukkathali MM during the year 2021 and the payment for same was made in cash. Further Smt. Jaseena K.P in her statement recorded u/s 50 of PMLA, 2002 has admitted that the said property was purchased by her husband Shoukathali in her name and she is not aware about the source of funds of the said property. She also admitted that during the said time her husband was a Director in ATM. Further Sh. Shoukathali in his statement recorded u/s 50 of PMLA, 2002 has admitted that the said property was purchased by him in his wife's name and the payment for the said property was made in cash. Hence it is clearly established that the property 11 cent of land at Sreekrishnapuram Village, Ottappalam Taluk, Kadambazhippuram Sub district, Palakkad District held in name of Smt. Jaseena K.P w/o Shoukathali M M was acquired out of proceeds of crime and is liable to be attached under PMLA, 2002.

                  (x) During further investigation it has been ascertained that the house situated at 6 cents of land at Chalavara Village, Kayilikkadu Desam, Cherpulassery. Palakkad held in name of Smt. Jaseena M J was purchased out of funds collected in KUN. The same has been admitted by Smt. Jaseena MJ in her statement recorded u/s 50 of PMLA, 2002 wherein she stated that the said house was gifted to her by Shoukathali. Hence it is established that the said house and land situated at 6 cents of land at Chalavara Village, Kavilikkadu Desam, Cherpulassery, Palakkad are acquired out of Proceeds of Crime.

8. Even though the learned counsel appearing for the additional 3rd respondent placed the copy of the complaint and findings of the the Investigation Agency, while opposing interference in the impugned order, the same cannot be looked into by this Court, while considering this appeal, as the said documents are not part of the records of this appeal. As such this Court is not inclined to consider the same.

9. However, the question poses for consideration herein is, what are the properties liable to be provisionally attached under Section 7 of the BUDS Act, 2019 and to be confirmed under Section 15 of the BUDS Act, 2019?

10. At this juncture, it is apposite to extract Section 7(1) to (3) of the BUDS Act, 2019. The same reads as under:

                  “7. Competent Authority. — (1) The appropriate Government shall, by notification, appoint one or more officers not below the rank of Secretary to that Government, as the Competent Authority for the purposes of this Act.

                  (2) The appropriate Government may, by notification, appoint such other officer or officers as it thinks fit, to assist the Competent Authority in discharging its functions under this Act.

                  (3) Where the Competent Authority or officers appointed under sub-section (2), for the purposes of this section, has reason to believe (the reason for such belief to be recorded in writing), on the basis of such information and particulars as may be prescribed, that any deposit taker is soliciting deposits in contravention of section 3, he may, by an order in writing, provisionally attach the deposits held by the deposit taker and the money or other property acquired either in the name of the deposit taker or in the name of any other person on behalf of the deposit taker from the date of the order, in such manner as may be prescribed.”

11. On reading Section 7(3), when a Competent Authority has reason to believe (the reason for such belief to be recorded in writing), on the basis of such information and particulars as may be prescribed, that any deposit taker is soliciting deposits in contravention of section 3, he may, by an order in writing, provisionally attach the deposits held by the deposit taker and the money or other property acquired either in the name of the deposit taker or in the name of any other person on behalf of the deposit taker from the date of the order, in such manner as may be prescribed. Thus, the properties which are subject matter of provisional attachment under Section 7 and confirmation under Section 15 of the BUDS Act, 2019 are the properties acquired in the name of deposit taker or other persons on behalf of the deposit taker. Therefore, Section 7 of the BUDS Act, 2019 empowers the Competent Authority to provisionally attach not only the properties acquired in the name of the deposit taker, but also the properties acquired by the deposit taker in the names of any other persons on behalf of the deposit taker.

12. In the instant case, the learned Designated Court addressed the contentions raised by respondent Nos.1 and 2 (the appellants herein) in paragraph No.12 of the impugned order. The same read as under:

                  “12. The serious objection regarding this application is raised by R1 and R2 who entered appearance and objected the petition seeking confirmation of the attachment and sale of the property. Respondent No.2 submits that the property was purchased on 29.11.2021 even before the FIRs were registered. It is argued that the property was not purchased using the illegal proceeds of the crime of Kannur Urban Nidhi Ltd. The Public Prosecutor has produced the account details of the 2nd respondent to show that even prior to November 2021, amounts were transferred from the account of Kannur Urban Nidhi to the account of the 2nd respondent. It is further stated that respondent No.2 is the wife of Shoukathali. Shoukkathali is the main conspirator and arrayed as accused in more than 100 criminal cases relating to the misappropriation of crores of money of common public. From the account details produced, it can be concluded that the property was purchased by using the illegal proceed of the crime of Kannur Urban Nidhi Ltd. Hence, the contention of respondent No.2 is rejected.”

13. In paragraph Nos.13 to 16 of the impugned order, the learned Designated Court observed as under:

                  “13. The competent authority seeks the permission to attach and sell the property belonging to Amina Muhammed wife of Abdul Jaleel. R1's husband received Rs.60 lakhs from the account of Kannur Urban Nidhi Ltd. The defence of 1st respondent is that her husband Abdul Jaleel received Rs.60,00,000/- from Kannur Urban Nidhi Ltd and her husband Jaleel has repaid the same to Kannur Urban Nidhi Ltd through one of their family friend namely Dr.Arshad Sivaraman. R1 virtually admits the receipt of Rs.60 lakhs by her husband. According to Respondent No.1 in addition to the above said amount, an amount of Rs.60 lakhs and another amount of Rs.2,50,00,000/- is transferred to the account of Any Time Money Limited by Dr.Arshad Sivaraman. Arshad Sivaraman transferred the same at the instance of R1's husband. No documents produced by Respondent No.1 to substantiate the transfer above said amounts ie, 60 lakhs and Rs.2,50,00,000/-. Further if they have transferred the same through bank as stated in the counter, they could have easily produced the bank documents.

                  14. Respondent No.1 contends that the said amount of Rs.2,50,00,000/- was paid through Dr.Arshad Sivaraman. That was an internal arrangement between Shoukathali and Dr.Arshad Sivaraman and 1st respondent produced an agreement. The learned counsel relies upon the agreement executed between Shoukathali and Dr.Arshad Sivaraman to argue that on behalf Abdul Jaleel Rs.2.5 crore was repaid to the account of ATM Money Ltd. The learned Public Prosecutor argued that even if the same is an internal arrangement, as per the provisions of the BUDS Act, they are entitled to attach the same. The competent authority is not bound by the transaction, is the contention of the Public Prosecutor. The Public Prosecutor argued that the function of the 'Any Time Money Limited' is to act as medium for transferring money like payments of Bills, which enables them to convert black money into white money. From the agreement produced by Respondent No.1 does not in anyway support the contention of Respondent No.1. Admittedly there is documentary proof relating to the transaction of Rs.60,00,000/- from Kannur Urban Nidhi Pvt.Ltd on 12.01.2021 to the account of Abdul Jaleel, husband of the Respondent No.1. The fact that funds of the depositors were siphoned of f from the account of Kannur Urban Nidhi is evident with respect to renovation of house mentioned in Serial No.1 belonging to R1. Infact money was transferred from the account of Kannur Urban Nidhi Ltd. to the bank account of one Varun. Rs.1,06,89,935/- was transferred to the bank account of Varun who was the Contractor engaged in renovating the house of Respondent No.1. This would also show that the money belonging to the depositors were utilised for renovation and purchase of the said house belonging to R1.

                  15. Even otherwise section 16 of the BUDS Act specifically provides that when the deposit taker has transferred any property, the same can be recovered from the possession of the transferee. For the above mentioned reasons it is proved that money has been transferred from the account of the Kannur Urban Nidhi Limited for the purpose of purchasing and renovating the house of respondent No.1 as well as respondent No.1's husband who is the original owner of the house. They are under an obligation to return the same. If not the competent authority is empowered to order the attachment and sale of the said property.

                  16. I have perused the statement of Usman whose name is specifically mentioned in the agreement relied upon by respondent No.1. This statement completely shows the falsity of arguments raised by respondent No.1. In fact an eye clinic was purchased by Dr.Arshad Sivaraman and brokerage of Rs.2,50,00,000/- was transferred through the account of ATM Pvt Ltd. Therefore, the case advanced by the respondent No.1 based on the said agreement is without any bonafides. Hence, respondent No.1 has advanced a totally fallacious case. There is nothing on record to suggest that the actions of the competent authority is ex facie illegal or perverse.”

14. On reading the reasons for making the provisional attachment final, it is discernible that the 1st respondent therein, Smt.Amina Muhammed, who is the wife of Sri.Abdul Jaleel, is the owner of Serial No.1 immovable property and respondent No.2 therein, Smt.Jaseena K.P., who is the wife of Sri.Shoukathali, who got arrayed as accused in large number of crimes relating to Kannur Urban Nidhi Limited, owns the property shown as Serial No.2. It was observed by the learned Designated Court that, admittedly, there are documents to prove that Rs.60,00,000/- was obtained by Sri.Abdul Jaleel, the husband of the 1st appellant herein from Kannur Urban Nidhi Limited on 12.01.2021 and the house mentioned in Serial No.1 was renovated by using the said fund, though an amount of Rs.1,06,89,935/- was transferred in the name of one Varun, who was engaged as the contractor to renovate the house of the 1st appellant.

15. Similarly, as far as Serial No.2 property is concerned, the property was purchased in the name of the 2nd appellant by her husband Sri.Shoukathali during November, 2021 and the illegal funds thereof alleged to be siphoned by the accused persons including the husband of the 2nd appellant, even prior to purchase of the said property found to be used to purchase the said property.

16. Regarding the challenge raised by the learned counsel for the appellants that the provisional attachment was not published in a news paper, it is specifically submitted by the learned Public Prosecutor that the same was published as per the Rules. Therefore, this challenge also found against the appellants.

17. Thus, in a case where the materials available would convincingly show that a property or properties in the names of the relatives or in the names of any other persons was/were acquired on behalf of the deposit taker, the same also can be the subject matter of attachment under Section 7 of the BUDS Act, 2019.

18. In view of the above, there is no justification to hold that the learned Designated Judge went wrong in finding that Serial Nos.1 and 2 properties are liable to be provisionally attached. Thus, the impugned order does no suffer from any illegality, since the order is only allowing confirmation of the provisional attachment already made as per law and the same does not require any interference. Therefore, this appeal is devoid of any merit and the same is liable to be dismissed. Accordingly, this appeal stands dismissed.

Registry is directed to forward a copy of this judgment to the Designated Court, forthwith, for information and compliance.