1. The order in Crl.M.P. No.1995/2025 in S.C. No.1379/2024 dated 14.08.2025 on the files of the Additional District and Sessions Court-VII, Ernakulam (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 the respondent in the above petition. As per the order impugned, after adjudicating a petition filed by the 2nd respondent herein, who is the petitioner in the above case, the Designated Court directed the competent authority to take possession of the assets mentioned in C.M.P. No.3234/2023, within one month from the date of receipt of the order.

2. Heard the learned counsel for the appellant, the learned Public Prosecutor and the learned counsel appearing for the 2nd respondent. Perused the order under challenge and relevant materials available.

3. The genesis of the case to be discernible is that, the 2nd respondent initially approached the competent authority to exercise its powers under Sections 12 and 13 of the BUDS Act, 2019. But the competent authority was not inclined to pass any order and accordingly, the 2nd respondent lodged C.M.P. No.1891/2023 as a private complaint before the Designated Court and after complying the procedure, the Designated Court took cognizance of the matter and accordingly, case as S.C. No.1379/2024 has been registered, alleging that the appellant herein committed offences under Sections 21 and 22 of the BUDS Act, 2019. While the said case has been pending before the Court, C.M.P. No.3234/2023 has been filed by the 2nd respondent before the Designated Court and on issuing notice to the respondent therein, an order was passed on 25.08.2023 by the Designated Court directing the competent authority to attach the property in terms of Section 18(c) of the BUDS Act, 2019. Thereafter, even though the competent authority is empowered to file an application within 60 days before the Designated Court, seeking confirmation of the attachment and sale of the property, invoking power under Section 15 of the BUDS Act, 2019, by the Designated Court, no action taken at the helm of the competent authority. Accordingly, again in the year 2025, the 2nd respondent filed Crl.M.P. No.1995/2025 seeking interference of the Designated Court by exercising power provided under Section 18(c) of the BUDS Act, 2019 and the impugned order has been passed in exercise of the power given to the Designated Court under Section 18(c) of the BUDS Act, 2019.

4. The learned counsel for the appellant argued that, the power of the Designated Court under Section 18(c) of the BUDS Act, 2019, is not fully independent and as per Section 13 of the BUDS Act, 2019, though the competent authority is empowered to pass provisional attachment in order to protect priority of depositors’ claim, the authority failed to pass any order, when the 2nd respondent approached the authority with prayer to do the said exercise. So, according to the learned counsel for the appellant, even though the order in C.M.P. No.3234/2023 was passed by the Designated Court, directing the competent authority to effect attachment, then the competent authority, after the attachment should have exercised powers under Section 14 of the BUDS Act, 2019. When the competent authority files an application with such particulars as may be prescribed before the Designated Court for making the provisional attachment absolute and for permission to sell the property so attached by public auction or if necessary, by private sale, the Designated Court shall issue notice to (a) the deposit taker and (b) any person whose property is attached under Section 14. According to the learned counsel for the appellant, the said procedure was not followed in this case and notice was not served upon the deposit taker (the appellant) in terms of Section 15(1)(b) of the BUDS Act, 2019. Thus, procedure violation is the trump card on which the learned counsel for the appellant sought interference in the order impugned.

5. Countering this argument, the learned counsel for the 2nd respondent narrated the case history and submitted that, initially the order of attachment was issued by the competent authority to make attachment and thereafter no steps were taken by the authority to put up an application for confirmation of the attachment and sale of the property. It is at this juncture, the present petition viz. Crl.M.P. No.1995/2025 has been filed by the 2nd respondent to take possession of the attached property and to sell the same to realize the amount due to him.

6. The learned Public Prosecutor also supported the contentions raised by the 2nd respondent.

7. While addressing the issues raised herein, Sections 12 to 15 as well as 18 of the BUDS Act, 2019 are relevant. The same are extracted hereunder:

                  “12. Priority of depositors’ claim. — Save as otherwise provided in the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002) or the Insolvency and Bankruptcy Code, 2016 (31 of 2016), any amount due to depositors from a deposit taker shall be paid in priority over all other debts and all revenues, taxes, cesses and other rates payable to the appropriate Government or the local authority.

                  13. Precedence of attachment. — (1) Save as otherwise provided in the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002) or the Insolvency and Bankruptcy Code, 2016 (31 of 2016), an order of provisional attachment passed by the Competent Authority, shall have precedence and priority, to the extent of the claims of the depositors, over any other attachment by any authority competent to attach property for repayment of any debts, revenues, taxes, cesses and other rates payable to the appropriate Government or the local authority.

                  (2) Where an order of provisional attachment has been passed by the Competent Authority—

                  (a) such attachment shall continue until an order is passed under sub-section (3) or sub-section (5) of section 15 by the Designated Court;

                  (b) all the attached money or property of the deposit taker and the persons mentioned therein shall vest in the Competent Authority and shall remain so vested till further order of the Designated Court.

                  (3) The Competent Authority shall open an account in a scheduled bank for the purpose of crediting and dealing with the money realised under this Act, which shall not be utilised except under the instructions of the Designated Court.

                  (4) The Competent Authority shall not dispose of or alienate the property or money attached, except in accordance with the order of the Designated Court under sub-section (3) or sub-section (5) of section 15.

                  (5) Notwithstanding anything contained in subsection (4), the Competent Authority may, if it thinks it expedient, order the immediate sale of perishable items or assets, and the proceeds of the sale shall be utilised in the same manner as provided for other property.

                  14. Application for confirmation of attachment and sale of property.—(1) The Competent Authority shall, within a period of thirty days, which may extend up to sixty days, for reasons to be recorded in writing, from the date of the order of provisional attachment, file an application with such particulars as may be prescribed, before the Designated Court for making the provisional attachment absolute, and for permission to sell the property so attached by public auction or, if necessary, by private sale.

                  (2) In case where the money or property has been attached on the permission granted by a Designated Court in another State or Union territory, the application for confirmation of such attachment shall be filed in that Court.

                  15. Confirmation of attachment by Designated Court. — (1) Upon receipt of an application under section 14, the Designated Court shall issue notice to—

                  (a) the deposit taker; and

                  (b) any person whose property is attached under section 14,

                  to show cause, within a period of thirty days from the date of issue of notice, as to why the order of attachment should not be made absolute and the properties so attached be sold.

                  (2) The Designated Court shall also issue notice to all other persons represented to it as having or being likely to claim any interest or title in the property, to appear on the same date as persons referred to in subsection (1) to raise objections, if they so desire, to the attachment of the property.

                  (3) The Designated Court shall, after adopting such procedure as may be prescribed, pass an order—

                  (a) making the provisional order of attachment absolute; or

                  (b) varying it by releasing a portion of the property from attachment; or

                  (c) cancelling the provisional order of attachment, and in case of an order under clause (a) or clause (b), direct the Competent Authority to sell the property so attached by public auction or, if necessary, by private sale and realise the sale proceeds.

                  (4) The Designated Court shall not, in varying or cancelling the provisional order of attachment, release any property from attachment, unless it is satisfied that—

                  (a) the deposit taker or the person referred to in sub-section (1) has interest in such property; and

                  (b) there shall remain an amount or property sufficient for repayment to the depositors of such deposit taker.

                  (5) The Designated Court shall pass such order or issue such direction as may be necessary for the equitable distribution among the depositors of the money attached or realised out of the sale.

                  (6) The Designated Court shall endeavour to complete the proceedings under this section within a period of one hundred and eighty days from the date of receipt of the application referred to in sub-section (1).

                  xxx xxx xxx

                  18. Powers of Designated Court. — (1) The Designated Court shall exercise the following powers, namely:—

                  (a) power to approve the statement of dues of the deposit taker due from various debtors;

                  (b) power to assess the value of the assets of the deposit taker and finalise the list of the depositors and their respective dues;

                  (c) power to direct the Competent Authority to take possession of any assets belonging to or in the control of the deposit taker and to sell, transfer or realise the attached assets, either by public auction or by private sale as it deems fit depending upon the nature of assets and credit the sale proceeds thereof to its bank account;

                  (d) power to approve the necessary expenditure to be incurred by the Competent Authority for taking possession and realisation of the assets of the deposit taker;

                  (e) power to pass an order for full payment to the depositors by the Competent Authority or an order for proportionate payment to the depositors in the event, the money so realised is not sufficient to meet the entire deposit liability;

                  (f) power to direct any person, who has made profit or averted loss by indulging in any transaction or activity in contravention of the provisions of this Act, to disgorge an amount equivalent to the wrongful gain made or loss averted by such contravention; and

                  (g) power to pass any other order which the Designated Court deems fit for realisation of assets of the deposit taker and for repayment of the same to the depositors of such deposit taker or on any other matter or issue incidental thereto.

                  (2) On the application of any person interested in any property attached and vested in the Competent Authority under this Act and after giving such Competent Authority an opportunity of being heard, make such order as the Designated Court considers just and reasonable for—

                  (a) providing from such of the property attached and vested in the Competent Authority as the applicant claims an interest in, such sums as may be reasonably necessary for the maintenance of the applicant and of his family, and for expenses connected with the defence of the applicant where criminal proceedings have been initiated against him in the Designated Court under this Act; or

                  (b) safeguarding, so far as may be practicable, the interest of any business affected by the attachment.

                  Explanation.—For the purposes of this section, the expression “deposit taker” includes the directors, promoters, managers or members of said establishment or any other person whose property or assets have been attached under this Act. “

8. On reading the provision of Section 12 of the BUDS Act, 2019, any amount due to depositors from a deposit taker shall be paid in priority over all other debts and all revenues, taxes, cesses and other rates payable to the appropriate Government or the local authority, save as otherwise provided in the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002) or the Insolvency and Bankruptcy Code, 2016 (31 of 2016).

9. Section 13 of the BUDS Act, 2019, provides that, attachment under the BUDS Act is having precedence and Section 13 is so titled as precedence of attachment. Thus, an order of provisional attachment passed by the Competent Authority, shall have precedence and priority, to the extent of the claims of the depositors, over any other attachment by any authority competent to attach property for repayment of any debts, revenues, taxes, cesses and other rates payable to the appropriate Government or the local authority as regards to an order of provisional attachment passed by the competent authority. Such attachment shall continue until an order is passed under sub-clause (3) or subclause (5) of Section 15 by the Designated Court in terms of Section 13(2)(a) of the BUDS Act, 2019. As per Section 13(2)(b), all the attached money or property of the deposit taker and the persons mentioned therein shall vest in the Competent Authority and shall remain so vested till further order of the Designated Court. Section 13(3) of the BUDS Act, 2019, provides that, the Competent Authority shall open an account in a scheduled bank for the purpose of crediting and dealing with the money realised under this Act, which shall not be utilised except under the instructions of the Designated Court. Section 13(4) of the BUDS Act, 2019 provides that, the Competent Authority shall not dispose of or alienate the property or money attached, except in accordance with the order of the Designated Court under sub-section (3) or sub-section (5) of section 15. Section 13(5) provides that, notwithstanding anything contained in subsection (4), the Competent Authority may, if it thinks it expedient, order the immediate sale of perishable items or assets, and the proceeds of the sale shall be utilised in the same manner as provided for other property.

10. Section 14 of the BUDS Act, 2019, mandates that, the Competent Authority shall, within a period of thirty days, which may extend up to sixty days, for reasons to be recorded in writing, from the date of the order of provisional attachment, file an application with such particulars as may be prescribed, before the Designated Court for making the provisional attachment absolute, and for permission to sell the property so attached by public auction or, if necessary, by private sale.

11. Section 15 of the BUDS Act, 2019, deals with the procedure for confirmation of the attachment by the Designated Court. Thus, upon receipt of an application under Section 14, the Designated Court shall issue notice to (a) the deposit taker and (b) any person whose property is attached under Section 14, to show cause, within a period of thirty days from the date of issue of notice, as to why the order of attachment should not be made absolute and the properties so attached be sold. Further, in the said proceedings, the Designated Court shall also issue notice to all other persons represented to it as having or being likely to claim any interest or title in the property.

12. As per Section 15(3) of the BUDS Act, 2019, the Designated Court shall, after adopting such procedure as may be prescribed, pass an order (a) making the provisional order of attachment absolute or (b) varying it by releasing a portion of the property from attachment or (c) cancelling the provisional order of attachment, and in case of an order under clause (a) or clause (b), the Designated Court can direct the Competent Authority to sell the property so attached by public auction or, if necessary, by private sale and realise the sale proceeds.

13. In the instant case, no provisional attachment order passed, within the meaning of Section 13(1) or 13(2) of the BUDS Act, 2019, by the competent authority and on noticing the reluctance on the part of the competent authority to pass such an order, the 2nd respondent filed petition before the Designated Court and the Court directed the competent authority to attach the property and the property was attached on 25.08.2023 as per the order in C.M.P. No.3234/2023. No challenge has been raised regarding the procedure adopted by the Designated Court in the matter of attachment and the impugned order would suggest the same as an order of attachment and the same is not in the form of a provisional attachment.

14. As regards to the legality of the order of attachment as per the order in C.M.P. No.3234/2023, this Court cannot dwell upon, since no challenge raised as much as the attachment ordered on 25.08.2023. Therefore, the legality of the order of attachment is not a matter of consideration before this Court.

15. Coming to the impugned order, the same has been passed in Crl.M.P. No.1995/2025, when the 2nd respondent filed an application under Section 18 of the BUDS Act, with prayer to direct the competent authority to take possession of the assets mentioned in C.M.P. No.3234/2023, within one month and to sell the same at the earliest and disburse the sale proceeds to the 2nd respondent. Such an application was considered by the Special Court and the impugned order has been passed.

16. According to the learned counsel for the appellant, while considering Crl.M.P. No.1995/2025, the Designated Court not issued show cause notice contemplated under Section 15 of the BUDS Act, 2019 with opportunity to the appellant to show cause, within a period of thirty days as to why the order of attachment should not be made absolute and the properties so attached be sold. In fact, the procedure as per Section 15 was not opted by the Designated Court in the present case and the Court directly invoked the power under Section 18(c) of the BUDS Act, 2019. The order passed by the Designated Court as could be seen from the last paragraph of the order impugned is extracted hereunder:

                  “The competent authority is directed to take possession of the asset mentioned in CMP No. 3234/2023, within one month from the date of receipt of this order and to take further steps to sell the property at the earliest and inform the court regarding the steps taken to sell the property on or before 18.09.2025.”

17. On perusal of Section 18(c) of the BUDS Act, 2019, the Designated Court should exercise the powers mentioned in Section 18(1)(a) to (g) and Section 18(c) provides that, power to direct the Competent Authority to take possession of any assets belonging to or in the control of the deposit taker and to sell, transfer or realise the attached assets, either by public auction or by private sale as it deems fit depending upon the nature of assets and credit the sale proceeds thereof to its bank account.

18. Going through the order impugned, it is discernible that, the order passed by the Designated Court, now under challenge before this Court, is directing the competent authority to take possession of the asset mentioned in C.M.P. No.3234/2023, within one month from the date of receipt of the order and make further steps to sell the property at the earliest and inform the court regarding the steps taken to sell the property on or before 18.09.2025. In fact, the order was not implemented by the competent authority because of the interim stay granted by this Court in this appeal.

19. When addressing the legality of the order impugned, another contention raised by the learned counsel for the appellant is that, even admitting that the power under Section 18 exercised by the Designated Court is independent, then also no notice was issued to the appellant, though notice has been served upon the counsel appearing for the appellant in the Sessions case and he failed to appear before the Court. In this regard, the learned counsel for the appellant relied on the observation of the Designated Court in paragraph No.4 of the order to the effect that “though notice of application was served to the Advocate for the accused, he did not appear or any objection filed”.

20. When in one main proceeding, an advocate files vakkalath for a party, for each and every applications filed thereafter, there is no necessity for the Court to issue notice to be served directly to the party/parties concerned and service of notice to the counsel, who has been legally authorized by the party by executing vakkalthnama would suffice the purpose of issuance of notice. That apart, Section 18 of the BUDS Act, 2019, does not provide any form or procedure for notice. In such event also, in order to address the objection of the otherside and to ensure hearing of the otherside, in view of principles of natural justice, the Court is obliged to issue notice to the otherside. When such a notice would be served to the advocate appearing for the appellant herein, the same would be sufficient notice to the party himself in its full vigor. Therefore, the contention raised by the learned counsel for the appellant that, notice was not served to the appellant could not be countenanced.

21. However, the fact remains is that, the impugned order was passed without getting the objection and without hearing the appellant, since the appellant failed to make use of the opportunity provided by the Court. Therefore, in the interest of justice, one more opportunity is liable to be provided to the appellant to file objection and to make his submissions regarding the prayers sought for in Crl.M.P. No.1995/2025 by the 2nd respondent, since the learned counsel for the appellant pressed for such relief and he voluntarily submitted that in order to get such an opportunity, as a bona fide person, the appellant is ready to deposit Rs.2,00,000/- in cash before the Designated Court and the amount shall be dealt with by the Designated Court, in accordance with law, after hearing both sides.

22. In the result, this appeal stands allowed and the order impugned is set aside on deposit of Rs.2,00,000/- (Rupees Two Lakh Only) as agreed by the learned counsel for the appellant, within ten days from the date of appearance of the parties before the Designated Court.

23. It is specifically ordered that, the amount of Rs.2,00,000/- voluntarily agreed to be deposited by the learned counsel for the appellant failed to be deposited within time, the order impugned shall stand confirmed and the Designated Court shall go with the proceedings to implement the order impugned, without fail. On deposit of the amount, the Designated Court (Additional District and Sessions Court-VII, Ernakulam) is directed to consider Crl.M.P. No.1995/2025 afresh, after providing an opportunity to the appellant herein to file objection, within a period of seven days from the date of deposit of the amount of Rs.2,00,000/- before the Court and hear the matter in detail and pass orders therein, within a period of two weeks thereafter.

24. The parties are directed to appear before the Designated Court at about 11.00 a.m. on 25.02.2026, without fail.

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