Sanchayita Lahkar

The High Court of Madras at Madurai, Single Bench of Justice B. Pugalendhi directed the Economic Offences Wing to expedite pending investigations and proceedings under the Tamil Nadu Protection of Interests of Depositors (TNPID) Act. The Court ordered early conclusion of investigation in a case involving over 300 depositors and directed necessary procedural compliance for trial progression in another pending matter. Stating the statutory objective of the TNPID Act, the Court reiterated that prosecuting offenders alone is insufficient and stressed the importance of ensuring that defrauded depositors recover their money.

The petition in Crl.OP(MD)No.3155 of 2024 was filed by A. Paramasivam, a victim in Crime No.2 of 2020 registered by the Economic Offences Wing (EOW), Dindigul. The petition sought a direction to the first respondent to complete the investigation and file a final report within a stipulated time. A separate petition, Crl.OP(MD)No.5962 of 2024, was filed by G. Sivakumar, a victim and de facto complainant in Crime No.3 of 2013 registered by the EOW, Madurai. This second petition sought direction for the Special Court for TNPID Act Cases, Madurai, to conclude the trial in CC.No.6 of 2016 within a specified timeframe.

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While both matters concerned different crime numbers and districts, the Court decided to address them jointly given that both fell within the scope of the TNPID Act. According to the status report presented in Crl.OP(MD)No.3155 of 2024, the case originated from allegations against M/s Udhayam Chits Private Limited and its associated entities. These companies had collected deposits from the public with the promise of high interest returns but subsequently defaulted. The EOW, Theni, currently in charge of the investigation, reported over 300 victims with total fraud estimated at Rs. 10 Crores involving 13 accused. Seizure actions included freezing of bank accounts worth Rs. 29,96,075 and identification of properties valued at Rs. 2,20,65,017. Five movable and eight immovable assets were identified pending valuation reports.

In Crl.OP(MD)No.5962 of 2024, the accused entities included PG Marketings and PGM Agro Tech Company Limited, along with directors S. Thanihaimalai, S. Tharadevi, and S. Balamurugan. The case, initially filed as Crime No.3 of 2013, resulted in a charge sheet being filed and taken on record as CC.No.6 of 2016 before the TNPID Court, Madurai. However, trial proceedings had stagnated due to the failure of the investigation agency to identify and attach properties under Section 3 of the TNPID Act. The Deputy Superintendent of Police, EOW Madurai, cited procedural delays and multiple discharge petitions filed by accused persons as obstacles. The agency reported progress in initiating attachment of properties valued at Rs. 87.9 Lakh and Rs. 2,72,000, respectively.

The Court recorded: "The object of TNPID Act is to ensure that the victims got back their money." It expressed concern that the implementation of the Act remains slow despite its enactment in 1997. "Very few people have benefitted out of this Act and got their money back." Noting the outdated procedural framework, the Court remarked, "Delay occurs in attachment of properties. Most of the victims, like the petitioners, are waiting with a hope that at one point of time, they will get their money back."

Stating the duty of the Economic Offences Wing, the Court stated, "The Economic Offences Wing is established by the Government not only to prosecute the offenders, but also to ensure that the amount cheated by the accused are appropriated and disbursed to the victims." It criticized the passive role of authorities and recorded that, "Officers of the Economic Offences Wing are under the impression that they are supposed to act / prosecute only after a case has been reported before them."

On the ineffectiveness of Competent Authorities under the Act, particularly the District Revenue Officers (DROs), the Court noted that despite designation as Special Officers under the TNPID Act, they fail to timely file applications for making ad-interim attachments absolute. "The data provided by the Economic Offences Wing itself discloses the failure of the Special Officers, namely, DROs." The Court cited a previous case (G. Ramdoss) where an application was filed with a delay of 1537 days.

Further, it noted from official data that out of Rs. 827.67 Crores worth of properties attached, only Rs. 321.45 Crores were realized through auction. Additionally, the data available publicly only covered up to 2017. Stating the growing volume of such cases, the Court suggested the appointment of a retired High Court Judge or an IAS officer as Competent Authority to oversee auctions and ensure depositor confidence.

The Court also discussed systemic inefficiencies, observing that investigating officers often lack adequate manpower and infrastructure. "They have not been provided with any vehicles...difficulties faced by the investigation agency in collecting the revenue records...guideline value from the Sub Registrar." The Court proposed minimizing summoning of officers to court hearings and using video conferencing for procedural matters.

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The Court issued detailed directions. It directed that "the investigation agency in Crl.OP(MD)No.3155/2024 is expected to conclude the investigation in Crime No.2 of 2020 as expeditiously as possible." For the second petition, the Court recorded, "the investigation agency in Crl.OP(MD)No.5962/2024 is expected to ensure that the proceedings u/s.3 of the TNPID Act is complied and the trial in CC.No.3 of 2013 attains its logical conclusion."

Addressing systemic concerns, the Court observed, "The Government shall take initiative to amend the relevant provisions under the TNPID Act enabling the Investigating Officer to file necessary application directly before the Special Courts." It stated, "The Secretary to Government, Home Department shall ensure for providing video conference facility...to preserve the time of the investigation officers." It also instructed the Public Prosecutor to issue a circular defining when it is necessary to summon investigating officers.

The Court expressed hope that "the Government would address the issue...in the right spirit" and concluded with the observation that "keeping the investigation pending without any progress would not serve the purpose."

Advocates Representing the Parties:

For the Petitioners: Mr. R. Balakrishnan, Advocate ; Mr. S. Sankarapandian, Advocate

For the Respondents: Mr. M. Sakthi Kumar, Government Advocate

Case Title: Paramasivam and Another v. The Inspector of Police and Others

Case Number: Crl.OP(MD)Nos.3155, 5962 of 2024

Bench: Justice B. Pugalendhi

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