SC upholds order on defaulting firm

The Supreme Court has upheld the interim order passed by the Tamil Nadu government in December 2012 attaching the immovable properties of the partners of Financial Establishment (Global Capital Trading Services) under the Tamil Nadu Protection of Interests of Depositors (In Financial Establishments) Act.

A bench of Justices N.V. Ramana and Prafulla C. Pant set aside a judgment of the Madurai bench of the Madras high court which had quashed the attachment order and permitted the competent authority to proceed further in accordance with law.

Allowing an appeal from the state, the bench said the statement of objects, as well as the relevant provisions of the Tamil Nadu Act, shows that its object was to ameliorate the situation of thousands of depositors from the clutches of Financial Establishment which deceives the investors by offering high rates of interest on deposits and committed deliberate fraud in repayment of the principal and interest after maturity of such deposits.

Writing the judgment, Justice Ramana said, “Respondents K.S. Palanichamy and others were conjointly running a Financial Establishment in the name of Global Capital Trading Services at Madurai, offering high rate of returns on investments in their Financial Establishment. Basing on the assurance given by the respondents, huge deposits were made by the public. It was alleged that respondent No. 1 (Mr Palanichamy) has returned back only a part of the deposited amount to the complainant and thereafter absconded and hence the attachment order was passed.”

The bench said Tamil Nadu enacted this statute to protect the interest of innocent investors.