The Andhra Pradesh High Court on July 27 (Thursday) heard a batch of writ petitions that challenged the orders passed by the Enforcement Directorate (ED) for a provisional attachment of the same properties of the AgriGold Farm Estates Pvt. Ltd. (AGFEPL) that had been seized by AP CID under the Protection of Depositors Act, 1999.
Justice Ravi Cheemalapati posted them for further hearing on July 31, when the ED would present its arguments.
Those who questioned the validity of the ED’s order for attachment of the said properties included the Union Bank of India (UBI) and the Corporation Bank, which also challenged the attachment orders issued by the State government, a purchaser of the properties auctioned under orders by the Debt Recovery Tribunal (DRT), an association of flat owners and the agents, who contended that they had bought the properties well before the FIR was registered, and the AGFEPL itself.
Appearing on behalf of the State, Advocate-General S. Sriram argued that the CID and the State’s power to auction the properties was independent of the proceedings under the Bankruptcy Act and the Prevention of Money Laundering Act (PMLA), under which the ED had issued the attachment orders.
He insisted that there was no conflict between the respective enactments and the first right to deal with the attached properties so as to repay the depositors’ monies collected by the AGFEPL, and remaining unpaid belonged to the State.
Also, he informed the court that the State had already distributed ₹900 crore towards repayment of deposits below ₹20,000.
Further, Mr. Sriram said neither the PMLA nor the Bankruptcy Act contemplate the protection of depositors who were duped, under the Depositors Protection Act of 1999. Therefore, the creditor-banks, or the ED, could not frustrate the State’s objectives under the 1999 Act, while the accused had to separately defend themselves against the charges levelled.
The State’s power to auction the attached properties (duly subject to the scrutiny of the special court concerned) could not be curtailed by any investigating agency, as it intended to fully protect the depositors, he concluded.
The UBI and the Corporation Bank’s challenge was on the ground that they were creditors of the AGFEPL, and thus were entitled to recover monies from the company under the Recovery of Debts and Bankruptcy Act.
They maintained that neither the CID nor the ED could interfere with their right to recover monies under the decrees of the DRT.
The auction purchaser’s claim was that he was entitled to AGFEPL properties bought under auction by the DRT, and it could not be interdicted by the CID and ED.
