Kochi: The embattled promoters of scam-hit Highrich Online Shoppe Private Limited won a rare legal battle on Friday when the High Court of Kerala overturned the judgment of a special court allowing the attachment and sale of their supermarket in Thrissur.
The legal victory was gifted to the promoters, Kolatt Dasan Prathapan (43) and Sreena Prathapan (35), by Thrissur Collector V R Krishna Teja who did not act on time to confirm the provisional attachment order issued under the Banning of Unregulated Deposit Schemes (BUDS) Act, 2019.
In his judgment, High Court judge P G Ajithkumar held that the special court's decision to pardon the Collector's delay of 71 days in moving in to confirm the provisional attachment order was incorrect.
"The delay could not be condoned," the judge ruled. And therefore, the collector's petition before the special court to overlook the delay "was to be dismissed", the judgment said.
The High Court order is a setback to the state government trying to recover the money the promoters allegedly swindled from the public through illegal deposit schemes. According to the state government, the couple has illegally raised Rs 3,141 crore through money chain schemes, using the supermarket as a cover.
Cherpu police have registered cases under Sections 3 read with 21, 4 read with 22, and 5 & 6 read with 23 of the BUDS Act.
According to the BUDS Act, the competent authority or officer implementing the Act in a state has the power to issue provisional attachment orders. Once the competent authority issues the orders, the district collectors have to immediately identify the properties of those who illegally took deposits, and file an application before the designated court within 30 days to confirm the provisional order and for permission to sell the property through auction or private sale.
The collectors may take up to 60 days to file the application but then they will have to record the reasons for the delay in writing, says Section 14 (1) of the BUDS Act.
The state government had noted "inordinate delays" on the part of the district collectors in filing applications and on August 7, 2023, it sent out a circular asking the collectors to stick to the time limit set by the BUDS Act.
Despite the circular, Thrissur Collector Krishna Teja overshot the time limit.
Highrich promoters saw the time limit loophole in the special court's order and challenged it in the High Court. They not only sought the release of the properties from attachment but also sought permission to reopen the supermarket on the premises that it was necessary for protecting the interest of the customers.
Kerala's competent authority Sanjay M Kaul and Thrissur Collector Krishna Teja objected to both pleas. The High Court, however, noted that when the petition seeking confirmation of the attachment and permission to sell the properties is dismissed, the petitions filed by the promoters of Highrich seeking to remove the attachment and allow them to reopen the supermarket need consideration.
But the High Court did not take up those pleas and asked the petitioners to approach the special court for that purpose.
The High Court also made it clear that the special court order was overturned only on the grounds of time limit and there was no bar on the competent authority and the Collector to initiate fresh proceedings against Highrich.
The Union government's Directorate of Enforcement investigating the money laundering aspect of the scam said the promoters might have raised around Rs 1,500 crore from the public and returned most of the money to the early depositors and pegged the money they swindled at Rs 250 crore. To date, ED has attached or frozen assets worth Rs 260 crore.
