Unregulated Deposits Act | Provisional Attachment Can't Survive Beyond Statutory Period For Filing Confirmation Plea: Kerala High Court

The Kerala High Court has held that the provisional attachment under the Banning of Unregulated Deposit (BUDS) Act cannot continue indefinitely and the attachment won't exist beyond the statutory period within which by the Competent Authority is mandated to file a confirmation application before the Designated Court as per Section 14.Justice Bechu Kurian Thomas observed:“The failure to file an application for confirmation of the provisional attachment contemplated under Section 14 of the BUDS Act will have the effect of such an attachment itself failing to continue beyond the period stipulated therein. The statute conspicuously does not confer a power of condonation of delay as well. Therefore, as per the statutory scheme of BUDS Act and more specifically, as evident from Sections 14 and 15 of the BUDS Act, in case a provisional attachment is ordered, the Competent Authority must move the Designated Court for confirmation of the provisional attachment, and thereafter it is upon the Designated Court to either confirm, vary, or cancel the provisional attachment. If the Competent Authority fails to approach the Designated Court, the provisional attachment cannot continue indefinitely.”The petitioners before the Court were a private limited company and its Managing Director, who were conducting their cloth manufacturing unit in a property attached in a BUDS Act proceeding initiated against two other entities.After the Competent Authority provisionally attached the property that was in the petitioners' possession, they were served with a notice issued by the Village Officer wherein it was stated that the District Collector has provisionally attached the same.The petitioners challenged the notice and also sought to restraint any proceedings for recovery action against them. The petitioners claimed that the alleged attachment is based on proceedings against another individual, who had collected large amounts of money from the public. Since the petitioners had no role in the deposits taken, they contended that the attachment is not having any legal basis.The Additional Chief Secretary to the Home department filed an affidavit stating that the provisional attachment was by the Competent Authority under the BUDS Act against certain entities, which had acted as deposit takers and later absconded without repaying depositors. In the crime registered by the police, the petitioners are also arrayed as accused. It was further stated that the vide notice challenged, an attempt was made to enforce the provisional order against the accused and no revenue recovery proceedings have been initiated. Moreover, no confiscation, take over or sale of property have been carried out and any consequential action will be initiated only upon orders from the Designated Court.The respondents in the plea argued that the writ petition was not maintainable since the notice challenged is not a revenue recovery notice. However, the Court disagreed:“I am of the view that the consequence of…notice being a blot on the property mentioned therein, and since petitioners are admittedly in possession of the property referred to therein, their right to challenge the said notice, even if it is not a revenue recovery notice, cannot be curtailed. Hence, this writ petition is maintainable.”The Court further noticed that the petitioners were informed of the attachment only by the impugned notice but since they were arrayed as accused, their properties were attached vide the BUDS Act notice.The District Collector, who was directed to the identify the accused's properties, had issued instructions as mentioned in the notice challenged. Therefore, the Court opined that the notice is also in tune with the direction of the Competent Authority. Since both the attachment and Village Officer's notice were issued in exercise of powers of provisional attachment, the provisions under the BUDS Act would apply, the Court added.Next, the Court examined Section 14, which lays down that an application for confirmation of provisional attachment must state reasons and particulars, and that the same must be filed within 30 days or an extended period of 60 days. Confirmation of attachment can only be done by the Designated Court and not by the Competent Authority.Looking at the facts of the case, the Court remarked that the Competent Authority did not comply with Section 14 as no application for confirmation was filed within the stipulated time.The Court also took note of the fact that the questions as to whether the Competent Authority can issue a fresh provisional attachment and whether that will be valid in law have not been settled. Therefore, it left that question open.Thus, the Court allowed the plea and it set aside the impugned notice issued by the Village Officer.Case No: WP(C) 646 of 2025Case Title: Alkarsf Apparels Pvt. Ltd. and Anr. v. State of Kerala and Ors.Citation: 2026 LiveLaw (Ker) 260Counsel for the petitioners: M. Ramesh Chander (Sr.), K.A. Salil Narayanan,...

Unregulated Deposits Act | Provisional Attachment Can't Survive Beyond Statutory Period For Filing Confirmation Plea: Kerala High Court

K. Salma Jennath

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Unregulated Deposits Act | Provisional Attachment Can't Survive Beyond Statutory Period For Filing Confirmation Plea: Kerala High Court

K. Salma Jennath

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