Prima facie, the Competent Authority may take possession of assets attached under Sections 3 and 6.

Dream Land Ventures Private Limited challenged the State authorities’ actions in taking possession of its Bengaluru property, which it said was not liable to be taken over and had been leased to several corporate entities.

The Competent Authority maintained that the property was included in an attachment order dated 22 June 2017, later confirmed by the Special Court on 24 July 2024, and that the leases were entered into after attachment.

In the pending writ petition, the Single Judge made an ad interim order directing restoration of possession to the company. The Competent Authority appealed that order.

Whether the Competent Authority could, under the Act, take possession of immovable property attached under the Act, or whether possession could be taken only pursuant to an order of the Special Court under Section 12(7).

Whether the Single Judge’s ad interim direction to restore possession should be set aside pending determination of the parties’ competing contentions.

Section 3(4) of the Karnataka Protection of Interest of Depositors in Financial Establishments Act, 2004 provides that, upon publication of an attachment order under Section 3(2), the specified properties and assets vest in the Competent Authority pending further orders of the Special Court.

Section 6(1) and Section 6(2)(c) empower the Competent Authority to take necessary steps to obtain physical possession of assets and to require persons in possession or control of assets to hand them over.

Section 12(7) concerns the Special Court’s power to issue directions, including for realisation of attached assets and their equitable distribution among depositors; it must be considered harmoniously with Sections 3 and 6.

Rule 6 of the 2006 Rules was invoked by the appellant as prohibiting transfers of attached property.

The Court noted that the Competent Authority relied on the asserted attachment and confirmation of the property, as well as the statutory vesting and possession powers in Sections 3 and 6.

It considered that Section 12(7) addressed realisation and distribution of attached assets, whereas the Competent Authority had not yet taken steps for either purpose; the provisions therefore required harmonious consideration.

Because the Single Judge’s order was ad interim and the writ petition was listed for further consideration the following day, the appellate Court set aside the order without deciding the parties’ substantive arguments or binding the Single Judge on the merits.

The Single Judge remained free to consider all relevant issues and reach an informed decision uninfluenced by the appellate Court’s observations.

Pending applications were disposed of.