The Banning of Unregulated Deposit Schemes Act, 2019
Administered Ministry: Ministry of Finance / Department of Financial Services
Section
Section 1 Short title, extent and commencement.
(1) This Act may be called the Banning of Unregulated Deposit Schemes Act, 2019.
(2) It extends to the whole of India *except the State of Jammu and Kashmir.
(3) It shall be deemed to have come into force on the 21st day of February, 2019
(2) It extends to the whole of India *except the State of Jammu and Kashmir.
(3) It shall be deemed to have come into force on the 21st day of February, 2019
*. Now applicable to the Union territory of Jammu and Kashmir and the Union territory of Ladakh by vide notification No. S.O. 3912 (E), dated 30th October, 2019.
Section 2 Definitions.
In this Act, unless the context otherwise requires,---
(1) "appropriate Government" means in respect of matters relating to,---
(i) the Union territory without legislature, the Central Government;
(ii) the Union territory of Puducherry, the Government of that Union territory;
(iii) the Union territory of Delhi, the Government of that Union territory; and
(iv) the State, the State Government;
(2) "company" shall have the same meaning as assigned to it in clause (20) of section 2 of the Companies Act, 2013 (18 of 2013);
(3) "Competent Authority" means an Authority appointed by the appropriate Government under section 7;
(4) "deposit" means an amount of money received by way of an advance or loan or in any other form, by any deposit taker with a promise to return whether after a specified period or otherwise, either in cash or in kind or in the form of a specified service, with or without any benefit in the form of interest, bonus, profit or in any other form, but does not include---
(a) amounts received as loan from a scheduled bank or a co-operative bank or any other banking company as defined in section 5 of the Banking Regulation Act, 1949 (10 of 1949);
(b) amounts received as loan or financial assistance from the Public Financial Institutions notified by the Central Government in consultation with the Reserve Bank of India or any non-banking financial company as defined in clause (f) of section 45-I of the Reserve Bank of India Act, 1934 (2 of 1934) and is registered with the Reserve Bank of India or any Regional Financial Institutions or insurance companies;
(c) amounts received from the appropriate Government, or any amount received from any other source whose repayment is guaranteed by the appropriate Government, or any amount received from a statutory authority constituted under an Act of Parliament or a State Legislature;
(d) amounts received from foreign Governments, foreign or international banks, multilateral financial institutions, foreign Government owned development financial institutions, foreign export credit collaborators, foreign bodies corporate, foreign citizens, foreign authorities or person resident outside India subject to the provisions of the Foreign Exchange Management Act, 1999 (42 of 1999) and the rules and regulations made thereunder;
(e) amounts received by way of contributions towards the capital by partners of any partnership firm or a limited liability partnership;
(f) amounts received by an individual by way of loan from his relatives or amounts received by any firm by way of loan from the relatives of any of its partners;
(g) amounts received as credit by a buyer from a seller on the sale of any property (whether movable or immovable);
(h) amounts received by an asset re-construction company which is registered with the Reserve Bank of India under section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002);
(i) any deposit made under section 34 or an amount accepted by a political party under section 29B of the Representation of the People Act, 1951 (43 of 1951);
(j) any periodic payment made by the members of the self-help groups operating within such ceilings as may be prescribed by the State Government or Union territory Government;
(k) any other amount collected for such purpose and within such ceilings as may be prescribed by the State Government;
(l) an amount received in the course of, or for the purpose of, business and bearing a genuine connection to such business including--
(i) payment, advance or part payment for the supply or hire of goods or provision of services and is repayable in the event the goods or services are not in fact sold, hired or otherwise provided;
(ii) advance received in connection with consideration of an immovable property under an agreement or arrangement subject to the condition that such advance is adjusted against such immovable property as specified in terms of the agreement or arrangement;
(iii) security or dealership deposited for the performance of the contract for supply of goods or provision of services; or
(iv) an advance under the long-term projects for supply of capital goods except those specified in item (ii):
Provided that if the amounts received under items (i) to (iv) become refundable, such amounts shall be deemed to be deposits on the expiry of fifteen days from the date on which they become due for refund:
Provided further that where the said amounts become refundable, due to the deposit taker not obtaining necessary permission or approval under the law for the time being in force, wherever required, to deal in the goods or properties or services for which money is taken, such amounts shall be deemed to be deposits.
Explanation.---For the purposes of this clause,---
(i) in respect of a company, the expression "deposit" shall have the same meaning as assigned to it under the Companies Act, 2013 (18 of 2013);
(ii) in respect of a non-banking financial company registered under the Reserve Bank of India Act, 1934 (2 of 1934), the expression "deposit" shall have the same meaning as assigned to it in clause (bb) of section 45-I of the said Act;
(iii) the expressions "partner" and "firm" shall have the meanings respectively assigned to them under the Indian Partnership Act, 1932 (9 of 1932);
(iv) the expression "partner" in respect of a limited liability partnership shall have the same meaning as assigned to it in clause (q) of sub-section (1) of section 2 of the Limited Liability Partnership Act, 2008 (6 of 2009);
(v) the expression "relative" shall have the same meaning as assigned to it in the Companies Act, 2013 (18 of 2013);
(5) "depositor" means any person who makes a deposit under this Act;
(6) "deposit taker" means---
(i) any individual or group of individuals;
(ii) a proprietorship concern;
(iii) a partnership firm (whether registered or not);
(iv) a limited liability partnership registered under the Limited Liability Partnership Act, 2008 (6 of 2009);
(v) a company;
(vi) an association of persons;
(vii) a trust (being a private trust governed under the provisions of the Indian Trusts Act, 1882 (2 of 1882) or a public trust, whether registered or not);
(viii) a co-operative society or a multi-State co-operative society; or
(ix) any other arrangement of whatsoever nature, receiving or soliciting deposits, but does not include---
(i) a Corporation incorporated under an Act of Parliament or a State Legislature;
(ii) a banking company, a corresponding new bank, the State Bank of India, a subsidiary bank, a regional rural bank, a co-operative bank or a multi-State co-operative bank as defined in the Banking Regulation Act,1949 (10 of 1949);
(7) "Designated Court" means a Designated Court constituted by the appropriate Government under section 8;
(8) "insurer" shall have the same meaning as assigned to it in clause (9) of section 2 of the Insurance Act, 1938 (4 of 1938);
(9) "notification" means a notification published in the Official Gazette and the expression "notify" shall be construed accordingly;
(10) "person" includes--
(i) an individual;
(ii) a Hindu Undivided Family;
(iii) a company;
(iv) a trust;
(v) a partnership firm;
(vi) a limited liability partnership;
(vii) an association of persons;
(viii) a co-operative society registered under any law for the time being in force relating to cooperative societies; or
(ix) every artificial juridical person, not falling within any of the preceding sub-clauses;
(11) "prescribed" means prescribed by the rules made by the Central Government or, as the case may be, the State Government under this Act;
(12) "property" means any property or assets of every description, whether corporeal or incorporeal, movable or immovable, tangible or intangible, and includes deeds and instruments evidencing title to, or interest in, such property or assets, wherever located;
(13) "public financial institution" shall have the same meaning as assigned to it in clause (72) of section 2 of the Companies Act, 2013 (18 of 2013);
(14) "Regulated Deposit Scheme" means the Schemes specified under column (3) of the First Schedule;
(15) "Regulator" means the Regulator specified in column (2) of the First Schedule;
(16) "Schedule" means the Schedule appended to this Act;
(17) "Unregulated Deposit Scheme means a Scheme or an arrangement under which deposits are accepted or solicited by any deposit taker by way of business and which is not a Regulated Deposit Scheme, as specified under column (3) of the First Schedule.
STATE AMENDMENT
Union Territory of Jammu and Kashmir
Section 2.---In clause (1), in sub-clause (iii), omit "and" and after sub-clause (iii) as so omitted, insert--
"(iiia) the Union territory of Jammu and Kashmir, the Government of that Union territory; and".
[Vide Union Territory of Jammu and Kashmir Reorganisation (Adaptation of Central Laws) Second Order, 2020, Notification No. S.O. 3465(E), dated (5-10-2020).]
(1) "appropriate Government" means in respect of matters relating to,---
(i) the Union territory without legislature, the Central Government;
(ii) the Union territory of Puducherry, the Government of that Union territory;
(iii) the Union territory of Delhi, the Government of that Union territory; and
(iv) the State, the State Government;
(2) "company" shall have the same meaning as assigned to it in clause (20) of section 2 of the Companies Act, 2013 (18 of 2013);
(3) "Competent Authority" means an Authority appointed by the appropriate Government under section 7;
(4) "deposit" means an amount of money received by way of an advance or loan or in any other form, by any deposit taker with a promise to return whether after a specified period or otherwise, either in cash or in kind or in the form of a specified service, with or without any benefit in the form of interest, bonus, profit or in any other form, but does not include---
(a) amounts received as loan from a scheduled bank or a co-operative bank or any other banking company as defined in section 5 of the Banking Regulation Act, 1949 (10 of 1949);
(b) amounts received as loan or financial assistance from the Public Financial Institutions notified by the Central Government in consultation with the Reserve Bank of India or any non-banking financial company as defined in clause (f) of section 45-I of the Reserve Bank of India Act, 1934 (2 of 1934) and is registered with the Reserve Bank of India or any Regional Financial Institutions or insurance companies;
(c) amounts received from the appropriate Government, or any amount received from any other source whose repayment is guaranteed by the appropriate Government, or any amount received from a statutory authority constituted under an Act of Parliament or a State Legislature;
(d) amounts received from foreign Governments, foreign or international banks, multilateral financial institutions, foreign Government owned development financial institutions, foreign export credit collaborators, foreign bodies corporate, foreign citizens, foreign authorities or person resident outside India subject to the provisions of the Foreign Exchange Management Act, 1999 (42 of 1999) and the rules and regulations made thereunder;
(e) amounts received by way of contributions towards the capital by partners of any partnership firm or a limited liability partnership;
(f) amounts received by an individual by way of loan from his relatives or amounts received by any firm by way of loan from the relatives of any of its partners;
(g) amounts received as credit by a buyer from a seller on the sale of any property (whether movable or immovable);
(h) amounts received by an asset re-construction company which is registered with the Reserve Bank of India under section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002);
(i) any deposit made under section 34 or an amount accepted by a political party under section 29B of the Representation of the People Act, 1951 (43 of 1951);
(j) any periodic payment made by the members of the self-help groups operating within such ceilings as may be prescribed by the State Government or Union territory Government;
(k) any other amount collected for such purpose and within such ceilings as may be prescribed by the State Government;
(l) an amount received in the course of, or for the purpose of, business and bearing a genuine connection to such business including--
(i) payment, advance or part payment for the supply or hire of goods or provision of services and is repayable in the event the goods or services are not in fact sold, hired or otherwise provided;
(ii) advance received in connection with consideration of an immovable property under an agreement or arrangement subject to the condition that such advance is adjusted against such immovable property as specified in terms of the agreement or arrangement;
(iii) security or dealership deposited for the performance of the contract for supply of goods or provision of services; or
(iv) an advance under the long-term projects for supply of capital goods except those specified in item (ii):
Provided that if the amounts received under items (i) to (iv) become refundable, such amounts shall be deemed to be deposits on the expiry of fifteen days from the date on which they become due for refund:
Provided further that where the said amounts become refundable, due to the deposit taker not obtaining necessary permission or approval under the law for the time being in force, wherever required, to deal in the goods or properties or services for which money is taken, such amounts shall be deemed to be deposits.
Explanation.---For the purposes of this clause,---
(i) in respect of a company, the expression "deposit" shall have the same meaning as assigned to it under the Companies Act, 2013 (18 of 2013);
(ii) in respect of a non-banking financial company registered under the Reserve Bank of India Act, 1934 (2 of 1934), the expression "deposit" shall have the same meaning as assigned to it in clause (bb) of section 45-I of the said Act;
(iii) the expressions "partner" and "firm" shall have the meanings respectively assigned to them under the Indian Partnership Act, 1932 (9 of 1932);
(iv) the expression "partner" in respect of a limited liability partnership shall have the same meaning as assigned to it in clause (q) of sub-section (1) of section 2 of the Limited Liability Partnership Act, 2008 (6 of 2009);
(v) the expression "relative" shall have the same meaning as assigned to it in the Companies Act, 2013 (18 of 2013);
(5) "depositor" means any person who makes a deposit under this Act;
(6) "deposit taker" means---
(i) any individual or group of individuals;
(ii) a proprietorship concern;
(iii) a partnership firm (whether registered or not);
(iv) a limited liability partnership registered under the Limited Liability Partnership Act, 2008 (6 of 2009);
(v) a company;
(vi) an association of persons;
(vii) a trust (being a private trust governed under the provisions of the Indian Trusts Act, 1882 (2 of 1882) or a public trust, whether registered or not);
(viii) a co-operative society or a multi-State co-operative society; or
(ix) any other arrangement of whatsoever nature, receiving or soliciting deposits, but does not include---
(i) a Corporation incorporated under an Act of Parliament or a State Legislature;
(ii) a banking company, a corresponding new bank, the State Bank of India, a subsidiary bank, a regional rural bank, a co-operative bank or a multi-State co-operative bank as defined in the Banking Regulation Act,1949 (10 of 1949);
(7) "Designated Court" means a Designated Court constituted by the appropriate Government under section 8;
(8) "insurer" shall have the same meaning as assigned to it in clause (9) of section 2 of the Insurance Act, 1938 (4 of 1938);
(9) "notification" means a notification published in the Official Gazette and the expression "notify" shall be construed accordingly;
(10) "person" includes--
(i) an individual;
(ii) a Hindu Undivided Family;
(iii) a company;
(iv) a trust;
(v) a partnership firm;
(vi) a limited liability partnership;
(vii) an association of persons;
(viii) a co-operative society registered under any law for the time being in force relating to cooperative societies; or
(ix) every artificial juridical person, not falling within any of the preceding sub-clauses;
(11) "prescribed" means prescribed by the rules made by the Central Government or, as the case may be, the State Government under this Act;
(12) "property" means any property or assets of every description, whether corporeal or incorporeal, movable or immovable, tangible or intangible, and includes deeds and instruments evidencing title to, or interest in, such property or assets, wherever located;
(13) "public financial institution" shall have the same meaning as assigned to it in clause (72) of section 2 of the Companies Act, 2013 (18 of 2013);
(14) "Regulated Deposit Scheme" means the Schemes specified under column (3) of the First Schedule;
(15) "Regulator" means the Regulator specified in column (2) of the First Schedule;
(16) "Schedule" means the Schedule appended to this Act;
(17) "Unregulated Deposit Scheme means a Scheme or an arrangement under which deposits are accepted or solicited by any deposit taker by way of business and which is not a Regulated Deposit Scheme, as specified under column (3) of the First Schedule.
Union Territory of Jammu and Kashmir
Section 2.---In clause (1), in sub-clause (iii), omit "and" and after sub-clause (iii) as so omitted, insert--
"(iiia) the Union territory of Jammu and Kashmir, the Government of that Union territory; and".
[Vide Union Territory of Jammu and Kashmir Reorganisation (Adaptation of Central Laws) Second Order, 2020, Notification No. S.O. 3465(E), dated (5-10-2020).]
Section 3 Banning of Unregulated Deposit Schemes.
On and from the date of commencement of this Act,—
(a) the Unregulated Deposit Schemes shall be banned; and
(b) no deposit taker shall, directly or indirectly, promote, operate, issue any advertisement soliciting participation or enrolment in or accept deposits in pursuance of an Unregulated Deposit Scheme.
(a) the Unregulated Deposit Schemes shall be banned; and
(b) no deposit taker shall, directly or indirectly, promote, operate, issue any advertisement soliciting participation or enrolment in or accept deposits in pursuance of an Unregulated Deposit Scheme.
Section 4 Fraudulent default in Regulated Deposit Schemes.
No deposit taker, while accepting deposits pursuant to a Regulated Deposit Scheme, shall commit any fraudulent default in the repayment or return of deposit on maturity or in rendering any specified service promised against such deposit.
Section 5 Wrongful inducement in relation to Unregulated Deposit Schemes.
No person by whatever name called shall knowingly make any statement, promise or forecast which is false, deceptive or misleading in material facts or deliberately conceal any material facts, to induce another person to invest in, or become a member or participant of any Unregulated Deposit Scheme.
Section 6 Certain scheme to be Unregulated Deposit Scheme.
A prize chit or a money circulation scheme banned under the provisions of the Prize Chits and Money Circulation Scheme (Banning) Act, 1978 (43 of 1978) shall be deemed to be an Unregulated Deposit Scheme under this Act.
Section 7 Competent Authority. 1 docs
(1) The appropriate Government shall, by notification, appoint one or more officers not below the rank of Secretary to that Government, as the Competent Authority for the purposes of this Act.
(2) The appropriate Government may, by notification, appoint such other officer or officers as it thinks fit, to assist the Competent Authority in discharging its functions under this Act.
(3) Where the Competent Authority or officers appointed under sub-section (2), for the purposes of this section, has reason to believe (the reason for such belief to be recorded in writing), on the basis of such information and particulars as may be prescribed, that any deposit taker is soliciting deposits in contravention of section 3, he may, by an order in writing, provisionally attach the deposits held by the deposit taker and the money or other property acquired either in the name of the deposit taker or in the name of any other person on behalf of the deposit taker from the date of the order, in such manner as may be prescribed.
(4) The Competent Authority shall, for the purposes of sub-section (3), have the same powers as vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908) while conducting investigation or inquiry in respect of the following matters, namely:---
(a) discovery and inspection;
(b) enforcing the attendance of any person, including any officer of a reporting entity and examining him on oath;
(c) compelling the production of records;
(d) receiving evidence on affidavits;
(e) issuing commissions for examination of witnesses and documents; and
(f) any other matter which may be prescribed.
(5) The Competent Authority shall have power to summon any person whose attendance he considers necessary whether to give evidence or to produce any records during the course of any investigation or proceeding under this section.
(6) All the persons so summoned shall be bound to attend in person or through authorised agents, as such officer may direct, and shall be bound to state the truth upon any subject respecting which they are examined or make statements, and produce such documents as may be required.
(7) Every proceeding under sub-sections (4) and (5) shall be deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the Indian Penal Code (45 of 1860).
(8) Subject to any rules made in this behalf by the Central Government, any officer referred to in sub-section (2) may impound and retain in his custody for such period, as he thinks fit, any records produced before him in any proceedings under this Act:
Provided that the officer or officers referred to in sub-section (2) shall not---
(a) impound any records without recording his reasons for so doing; or
(b) retain in his custody any such records for a period exceeding three months, without obtaining the previous approval of the Competent Authority.
(2) The appropriate Government may, by notification, appoint such other officer or officers as it thinks fit, to assist the Competent Authority in discharging its functions under this Act.
(3) Where the Competent Authority or officers appointed under sub-section (2), for the purposes of this section, has reason to believe (the reason for such belief to be recorded in writing), on the basis of such information and particulars as may be prescribed, that any deposit taker is soliciting deposits in contravention of section 3, he may, by an order in writing, provisionally attach the deposits held by the deposit taker and the money or other property acquired either in the name of the deposit taker or in the name of any other person on behalf of the deposit taker from the date of the order, in such manner as may be prescribed.
(4) The Competent Authority shall, for the purposes of sub-section (3), have the same powers as vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908) while conducting investigation or inquiry in respect of the following matters, namely:---
(a) discovery and inspection;
(b) enforcing the attendance of any person, including any officer of a reporting entity and examining him on oath;
(c) compelling the production of records;
(d) receiving evidence on affidavits;
(e) issuing commissions for examination of witnesses and documents; and
(f) any other matter which may be prescribed.
(5) The Competent Authority shall have power to summon any person whose attendance he considers necessary whether to give evidence or to produce any records during the course of any investigation or proceeding under this section.
(6) All the persons so summoned shall be bound to attend in person or through authorised agents, as such officer may direct, and shall be bound to state the truth upon any subject respecting which they are examined or make statements, and produce such documents as may be required.
(7) Every proceeding under sub-sections (4) and (5) shall be deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the Indian Penal Code (45 of 1860).
(8) Subject to any rules made in this behalf by the Central Government, any officer referred to in sub-section (2) may impound and retain in his custody for such period, as he thinks fit, any records produced before him in any proceedings under this Act:
Provided that the officer or officers referred to in sub-section (2) shall not---
(a) impound any records without recording his reasons for so doing; or
(b) retain in his custody any such records for a period exceeding three months, without obtaining the previous approval of the Competent Authority.
Section 8 Designated Court. 1 docs
(1) The appropriate Government shall, with the concurrence of the Chief Justice of the concerned High Court, by notification, constitute one or more Courts known as the Designated Courts for such area or areas or such case or cases as may be specified in such notification, which shall be presided over by a Judge not below the rank of a District and Sessions Judge or Additional District and Sessions Judge.
(2) No Court other than the Designated Court shall have jurisdiction in respect of any matter to which the provisions of this Act apply.
(3) When trying an offence under this Act, the Designated Court may also try an offence, other than an offence under this Act, with which the accused may, under the Code of Criminal Procedure, 1973 (2 of 1974), be charged at the same trial.
(2) No Court other than the Designated Court shall have jurisdiction in respect of any matter to which the provisions of this Act apply.
(3) When trying an offence under this Act, the Designated Court may also try an offence, other than an offence under this Act, with which the accused may, under the Code of Criminal Procedure, 1973 (2 of 1974), be charged at the same trial.
Section 9 Central database.
(1) The Central Government may designate an authority, whether existing or to be constituted, which shall create, maintain and operate an online database for information on deposit takers operating in India.
(2) The authority designated under sub-section (1) may require any Regulator or the Competent Authority to share such information on deposit takers, as may be prescribed.
(2) The authority designated under sub-section (1) may require any Regulator or the Competent Authority to share such information on deposit takers, as may be prescribed.
Section 10 Information of business by deposit taker.
(1) Every deposit taker which commences or carries on its business as such on or after the commencement of this Act shall intimate the authority referred to in sub-section (1) of section 9 about its business in such form and manner and within such time, as may be prescribed.
(2) The Competent Authority may, if it has reason to believe that the deposits are being solicited or accepted pursuant to an Unregulated Deposit Scheme, direct any deposit taker to furnish such statements, information or particulars, as it considers necessary, relating to or connected with the deposits received by such deposit taker.
Explanation.---For the removal of doubts, it is hereby clarified that---
(a) the requirement of intimation under sub-section (1) is applicable to deposit takers accepting or soliciting deposits as defined in clause (4) of section 2; and
(b) the requirement of intimation under sub-section (1) applies to a company, if the company accepts the deposits under Chapter V of the Companies Act, 2013 (18 of 2013).
(2) The Competent Authority may, if it has reason to believe that the deposits are being solicited or accepted pursuant to an Unregulated Deposit Scheme, direct any deposit taker to furnish such statements, information or particulars, as it considers necessary, relating to or connected with the deposits received by such deposit taker.
Explanation.---For the removal of doubts, it is hereby clarified that---
(a) the requirement of intimation under sub-section (1) is applicable to deposit takers accepting or soliciting deposits as defined in clause (4) of section 2; and
(b) the requirement of intimation under sub-section (1) applies to a company, if the company accepts the deposits under Chapter V of the Companies Act, 2013 (18 of 2013).
Section 11 Information to be shared.
(1) The Competent Authority shall share all information received under section 29 with the Central Bureau of Investigation and with the authority which may be designated by the Central Government under section 9.
(2) The appropriate Government, any Regulator, income-tax authorities or any other investigation agency, having any information or documents in respect of the offence investigated under this Act by the police or the Central Bureau of Investigation, shall share all such information or documents with the police or the Central Bureau of Investigation.
(3) Where the principal officer of any banking company, a corresponding new bank, the State Bank of India, a subsidiary bank, a regional rural bank, a co-operative bank or a multi-State co-operative bank has reason to believe that any client is a deposit taker and is acting in contravention to the provisions of this Act, he shall forthwith inform the same to the Competent Authority.
(2) The appropriate Government, any Regulator, income-tax authorities or any other investigation agency, having any information or documents in respect of the offence investigated under this Act by the police or the Central Bureau of Investigation, shall share all such information or documents with the police or the Central Bureau of Investigation.
(3) Where the principal officer of any banking company, a corresponding new bank, the State Bank of India, a subsidiary bank, a regional rural bank, a co-operative bank or a multi-State co-operative bank has reason to believe that any client is a deposit taker and is acting in contravention to the provisions of this Act, he shall forthwith inform the same to the Competent Authority.
Section 12 Priority of depositors' claim.
Save as otherwise provided in the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002) or the Insolvency and Bankruptcy Code, 2016 (31 of 2016), any amount due to depositors from a deposit taker shall be paid in priority over all other debts and all revenues, taxes, cesses and other rates payable to the appropriate Government or the local authority.
Section 13 Precedence of attachment.
(1) Save as otherwise provided in the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002) or the Insolvency and Bankruptcy Code, 2016 (31 of 2016), an order of provisional attachment passed by the Competent Authority, shall have precedence and priority, to the extent of the claims of the depositors, over any other attachment by any authority competent to attach property for repayment of any debts, revenues, taxes, cesses and other rates payable to the appropriate Government or the local authority.
(2) Where an order of provisional attachment has been passed by the Competent Authority—
(a) such attachment shall continue until an order is passed under sub-section (3) or sub-section (5) of section 15 by the Designated Court;
(b) all the attached money or property of the deposit taker and the persons mentioned therein shall vest in the Competent Authority and shall remain so vested till further order of the Designated Court.
(3) The Competent Authority shall open an account in a scheduled bank for the purpose of crediting and dealing with the money realised under this Act, which shall not be utilised except under the instructions of the Designated Court.
(4) The Competent Authority shall not dispose of or alienate the property or money attached, except in accordance with the order of the Designated Court under sub-section (3) or sub-section (5) of section 15.
(5) Notwithstanding anything contained in sub-section (4), the Competent Authority may, if it thinks it expedient, order the immediate sale of perishable items or assets, and the proceeds of the sale shall be utilised in the same manner as provided for other property.
(2) Where an order of provisional attachment has been passed by the Competent Authority—
(a) such attachment shall continue until an order is passed under sub-section (3) or sub-section (5) of section 15 by the Designated Court;
(b) all the attached money or property of the deposit taker and the persons mentioned therein shall vest in the Competent Authority and shall remain so vested till further order of the Designated Court.
(3) The Competent Authority shall open an account in a scheduled bank for the purpose of crediting and dealing with the money realised under this Act, which shall not be utilised except under the instructions of the Designated Court.
(4) The Competent Authority shall not dispose of or alienate the property or money attached, except in accordance with the order of the Designated Court under sub-section (3) or sub-section (5) of section 15.
(5) Notwithstanding anything contained in sub-section (4), the Competent Authority may, if it thinks it expedient, order the immediate sale of perishable items or assets, and the proceeds of the sale shall be utilised in the same manner as provided for other property.
Section 14 Application for confirmation of attachment and sale of property.
(1) The Competent Authority shall, within a period of thirty days, which may extend up to sixty days, for reasons to be recorded in writing, from the date of the order of provisional attachment, file an application with such particulars as may be prescribed, before the Designated Court for making the provisional attachment absolute, and for permission to sell the property so attached by public auction or, if necessary, by private sale.
(2) In case where the money or property has been attached on the permission granted by a Designated Court in another State or Union territory, the application for confirmation of such attachment shall be filed in that Court.
(2) In case where the money or property has been attached on the permission granted by a Designated Court in another State or Union territory, the application for confirmation of such attachment shall be filed in that Court.
Section 15 Confirmation of attachment by Designated Court.
(1) Upon receipt of an application under section 14, the Designated Court shall issue notice to---
(a) the deposit taker; and
(b) any person whose property is attached under section 14,
to show cause, within a period of thirty days from the date of issue of notice, as to why the order of attachment should not be made absolute and the properties so attached be sold.
(2) The Designated Court shall also issue notice to all other persons represented to it as having or being likely to claim any interest or title in the property, to appear on the same date as persons referred to in sub-section (1) to raise objections, if they so desire, to the attachment of the property.
(3) The Designated Court shall, after adopting such procedure as may be prescribed, pass an order
(a) making the provisional order of attachment absolute; or
(b) varying it by releasing a portion of the property from attachment; or
(c) cancelling the provisional order of attachment, and in case of an order under clause (a) or clause (b), direct the Competent Authority to sell the property so attached by public auction or, if necessary, by private sale and realise the sale proceeds.
(4) The Designated Court shall not, in varying or cancelling the provisional order of attachment, release any property from attachment, unless it is satisfied that
(a) the deposit taker or the person referred to in sub-section (1) has interest in such property; and
(b) there shall remain an amount or property sufficient for repayment to the depositors of such deposit taker.
(5) The Designated Court shall pass such order or issue such direction as may be necessary for the equitable distribution among the depositors of the money attached or realised out of the sale.
(6) The Designated Court shall endeavour to complete the proceedings under this section within a period of one hundred and eighty days from the date of receipt of the application referred to in sub-section (1).
(a) the deposit taker; and
(b) any person whose property is attached under section 14,
to show cause, within a period of thirty days from the date of issue of notice, as to why the order of attachment should not be made absolute and the properties so attached be sold.
(2) The Designated Court shall also issue notice to all other persons represented to it as having or being likely to claim any interest or title in the property, to appear on the same date as persons referred to in sub-section (1) to raise objections, if they so desire, to the attachment of the property.
(3) The Designated Court shall, after adopting such procedure as may be prescribed, pass an order
(a) making the provisional order of attachment absolute; or
(b) varying it by releasing a portion of the property from attachment; or
(c) cancelling the provisional order of attachment, and in case of an order under clause (a) or clause (b), direct the Competent Authority to sell the property so attached by public auction or, if necessary, by private sale and realise the sale proceeds.
(4) The Designated Court shall not, in varying or cancelling the provisional order of attachment, release any property from attachment, unless it is satisfied that
(a) the deposit taker or the person referred to in sub-section (1) has interest in such property; and
(b) there shall remain an amount or property sufficient for repayment to the depositors of such deposit taker.
(5) The Designated Court shall pass such order or issue such direction as may be necessary for the equitable distribution among the depositors of the money attached or realised out of the sale.
(6) The Designated Court shall endeavour to complete the proceedings under this section within a period of one hundred and eighty days from the date of receipt of the application referred to in sub-section (1).
Section 16 Attachment of property of mala fide transferees.
(1) Where the Designated Court is satisfied that there is a reasonable cause for believing that the deposit taker has transferred any property otherwise than in good faith and not for commensurate consideration, it may, by notice, require any transferee of such property, whether or not he received the property directly from the said deposit taker, to appear on a date to be specified in the notice and show cause why so much of the transferee’s property as is equivalent to the proper value of the property transferred should not be attached.
(2) Where the said transferee does not appear and show cause on the specified date or where the Designated Court is satisfied that the transfer of the property to the said transferee was not a bona fide transfer and not for commensurate consideration, it shall order the attachment of so much of the said transferee’s property as in its opinion is equivalent to the proper value of the property transferred.
(2) Where the said transferee does not appear and show cause on the specified date or where the Designated Court is satisfied that the transfer of the property to the said transferee was not a bona fide transfer and not for commensurate consideration, it shall order the attachment of so much of the said transferee’s property as in its opinion is equivalent to the proper value of the property transferred.
Section 17 Payment in lieu of attachment.
(1) Any deposit taker or a person referred to in sub-section (1) of section 15, or transferee referred to in section 16 whose property is about to be attached or has been provisionally attached under this Act, may, at any time before the confirmation of attachment, apply to the Designated Court for permission to deposit the fair value of the property in lieu of attachment.
(2) While allowing the deposit taker or person or transferee referred to in sub-section (1) to make the deposit under sub-section (1), the Designated Court may order such deposit taker or person or transferee to pay any sum towards costs as may be applicable.
(2) While allowing the deposit taker or person or transferee referred to in sub-section (1) to make the deposit under sub-section (1), the Designated Court may order such deposit taker or person or transferee to pay any sum towards costs as may be applicable.
Section 18 Powers of Designated Court.
(1) The Designated Court shall exercise the following powers, namely:—
(a) power to approve the statement of dues of the deposit taker due from various debtors;
(b) power to assess the value of the assets of the deposit taker and finalise the list of the depositors and their respective dues;
(c) power to direct the Competent Authority to take possession of any assets belonging to or in the control of the deposit taker and to sell, transfer or realise the attached assets, either by public auction or by private sale as it deems fit depending upon the nature of assets and credit the sale proceeds thereof to its bank account;
(d) power to approve the necessary expenditure to be incurred by the Competent Authority for taking possession and realisation of the assets of the deposit taker;
(e) power to pass an order for full payment to the depositors by the Competent Authority or an order for proportionate payment to the depositors in the event, the money so realised is not sufficient to meet the entire deposit liability;
(f) power to direct any person, who has made profit or averted loss by indulging in any transaction or activity in contravention of the provisions of this Act, to disgorge an amount equivalent to the wrongful gain made or loss averted by such contravention; and
(g) power to pass any other order which the Designated Court deems fit for realisation of assets of the deposit taker and for repayment of the same to the depositors of such deposit taker or on any other matter or issue incidental thereto.
(2) On the application of any person interested in any property attached and vested in the Competent Authority under this Act and after giving such Competent Authority an opportunity of being heard, make such order as the Designated Court considers just and reasonable for—
(a) providing from such of the property attached and vested in the Competent Authority as the applicant claims an interest in, such sums as may be reasonably necessary for the maintenance of the applicant and of his family, and for expenses connected with the defence of the applicant where criminal proceedings have been initiated against him in the Designated Court under this Act; or
(b) safeguarding, so far as may be practicable, the interest of any business affected by the attachment.
Explanation.—For the purposes of this section, the expression “deposit taker” includes the directors, promoters, managers or members of said establishment or any other person whose property or assets have been attached under this Act.
(a) power to approve the statement of dues of the deposit taker due from various debtors;
(b) power to assess the value of the assets of the deposit taker and finalise the list of the depositors and their respective dues;
(c) power to direct the Competent Authority to take possession of any assets belonging to or in the control of the deposit taker and to sell, transfer or realise the attached assets, either by public auction or by private sale as it deems fit depending upon the nature of assets and credit the sale proceeds thereof to its bank account;
(d) power to approve the necessary expenditure to be incurred by the Competent Authority for taking possession and realisation of the assets of the deposit taker;
(e) power to pass an order for full payment to the depositors by the Competent Authority or an order for proportionate payment to the depositors in the event, the money so realised is not sufficient to meet the entire deposit liability;
(f) power to direct any person, who has made profit or averted loss by indulging in any transaction or activity in contravention of the provisions of this Act, to disgorge an amount equivalent to the wrongful gain made or loss averted by such contravention; and
(g) power to pass any other order which the Designated Court deems fit for realisation of assets of the deposit taker and for repayment of the same to the depositors of such deposit taker or on any other matter or issue incidental thereto.
(2) On the application of any person interested in any property attached and vested in the Competent Authority under this Act and after giving such Competent Authority an opportunity of being heard, make such order as the Designated Court considers just and reasonable for—
(a) providing from such of the property attached and vested in the Competent Authority as the applicant claims an interest in, such sums as may be reasonably necessary for the maintenance of the applicant and of his family, and for expenses connected with the defence of the applicant where criminal proceedings have been initiated against him in the Designated Court under this Act; or
(b) safeguarding, so far as may be practicable, the interest of any business affected by the attachment.
Explanation.—For the purposes of this section, the expression “deposit taker” includes the directors, promoters, managers or members of said establishment or any other person whose property or assets have been attached under this Act.
Section 19 Appeal to High Court.
Any person including the Competent Authority, if aggrieved by any final order of the Designated Court under this Chapter, may appeal to the High Court, within a period of sixty days from the date of such order:
Provided that the High Court may entertain the appeal after the expiry of the said period of sixty days, if it is satisfied that the appellant was prevented by sufficient cause from preferring the appeal in time.
Explanation.—The expression "High Court" means the High Court of a State or Union territory where the Designated Court is situated.
Provided that the High Court may entertain the appeal after the expiry of the said period of sixty days, if it is satisfied that the appellant was prevented by sufficient cause from preferring the appeal in time.
Explanation.—The expression "High Court" means the High Court of a State or Union territory where the Designated Court is situated.
Section 20 Power of Supreme Court to transfer cases.
(1) Whenever it is made to appear to the Supreme Court that there is a default in any deposit scheme or deposit schemes of the nature referred to in section 30, the Supreme Court may, by an order, direct that any particular case be transferred from one Designated Court to another Designated Court.
(2) The Supreme Court may act under this section only on an application filed by the Competent Authority or any interested party, and every such application shall be supported by an affidavit.
(3) Where an application for the exercise of the powers conferred by this section is dismissed, the Supreme Court may, if it is of opinion that the application was frivolous or vexatious, order the applicant to pay by way of compensation to any person who has opposed the application such sum not exceeding fifty thousand rupees as it may consider appropriate in the circumstances of the case.
(2) The Supreme Court may act under this section only on an application filed by the Competent Authority or any interested party, and every such application shall be supported by an affidavit.
(3) Where an application for the exercise of the powers conferred by this section is dismissed, the Supreme Court may, if it is of opinion that the application was frivolous or vexatious, order the applicant to pay by way of compensation to any person who has opposed the application such sum not exceeding fifty thousand rupees as it may consider appropriate in the circumstances of the case.