The Banning of Unregulated Deposit Schemes Act, 2019
Administered Ministry: Ministry of Finance / Department of Financial Services
Section
Section 21 Punishment for contravention of section 3.
(1) Any deposit taker who solicits deposits in contravention of section 3 shall be punishable with imprisonment for a term which shall not be less than one year but which may extend to five years and with fine which shall not be less than two lakh rupees but which may extend to ten lakh rupees.
(2) Any deposit taker who accepts deposits in contravention of section 3 shall be punishable with imprisonment for a term which shall not be less than two years but which may extend to seven years and with fine which shall not be less than three lakh rupees but which may extend to ten lakh rupees.
(3) Any deposit taker who accepts deposits in contravention of section 3 and fraudulently defaults in repayment of such deposits or in rendering any specified service, shall be punishable with imprisonment for a term which shall not be less than three years but which may extend to ten years and with fine which shall not be less than five lakh rupees but which may extend to twice the amount of aggregate funds collected from the subscribers, members or participants in the Unregulated Deposit Scheme.
Explanation.—For the purposes of this Act,—
(i) the expression “fraudulently” shall have the same meaning as assigned to it in section 25 of the Indian Penal Code (45 of 1860);
(ii) where the terms of the Deposit Scheme are entirely impracticable or unviable, the terms shall be relevant facts showing an intention to defraud.
(2) Any deposit taker who accepts deposits in contravention of section 3 shall be punishable with imprisonment for a term which shall not be less than two years but which may extend to seven years and with fine which shall not be less than three lakh rupees but which may extend to ten lakh rupees.
(3) Any deposit taker who accepts deposits in contravention of section 3 and fraudulently defaults in repayment of such deposits or in rendering any specified service, shall be punishable with imprisonment for a term which shall not be less than three years but which may extend to ten years and with fine which shall not be less than five lakh rupees but which may extend to twice the amount of aggregate funds collected from the subscribers, members or participants in the Unregulated Deposit Scheme.
Explanation.—For the purposes of this Act,—
(i) the expression “fraudulently” shall have the same meaning as assigned to it in section 25 of the Indian Penal Code (45 of 1860);
(ii) where the terms of the Deposit Scheme are entirely impracticable or unviable, the terms shall be relevant facts showing an intention to defraud.
Section 22 Punishment for contravention of section 4.
Any deposit taker who contravenes the provisions of section 4 shall be punishable with imprisonment for a term which may extend to seven years, or with fine which shall not be less than five lakh rupees but which may extend to twenty-five crore rupees or three times the amount of profits made out of the fraudulent default referred to in said section, whichever is higher, or with both.
Section 23 Punishment for contravention of section 5.
Any person who contravenes the provisions of section 5 shall be punishable with imprisonment for a term which shall not be less than one year but which may extend to five years and with fine which may extend to ten lakh rupees.
Section 24 Punishment for repeat offenders.
Whoever having been previously convicted of an offence punishable under this Chapter, except the offence under section 26, is subsequently convicted of an offence shall be punishable with imprisonment for a term which shall not be less than five years but which may extend to ten years and with fine which shall not be less than ten lakh rupees but which may extend to fifty crore rupees.
Section 25 Offences by deposit takers other than individuals.
(1) Where an offence under this Act has been committed by a deposit taker other than an individual, every person who, at the time the offence was committed, was in charge of, and was responsible to, the deposit taker for the conduct of its business, as well as the deposit taker, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.
(2) Nothing contained in sub-section (1) shall render any such person liable to any punishment provided in this Act, if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence.
(3) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed by a deposit taker other than an individual, and it is proved that the offence—
(a) has been committed with the consent or connivance of; or
(b) is attributable to any neglect on the part of any director, manager, secretary, promoter, partner, employee or other officer of the deposit taker,
such person shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
(2) Nothing contained in sub-section (1) shall render any such person liable to any punishment provided in this Act, if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence.
(3) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed by a deposit taker other than an individual, and it is proved that the offence—
(a) has been committed with the consent or connivance of; or
(b) is attributable to any neglect on the part of any director, manager, secretary, promoter, partner, employee or other officer of the deposit taker,
such person shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
Section 26 Punishment for contravention of section 10.
Whoever fails to give the intimation required under sub-section (1) of section 10 or fails to furnish any such statements, information or particulars as required under sub-section (2) of that section, shall be punishable with fine which may extend to five lakh rupees.
Section 27 Cognizance of offences.
Notwithstanding anything contained in section 4, no Designated Court shall take cognizance of an offence punishable under that section except upon a complaint made by the Regulator:
Provided that the provisions of section 4 and this section shall not apply in relation to a deposit taker which is a company.
Provided that the provisions of section 4 and this section shall not apply in relation to a deposit taker which is a company.
Section 28 Offences to be cognizable and non-bailable.
Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974) every offence punishable under this Act, except the offence under section 22 and section 26, shall be cognizable and non-bailable.
Section 29 Competent Authority to be informed of offences.
The police officer shall, on recording information about the commission of an offence under this Act, inform the same to the Competent Authority.
Section 30 Investigation of offences by Central Bureau of Investigation.
(1) On receipt of information under section 29 or otherwise, if the Competent Authority has reason to believe that the offence relates to a deposit scheme or deposit schemes in which—
(a) the depositors, deposit takers or properties involved are located in more than one State or Union territory in India or outside India; and
(b) the total value of the amount involved is of such magnitude as to significantly affect the public interest,
the Competent Authority shall refer the matter to the Central Government for investigation by the Central Bureau of Investigation.
(2) The reference made by the Competent Authority under sub-section (1) shall be deemed to be with the consent of the State Government under section 6 of the Delhi Special Police Establishment Act, 1946 (25 of 1946).
(3) On the receipt of the reference under sub-section (1), the Central Government may transfer the investigation of the offence to the Central Bureau of Investigation under section 5 of the Delhi Special Police Establishment Act, 1946 (25 of 1946).
(a) the depositors, deposit takers or properties involved are located in more than one State or Union territory in India or outside India; and
(b) the total value of the amount involved is of such magnitude as to significantly affect the public interest,
the Competent Authority shall refer the matter to the Central Government for investigation by the Central Bureau of Investigation.
(2) The reference made by the Competent Authority under sub-section (1) shall be deemed to be with the consent of the State Government under section 6 of the Delhi Special Police Establishment Act, 1946 (25 of 1946).
(3) On the receipt of the reference under sub-section (1), the Central Government may transfer the investigation of the offence to the Central Bureau of Investigation under section 5 of the Delhi Special Police Establishment Act, 1946 (25 of 1946).
Section 31 Power to enter, search and seize without warrant.
(1) Whenever any police officer, not below the rank of an officer in-charge of a police station, has reason to believe that anything necessary for the purpose of an investigation into any offence under this Act may be found in any place within the limits of the police station of which he is in-charge, or to which he is attached, such officer may, with the written authorisation of an officer not below the rank of Superintendent of Police, and after recording in writing so far as possible, the thing for which the search is to be made and subject to the rules made in this behalf, authorise any officer subordinate to him,---
(a) to enter and search any building, conveyance or place, between sunrise and sunset, which he has reason to suspect is being used for purposes connected with the promotion or conduct of any deposit taking scheme or arrangement in contravention of the provisions of this Act;
(b) in case of resistance, to break open any door and remove any obstacle to such entry, if necessary by force, with such assistance as he considers necessary, for exercising the powers conferred by clause (a);
(c) to seize any record or property found as a result of the search in the said building, conveyance or place, which are intended to be used, or reasonably suspected to have been used, in connection with any such deposit taking scheme or arrangement in contravention of the provisions of this Act; and
(d) to detain and search, and if he thinks proper, take into custody and produce before any Designated Court any such person whom he has reason to believe to have committed any offence punishable under this Act:
Provided that if such officer has reason to believe that the said written authorisation cannot be obtained without affording opportunity for the concealment of evidence or facility for the escape of an offender, he may, without the said written authorisation, enter and search such building, conveyance or place, at any time between sunset and sunrise after recording the grounds in writing.
(2) Where it is not practicable to seize the record or property, the officer authorised under subsection (1), may make an order in writing to freeze such property, account, deposits or valuable securities maintained by any deposit taker about which a complaint has been made or credible information has been received or a reasonable suspicion exists of their having been connected with the promotion or conduct of any deposit taking scheme or arrangement in contravention of the provisions of this Act and it shall be binding on the concerned bank or financial or market establishment to comply with the said order:
Provided that no bank or financial or market establishment shall freeze such account, deposit or valuable securities, for a period beyond thirty days unless the same is authorised by the order of the Designated Court:
Provided further that, if at any time, it becomes practicable to seize the frozen property, the officer authorised under sub-section (1) may seize such property.
Explanation.---For the purposes of this section, the expressions,---
(i) "freezing of account" shall mean that no transaction, whether deposit or withdrawal shall be allowed in the said account; and
(ii) "freezing of property" shall mean that no transfer, conversion, disposition or movement of property shall be allowed.
(3) Where an officer takes down any information in writing or records grounds for his belief or makes an order in writing under sub-section (1) or sub-section (2), he shall, within a time of seventytwo hours send a copy thereof to the Designated Court in a sealed envelope and the owner or occupier of the building, conveyance or place shall, on application, be furnished, free of cost, with a copy of the same by the Designated Court.
(4) All searches, seizures and arrests under this section shall be made in accordance with the provisions of the Code of Criminal Procedure, 1973 (2 of 1974).
(a) to enter and search any building, conveyance or place, between sunrise and sunset, which he has reason to suspect is being used for purposes connected with the promotion or conduct of any deposit taking scheme or arrangement in contravention of the provisions of this Act;
(b) in case of resistance, to break open any door and remove any obstacle to such entry, if necessary by force, with such assistance as he considers necessary, for exercising the powers conferred by clause (a);
(c) to seize any record or property found as a result of the search in the said building, conveyance or place, which are intended to be used, or reasonably suspected to have been used, in connection with any such deposit taking scheme or arrangement in contravention of the provisions of this Act; and
(d) to detain and search, and if he thinks proper, take into custody and produce before any Designated Court any such person whom he has reason to believe to have committed any offence punishable under this Act:
Provided that if such officer has reason to believe that the said written authorisation cannot be obtained without affording opportunity for the concealment of evidence or facility for the escape of an offender, he may, without the said written authorisation, enter and search such building, conveyance or place, at any time between sunset and sunrise after recording the grounds in writing.
(2) Where it is not practicable to seize the record or property, the officer authorised under subsection (1), may make an order in writing to freeze such property, account, deposits or valuable securities maintained by any deposit taker about which a complaint has been made or credible information has been received or a reasonable suspicion exists of their having been connected with the promotion or conduct of any deposit taking scheme or arrangement in contravention of the provisions of this Act and it shall be binding on the concerned bank or financial or market establishment to comply with the said order:
Provided that no bank or financial or market establishment shall freeze such account, deposit or valuable securities, for a period beyond thirty days unless the same is authorised by the order of the Designated Court:
Provided further that, if at any time, it becomes practicable to seize the frozen property, the officer authorised under sub-section (1) may seize such property.
Explanation.---For the purposes of this section, the expressions,---
(i) "freezing of account" shall mean that no transaction, whether deposit or withdrawal shall be allowed in the said account; and
(ii) "freezing of property" shall mean that no transfer, conversion, disposition or movement of property shall be allowed.
(3) Where an officer takes down any information in writing or records grounds for his belief or makes an order in writing under sub-section (1) or sub-section (2), he shall, within a time of seventytwo hours send a copy thereof to the Designated Court in a sealed envelope and the owner or occupier of the building, conveyance or place shall, on application, be furnished, free of cost, with a copy of the same by the Designated Court.
(4) All searches, seizures and arrests under this section shall be made in accordance with the provisions of the Code of Criminal Procedure, 1973 (2 of 1974).
Section 32 Application of Code of Criminal Procedure, 1973 to proceedings before Designated Court.
(1) The Designated Court may take cognizance of offences under this Act without the accused being committed to it for trial.
(2) Save as otherwise provided in section 31, the provisions of the Code of Criminal Procedure, 1973 (2 of 1974) shall apply--
(a) to all arrests, searches and seizures made under this Act;
(b) to the proceedings under this Act and for the purposes of the said provisions, the Designated Court shall be deemed to be a Court of Session and the persons conducting the prosecution before the Designated Court, shall be deemed to be Public Prosecutors.
(2) Save as otherwise provided in section 31, the provisions of the Code of Criminal Procedure, 1973 (2 of 1974) shall apply--
(a) to all arrests, searches and seizures made under this Act;
(b) to the proceedings under this Act and for the purposes of the said provisions, the Designated Court shall be deemed to be a Court of Session and the persons conducting the prosecution before the Designated Court, shall be deemed to be Public Prosecutors.
Section 33 Publication of advertisement of Unregulated Deposit Scheme.
Where any newspaper or other publication of any nature, contains any statement, information or advertisement promoting, soliciting deposits for, or inducing any person to become a member of any Unregulated Deposit Scheme, the appropriate Government may direct such newspaper or publication to publish a full and fair retraction, free of cost, in the same manner and in the same position in such newspaper or publication as may be prescribed.
Section 34 Act to have overriding effect.
Save as otherwise expressly provided in this Act, the provisions of this Act shall have effect notwithstanding anything contained in any other law for the time being in force, including any law made by any State or Union territory.
Section 35 Application of other laws not barred.
The provisions of this Act shall be in addition to, and not in derogation of, the provisions of any other law for the time being in force.
Section 36 Protection of action taken in good faith.
No suit, prosecution or other legal proceedings shall lie against the appropriate Government or the Competent Authority or any officer of the appropriate Government for anything which is in good faith done or intended to be done under this Act or the rules made thereunder.
Section 37 Power of Central Government to make rules. 1 docs
(1) The Central Government may, by notification, make rules for carrying out the provisions of this Act.
(2) In particular and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:--
(a) the information and other particulars to be taken into consideration before issuing an order, and the manner of attachment, under sub-section (3) of section 7;
(b) the information to be shared under sub-section (2) of section 9;
(c) the form and manner in which and the time within which the intimation shall be given under sub-section (1) of section 10;
(d) the particulars contained in the application to be filed by the Competent Authority before the Designated Court under sub-section (1) of section 14;
(e) the procedure to be adopted by the Designated Court before issuing an order under sub-section (3) of section 15;
(f) rules under sub-section (1) of section 31;
(g) the manner of publication of advertisement under section 33; and
(h) any other matter which is required to be, or may be, prescribed.
(2) In particular and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:--
(a) the information and other particulars to be taken into consideration before issuing an order, and the manner of attachment, under sub-section (3) of section 7;
(b) the information to be shared under sub-section (2) of section 9;
(c) the form and manner in which and the time within which the intimation shall be given under sub-section (1) of section 10;
(d) the particulars contained in the application to be filed by the Competent Authority before the Designated Court under sub-section (1) of section 14;
(e) the procedure to be adopted by the Designated Court before issuing an order under sub-section (3) of section 15;
(f) rules under sub-section (1) of section 31;
(g) the manner of publication of advertisement under section 33; and
(h) any other matter which is required to be, or may be, prescribed.
Section 38 Power of State Government, etc., to make rules.
(1) The State Government or Union territory Government, as the case may be, in consultation with the Central Government, by notification, make rules for carrying out the provisions of this Act.
(2) In particular and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:--
(a) ceiling for self-help groups under clause (j) of sub-section (4) of section 2;
(b) purpose and ceiling under clause (k) of sub-section (4) of section 2;
(c) the manner of provisional attachment of property by the Competent Authority under subsection (3) of section 7;
(d) other matters under clause (f) of sub-section (4) of section 7;
(e) the rules relating to impounding and custody of records under sub-section (8) of section 7; and
(f) any other matter which is required to be, or may be, prescribed.
(2) In particular and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:--
(a) ceiling for self-help groups under clause (j) of sub-section (4) of section 2;
(b) purpose and ceiling under clause (k) of sub-section (4) of section 2;
(c) the manner of provisional attachment of property by the Competent Authority under subsection (3) of section 7;
(d) other matters under clause (f) of sub-section (4) of section 7;
(e) the rules relating to impounding and custody of records under sub-section (8) of section 7; and
(f) any other matter which is required to be, or may be, prescribed.
Section 39 Laying of rules.
(1) Every rule made by the Central Government under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session, or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule, or both Houses agree that the rule should not be made, the rule shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule.
(2) Every rule made by a State Government or the Union territory Government, as the case may be, shall be laid, as soon as may be after it is made, before each House of the State Legislature or the Union territory Legislature, as the case may be, where it consists of two Houses, or where such Legislature consists of one House, before that House.
(2) Every rule made by a State Government or the Union territory Government, as the case may be, shall be laid, as soon as may be after it is made, before each House of the State Legislature or the Union territory Legislature, as the case may be, where it consists of two Houses, or where such Legislature consists of one House, before that House.
Section 40 Power to amend First Schedule.
(1) The Central Government may, having regard to the objects of this Act, and if it considers necessary or expedient so to do, by notification, add to, or as the case may be, omit from the First Schedule, any scheme or arrangement, and on such addition, or omission, such scheme or arrangement shall become, or cease to be, a Regulated Deposit Scheme, as the case may be.
(2) A copy of every notification issued under this section shall, as soon as may be after it has been issued, be laid before each House of Parliament.
(2) A copy of every notification issued under this section shall, as soon as may be after it has been issued, be laid before each House of Parliament.