Transcript ANDHRA PRADESH PROTECTION OF DEPOSITORS OF FINANCIAL

A.P. PROTECTION OF DEPOSITORS OF FINANCIAL ESTABLISHMENT ACT, 1999
Act
Focuses
1. Deposit
2. Financial
Establishment
Deals
Criminal
punishment
Attachment
of property
NOTE:- FOCUS POINTS HAVE TO BE SATISFIED TO INVOKE THE PROVISIONS OF ACT
A.P. PROTECTION OF DEPOSITORS OF FINANCIAL ESTABLISHMENT ACT, 1999
Deposit
Section 2 (b) of the 1999 Act
defines “Deposit”
It must be a deposit of a sum
of money;
It can be either
in lump sum or
in installments;
It should be made
with a financial
establishment as
defined in Section
2(c);
It should be for
a fixed period;
It should be either
for interest or for
return in any kind.
HOW THE COMPANIES DIVERT THE ATTENTION OF LAW ENFORCING AGENCIES
Register under companies
Act
Pleas /
Diversion tactics
Register under RBI Act
Register under SEBI Act
NOTE:- DEFINATION OF DEPOSIT IS DIFFERENT WHEN COMPARED TO THESE ACTS
DEPOSIT UNDER COMPANIES ACT, 1956
Companies Act, 1956
Act
Relevant Rules
Explanation to Section 58 of the Act
defines “Deposit”
In exercise of the powers conferred by section 58A, read
with section 642 of the Companies Act, 1956(1 of 1956),
the Central Government, in consultation with the
Reserve Bank of India, made the Rules in this regard.
deposit means
These Rules are called the Companies
(Acceptance of Deposits) Rules, 1975.
any deposit
of money
with, a
company
and
includes
any amount
borrowed
by, a
company
but shall not
include such
categories of
amount as may
be prescribed in
consultation
with the Reserve
Bank of India.
(Advance for sale or service not deposit)
These rules shall not apply to
Banking Company
Financial Company
As per Section 58A (2) – No company shall invite, or allow any other person to invite or cause to be
invited on its behalf, any deposit unless (1) it is in accordance with Companies (Acceptance of Deposits)
Rules, 1975, (2) by issuing advertisement indicating financial position of the company in a prescribed form
and (3) the company is not in default in the repayment of any deposit or part thereof and any interest
thereupon in accordance with the terms and conditions of such deposit.
DIFFERENCE AMONG RBI, COMPANY, SEBI AND AP ACT RELATING TO DEPOSIT
Differences
RBI, Companies Act and
SEBI Act
AP Depositors Act
Advance for
sale or service
Not a deposit. Acts not
applicable
It will fall under the Act
Collect deposit
from relatives
Not an offence. But
they should certify that
the said amount is his
own.
It will fall under the
Act. It is also an offence
They cannot override
depositors Act
Since received
President Assent can
override RBI, SEBI &
Companies ActSec.14.
Over ride
FINANCIAL ESTABLISHMENT UNDER THE AP DEPOSITORS ACT, 1999
It must be any person or group
of individuals
It must accept deposits
Section
2(c)
FINANCIAL
ESTABLISHMENT
but does not include a
corporation or a co-operative
society owned or controlled
by any State Government or
the Central Government or a
banking company as defined
under clause (c) of Section 5
of the Banking Regulation Act,
1949 (Central Act 10 of 1949]
The acceptance
of deposits
must be under
any scheme or
arrangement or
in any other
manner
NOTE: GROUP OF INDIVIDUALS INCLUDES PARTNERSHIPS AND COMPANIES
NOTE: ARRANGEMENT OR IN ANY OTHER MANNER INCLUDES PROMISE TO SALE OR SERVICE
HIGH COURT JUDGEMENTS RELATING TO FINANCIAL ESTABLISHMENT
Company incorporated under the
Companies Act will not go out of the
purview of the 1999 Act.
amended provision of Section 2(c) of
the 1999 Act which came into effect
from 06.11.2003 will not take away
non banking financial company
HIGH COURT OF A.P.
out of the 1999 Act.
In the case of a chit fund transaction,
‘return in any kind’ is by way of
dividends. the definitions of ‘deposit’
under Section 2 (b) and ‘financial
establishment’ under Section 2 (c) of
the 1999 Act are satisfied in case of
organizer of a chit fund transaction
receiving subscriptions from members
of the chit.
Pothani Chandrasheker V.
State of A.P. (CRLP
5573/2002-Dt. Jud6/4/2005)
P. Lakshmi Narayana Reddy
V. Commissioner of Police,
Hyderabad City Police[WP
18855/2004- Dt.Jud.- 31-72007]
V.Revathi Vs. State of AP
(CRLA 70/2006-Dt.Judmnt-512-2011)
A.P. PROTECTION OF DEPOSITORS OF FINANCIAL ESTABLISHMENT ACT, 1999
Act
Deals two points
1. Attachment of
properties
2. Criminal
prosecution
WHEN ATTACHMENTS CAN BE MADE UNDER THE ACT
(1) where upon
complaints received from
depositor or
(1) defaulted or
Sec.3
Attachment
(2) Govt. has reason to
believe that any Financial
Establishment
(2) is likely to
default or
(3) is acting in a
manner
prejudicial to
the interests of
the depositors
NOTE: INITIAL ATTACHMENT MUST BE MADE BY THE GOVERNMENT ONLY
OFFENCE / CRIMINAL PROSECUTION UNDER THE AP DEPOSITORS ACT, 1999
1. default in the
return of the deposit
either in cash or kind
or
Offence
(2) default in the
payment of interest on
the deposit as agreed
upon
Section 5
Punishment
10 years imprisonment
and fine.
Cognizable
Nature of Case
(As per Cr.P.C.
Second Schedule)
Non-Bailable
COMPETENT AUTHORITY UNDER THE AP DEPOSITORS ACT, 1999
Authority
appointed to
exercise
control over
the
properties
attached by
Government
(Sec.4)
COMPETENT
AUTHORITY
DISTRICT
DISTRICT
MAGISTRATE
G.O.MS.349 HOME
(GENL-B) DT.
29.10.1999
COMMISSIO
NARATES
COMMISSIONER
OF POLICE
G.O.MS.349 HOME
(GENL-B) DT.
29.10.1999
C.I.D.
ADDL. DIR. GENL.
OF POLICE
G.O.MS.193 HOME
(GENL-B) DT.
23.8.2001
POWERS AND DUTIES OF COMPETENT AUTHORITY UNDER THE ACT
CAN TAKE THE ASSISTANCE OF HIS SUBORDINATES
AND/OR ANY OFFICER-IN-CHARGE OF POLICE STATION
POWER
CAN DEMAND ANY PERSON OR AUTHORITY TO
FURNISH INFORMATION RELATING TO F.E.
IN ADDITION THE GOVERNMENT MAY SPECIFY
POWERS AND FUNCTIONS
COMPETENT
AUTHORITY
HAVE TO APPLY WITHIN FIFTEEN DAYS TO SPECIAL
COURT FOR MAKING THE AD-INTERIM ORDER OF
ATTACHMENT ABSOLUTE
DUTIES
(SEC.4)
SHALL MAINTAIN RECORD OF ALL INCOME AND
EXPENDITURE OF F.E.
1. GROUNDS FOR BELIEF OF DEFAULT/LIKELY TO
DEFAULT
APPLICATION /
AFFIDAVIT SHOULD
CONTAIN
2. AMOUNT OF MONEY OR VALUE OF PROPERTY
BELIEVED TO HAVE BEEN PROCURED
3. THE DETAILS, IF ANY, OF PERSOONS IN WHOSE NAME
PROPERTIES BELIEVED TO HAVE BEEN INVESTED OR PURCHASED
OUT OF DEPOSITS COLLECTED
SPECIAL COURTS UNDER THE ACT
G.O.MS.NO.70 HOME GENL-B
DT.22/3/2000
METROPOLITAN SESSIONS JUDGE
COURT
PRINCIPAL DISTRICT AND SESSIONS
JUDGES COURT
PROCEDURE
CRIMINAL PROCEDURE CODE, 1973
PROSECUTOR
SPECIAL PUBLIC PROSECUTOR AND SPECIAL
GOVERNMENT PLEADER. ADVOCATE HAVING
10 YEARS STANDING IN PRACTICE
SPEICAL COURT
(SEC.6)
MAKE ABSOLUTE THE AD-INTERIM
POWER
EQUITABLE DISTRIBUTION AMONG THE
DESPOSITORS OF THE MONEY REALISED FROM
OUT OF THE PROPERTY ATTACHED
CONDUCT TRIAL/INVESTIGATION
APPEAL
HIGH COURT
MINIMUM SEIZURES DURING INVESTIGATION
PROMOTORS / DIRECOTRS / EMPLOYEES
/ CUSTOMERS / MEMBERS LIST
INCORPORATION DETAILS / MUNICIPAL /
VAT AND LABOUR DEPT LICENSES
COMPANY
LEASE, AGREEMENTS, PATENTS, TRADE
MARK LICENSES. GODOWN DETAILS.
BANK STATEMENTS , A/C BOOKS AND I.T.
RETURNS. BALANCE SHEET & PROPERTY
STATEMENT
SEIZURES
OBTAIN LIST OF RELATIVES AND THEIR
STATEMENTS
STATEMENT OF PERSONAL / RELATIVES
ASSETS
PROMOTOR/ DIRECTOR
BANK ACCOUNT / I.T. RETURNS DETAILS
OF RELATIVES/PERSONAL
E.Cs. OF ASSETS OF RELATIVE/PERSONAL