(1) Where the assets available for attachment of a Financial Establishment or other person referred to in section 4 are found to be less than the amount or value which such Financial Establishment is required to repay to the depositor and where the Designated Court is satisfied, by affidavit or otherwise, that there is reasonable cause for believing the said Financial Establishment has transferred (whether before or after the commencement of this Act) any of the property otherwise than in good faith or for proper consideration, the Designated Court may, by notice, require any transferee of such property (whether or not he received the property directly from the said Financial Establishment) 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 after investigation in the manner provided in sub-section (5) of section 11, the Designated Court is satisfied that the transfer of property to the said transferee was not in good faith or for proper consideration, the Designated Court shall order the attachment of so much of the said transferee’s property as in the opinion of the Designated Court equivalent to the proper value of the property transferred.
427 Security in lieu of attachment
13. Any Financial Establishment or person whose property has been or is about to be attached under this Act may at any time, apply to the Designated Court for permission to give security in lieu of such attachment and where security offered and given is, in the opinion of the Designated Court, satisfactory and sufficient, it may cancel the adinterim order of attachment or, as the case may be, refrain from passing, the order of attachment.
Administration of property attached
14. The Designated Court may, on the application of any person interested in any property attached and vested in the Competent Authority under this Act, and after giving the Competent Authority an opportunity of being heard, make such orders 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 instituted against him in the Designated Court under section 3;
(b) safeguarding so far as may be practicable the interest of any business affected by the attachment and in particular, the interest of any partners in such business;
(c) discharging any liability, statutory or otherwise, of such financial establishment.
Appeal
15. Any person including the Competent Authority, aggrieved by an order of the Designated Court, may appeal to the High Court within thirty days from the date of order.
Special Public Prosecutor
16. The Government shall, by notification in the Official Gazette, appoint an advocate of not less than ten years standing as a Special Public Prosecutor for the purpose of conducting the cases in the Designated Court.
Procedure and powers of Designated Court regarding offences
17.(1) The Designated Court may take cognizance of the offence without the accused being committed to it for trial and, in trying the accused person, shall follow the procedure prescribed in the Code of Criminal Procedure, 1973 (Central Act 2 of 1974) for the trial of sessions cases.
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(2) Except the provisions of section 467, all the provisions of the Code of Criminal Procedure, 1973 (Central Act 2 of 1974), shall, so far as may be, apply to the proceedings before a Designated Court and for the purpose of the said provisions a Designated Court shall be deemed to be a Magistrate.
Act to override other laws
18. Save as otherwise provided in this Act, the provisions of this Act shall have effect notwithstanding anything inconsistent therewith in any other law for the time being in force or any custom or usage or any instrument having effect by virtue of any such law.
Protection of action taken in good faith
19. No suit or other proceedings shall lie against the Government or the Competent Authority or an officer or employee of the Government for anything which is in good faith done or intended to be done under this Act.
Power to make rules
20.(1) The Government may, by notification in the Official Gazette, make rules for carrying out the provisions of this Act.
(2) All rules made and notifications issued under this Act shall be published in the Official Gazette and unless they are expressed to come into force on a particular day, shall come into force on the day on which they are so published.
(3) Every rule made or notification issued under this Act shall, as soon as possible after it is made or issued, be placed on the Table of the Legislative Assembly, and if before the expiry of the session in which it is so placed or the next session the Legislative Assembly agrees in making any modification in any such rule or notification or the Legislative Assembly agrees that the rule or notification should not be made or issued, the rule or notification 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 or notification.
Power to remove difficulties
21.(1) If any difficulty arises in giving effect to the provisions of this Act, the Government may, as occasion arises, by order, do anything, not inconsistent with the provisions of this Act, which appears to it to be necessary to remove the difficulty:
Provided that no such order shall be made after the expiry of a period of two years from the date of commencement of this Act.
(2) Every order made under this section shall, as soon as may be after it is made, be laid before the Legislative Assembly of Puducherry.
______ 429 STATEMENT OF OBJECTS AND REASONS FOR ACT NO.1 OF 2005 The last few years have witnessed a rapid growth of non-banking Financial Establishments and deposit taking unincorporated bodies not covered under the Reserve Bank of India, Act, 1934 in different parts of the country. In the recent past, certain financial institutions have also sprung up in this Union Territory with the sole object of receiving deposits from the public (primarily middle class and the poor) on the promise of unprecedented high rate of interest but without any obligation to refund the deposits to the investors at the time of maturity. Many of these Financial Establishments have in fact defaulted in the return of such deposits to the investors thus paving way for public resentment and insecurity. The Reserve Bank of India have in fact been seized of the situation prevalent in the country and have therefore addressed all State Governments and Union Territory Administrations to protect the interests of such depositors by having a legislation enacted in the matter.
Since this Union Territory has also seen the mushroom growth of such Financial Establishments in question in the last few years, it is proposed to undertake a legislation which seeks to protect the deposits made by the public in Financial Establishments not being a company registered under the Companies Act, 1956, or a corporation or a co-operative society owned or controlled by the State Government or the Central Government or a banking company under Banking Regulation Act. The more salient features of the proposed draft legislation cover the following:
Attachment by the Government of moneys or properties of such Financial Establishments who default in return of deposits;
Constitution of a Designated Court with powers, among others, to pass orders or issue directions for the equitable distribution among the depositors of the money realised out of the property attached.
The Bill seeks to achieve the above objects.
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