The Telangana Protection of Depositors of Financial Establishments Act, 1999

(1) This Act may be called the Telangana Protection of Depositors of Financial Establishments Act, 1999. (2) It extends to the whole of the State of Telangana. (3) It shall come into force on such date as the Government may, by notification, appoint.

Notwithstanding anything contained in any other law for the time being in force,- (i) Where, upon complaints received from a depositor or depositors, that any financial establishment defaulted or is likely to default in the return of deposits in cash or kind after maturity, or in any manner agreed upon; or (ii) Where the Government have reason to believe that any financial establishment is acting in a manner prejudicial to the interests of the depositors with an intention to defraud the depositors; and if the Government are satisfied that such financial establishment is not likely to return the deposits in cash or kind after maturity, or in any manner agreed upon, the Government may, in order to protect the interests of the depositors of such financial establishment, pass an ad-interim order attaching the money or other property alleged to have been procured either in the name of the financial establishment or in the name of any other person from and out of the deposits collected by the financial establishment, or if it transpires that such money or other property is not available for attachment or not sufficient for repayment of the deposits, such other property of the said financial establishment, or the promoter, manager or member of the said financial establishment, as the Government may think fit, and transfer the control over the said money or property to the competent authority.

Where any financial establishment defaults in the return of the deposit either in cash or kind or defaults in the payment of interest on the deposit as agreed upon, every person responsible for the management of the affairs of the financial establishment including the promoter, Manager or Member of the financial establishment shall be punished with imprisonment for a term which may extend to ten years and with fine which may extend to rupees one lakh and such financial establishment shall also be liable for fine which may extend to rupees five lakhs.

(1) For the purposes of this Act, the Government shall, with the concurrence of the Chief Justice of the High Court, by notification, constitute a District and Sessions Court as a Special Court. (2) No court including a court constituted under the Presidency Towns Insolvency Act, 1909 and the Provincial Insolvency Act 1920, other than the Special Court shall have jurisdiction in respect of any matter to which the provisions of this Act apply. (3) Any pending case in any other court to which the provisions of this Act apply shall stand transferred to the Special Court. (4) The Special Court shall, on an application by the competent authority, pass such order or issue such direction as may be necessary for the equitable distribution among the depositors of the money realized from out of the property attached.

(1) Where the assets available for attachment of a financial establishment or other person referred to in section 3 are found to be less than the amount or value which such financial establishment is required to repay to the depositors and where the Special Court is satisfied by affidavit or otherwise that there is reasonable cause for believing that the said financial establishment has transferred, whether before or after the commencement of this Act, any of the property otherwise than in good faith and for valuable consideration, the Special 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 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 7, the Special Court is satisfied that the transfer of the property of the said transferee was not in good faith and for valuable consideration, the Special Court shall order the attachment of so much of the transferee’s property as is in the opinion of the Special Court equivalent to the value of the property transferred.

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 Special Court for permission to give security in lieu of such attachment and where the security offered and given is in the opinion of the Special Court, satisfactory, and sufficient, it may cancel, the ad-interim order of attachment or, as the case may be, refrain from passing the order of attachment.

The Special Court may, on the application of any person interested in any property attached under this Act, and after giving the Competent Authority an opportunity of being heard make such orders as the Special Court considers just and reasonable for,- (a) providing from such of the property attached 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 Special Court under section 5; (b) safeguarding so far as may be practicable the interest of any business affected by the attachment and particularly by in the interest of any partners in such business.

Any person including the competent authority, if aggrieved by an order or the Special Court, may appeal to the High Court within thirty days from the date of such order.

The Government shall, by notification, appoint an Advocate who has been in practice as an Advocate for not less than ten years as a Special Public Prosecutor, as well as Special Government Pleader for the purpose of conducting the cases in the Special Court.

(1) The Special Court may take cognizance of the offences 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 for the trial of warrant cases by Magistrates. (2) The provisions of the Code of Criminal Procedure, 1973 shall, so far as may be, apply to the proceedings before a Special Court and for the purpose of the said provisions, a Special Court shall be deemed to be a Magistrate.

Save as otherwise provided in this Act, the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained 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.

Whoever makes a complaint knowing or having reason to believe it to be false or vexatious shall be punished with imprisonment for a term which may extend to one year or with fine which may extend to rupees one lakh, or with both.

No suit, prosecution or other legal proceedings shall lie against any person for anything which is in good faith done or intended to be done under this Act or the rules made thereunder.

If any doubt or difficulty arises in giving effect to the provisions of this Act, the Government may, by order, make provision or give such direction, not inconsistent with the provisions of this Act, as may appear to it to be necessary or expedient for the removal of the doubt or difficulty.