The Goa Protection of Interests of Depositors (in Financial Establishments) Act, 1999

-1- GOVERNMENT OF GOA Department of Law & Judiciary Legal Affairs Division Notification ______ 7-6-99/LA The Goa Protection of Interests of Depositors (in Financial Establishments) Act, 1999 (Goa Act 10 of 1999), which has been passed by the Legislative Assembly of Goa on 3-8-99 and assented to by the President of India on 2-11-1999 is hereby published for general information of the public. P. V. Kadneker, Joint Secretary (Law). Panaji, 16th November, 1999. ______ The Goa Protection of Interests of Depositors (in Financial Establishments) Act, 1999 (Goa Act 10 of 1999) [2-11-1999] AN ACT to protect deposits made by the public in financial establishments and matters relating thereto. Be it enacted by the Legislative Assembly of the State of Goa in the Fiftieth Year of the Republic of India as follows:- CHAPTER I 1. Short title and commencement.— (1) This Act may be called the Goa Protection of Interests of Depositors (in Financial Establishments) Act, 1999. (2) It shall come into force at once. 2. Definitions.— In this Act, unless the context otherwise requires,— (a) "competent authority" means the authority appointed by the Government under section 4; (b) "deposit" means the deposit of a sum of money made with a financial establishment for a fixed period, for interest or return of any kind; -2- (c) 1[financial establishment” means an individual, an association of individuals, a firm or a company/incorporated bodies registered under the Companies Act, 1956 (Central Act 1 of 1956) or the Companies Act, 2013 (Central Act 18 of 2013), carrying on the business of receiving deposits under any scheme or arrangement or in any other manner 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) or a non- banking financial company as defined in clause (f) of section 45-I of the Reserve Bank of India Act, 1934 (Central Act 2 of 1934)] (d) "Government” means the Government of Goa. CHAPTER II 3. Attachment of properties on default of return of deposits.— Notwithstanding anything contained in any other law for the time being in force— (i) where upon complaints received from a number of depositors, that any financial establishment has defaulted the return of deposits after maturity; or (ii) where the Government has reasons to believe that any financial establishment is acting in a calculated manner with an intention to defraud the depositors; and if the Government is satisfied that such financial establishment is not likely to return the deposits, the Government may, in order to protect the interests of the depositors in 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 of 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. 4. Competent authority.— (1) The Government may by notification, appoint an authority hereinafter called "the competent authority" to exercise control over the properties attached by the Government under section 3. (2) The competent authority shall have such other powers as may be necessary for carrying out the purposes of this Act. (3) Upon receipt of the orders of the Government under section 3, the competent authority shall apply within fifteen days to the Special Court constituted under this Act for making the ad-interim order of attachment absolute. (4) An application under sub-section (3) shall be accompanied by one or more affidavits, stating the grounds on which the belief that the financial establishment has -3- committed any default or is likely to defraud, is founded, the amount of money or value of other property believed to have been procured by means of the deposit, and the details, if any, of persons in whose name such property is believed to have been invested or purchased out of the deposits or any other property attached under section 3. 2[(5)The competent authority shall make an application to any court having jurisdiction to try similar cases or deal with the subject matter pertaining to money or property belonging to a financial establishment or any person specified in section 3 situated within the territorial jurisdiction of that court for appropriate orders. (5)For the purpose of crediting and dealing with the money realized by the competent authority, he shall open an account in any Scheduled commercial bank.] 3[4A. Report and return by financial establishment.— (1) Every financial establishment which commences or carries on its business as such in the State of Goa on or after the commencement of the Goa Protection of Interests of Depositors (in Financial Establishments) (Amendment) Act, 2017 (hereinafter, in this section, referred to as the “said Act”), shall make a report to the District Collector of the district, mentioning the details about its authority to carry on such business, the location of the financial establishment in the State and its main Branch Office, if any, wherever situated, permanent address of every person responsible for the management of, or conducting of, the business or affairs of the financial establishment in the State and such other particulars as may be prescribed. (2) Such report shall be made within seven days from the date on which a financial establishment commences or carries on its business as such in the State: Provided that a financial establishment which has been carrying on its business as such prior to the commencement of the said Act shall make such report within seven days from the date of such commencement. (3) Every financial establishment shall furnish a quarterly return within one month of the expiry of each quarter of a financial year to the District Collector in respect of its business and financial position, the area of its investment and the location of investments of moneys made by it within and outside the State, if any, and such other particulars as may be prescribed. (4) Whoever contravenes the provisions of this section shall be liable to a penalty of one thousand rupees per day of delay and upto a maximum of fifty thousand rupees, to be leviable by competent Authority.] CHAPTER III 4[5. Fraudulent default by financial establishment.— Any financial establishment, which fraudulently defaults any repayment of deposit on maturity along with any benefit in the form of interest, bonus, profit or in any other form as promised or fraudulently fails to render service as assured against the deposit, every person including the promoter, -4- partner, director, manager or any other person or an employee responsible for the management of or conducting of the business or affairs of such financial establishment shall, on conviction, be punished with imprisonment for a term which may extend to ten years and with fine which may extend to one lakh of rupees and such financial establishment also shall be liable for a fine which may extend to five lakh of rupees. Explanation.— For the purpose of this section, a financial establishment, which commits default in repayment of such deposit with such benefits in the form of interest, bonus, profit or in any other form as promised or fails to render any specified service promised against such deposit, or fails to render any specific service agreed against the deposit with an intention of causing wrongful gain to one person or wrongful loss to another person or commits such default due to its liability arising out of impracticable or commercially not viable promises made while accepting such deposit or arising out of deployment of money or assets acquired out of deposits in such a manner as it involves inherent risk in recovering the same when needed, shall be deemed to have committed a default or failed to render the specific service, fraudulently.] CHAPTER IV 6. Special Court.— (1) For the purposes of this Act, the Government may, with the concurrence of the Chief Justice of the High Court, by notification, constitute a Special Court in the cadre of a District and Sessions Judge. (2) No Court 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 realised from out of the property attached. 7.5[Powers of Special Court regarding attachment, sale, realization and distribution].— 6[(1) Upon receipt of an application under section 4, the Special Court shall issue to the financial establishment or to any other person whose property is attached by the Government under section 3, notice accompanied by the application and affidavits and of the evidence, if any, recorded, calling upon the said financial establishment or the said person to show cause on a date to be specified in the notice why the order of attachment should not be made absolute and the properties so attached be sold in public auction.] (2) The Special Court shall also issue such notice, to all other persons represented to it as having or being likely to claim, any interest or title in the property of the financial establishment or the person to whom the notice is issued calling upon such person to appear on the same date as that specified in the notice and make objection, if he so -5- desires, to the attachment of the property or any portion thereof on the ground that he has an interest in such property or portion thereof. (3) Any person claiming an interest in the property attached or any portion thereof may, notwithstanding that no notice has been served upon him under this section, make an objection as aforesaid to the Special Court at any time before an order is passed under sub-section (4) or sub-section (6). (4) If no cause is shown and no objections are made on or before the specified date, the Special Court shall forthwith pass an order making the ad-interim order of attachment absolute 7[and direct the competent authority to sell the property so attached by public auction and realize the sale proceeds.] (5) If cause is shown or any objection is made as aforesaid, the Special Court shall proceed to investigate the same, and in so doing as regards the examination of the parties and in all other respects, the Special Court shall subject to the provisions of this Act, follow the procedure and exercise all the powers of a Court in hearing a suit under the Code of Civil Procedure, 1908 (Central Act V of 1908) and any person making an objection shall be required to adduce evidence to show that at the date of the attachment he had some interest in the property attached. 8[(6) After investigation under sub-section (5), the Special Court shall pass an order, within a period of one hundred and eighty days from the date of receipt of an application under sub-section (3) of section 4, either by making the ad- -interim order of attachment absolute or varying it by releasing a portion of the property from attachment or cancelling the ad-interim order of attachment and then direct the competent authority to sell the property so attached by public auction and realize the sale proceeds: Provided that the Special Court shall not release from attachment any interest which it is satisfied that the financial establishment or the person referred to in sub-section (1) has in the property unless it is also satisfied that there will remain under attachment an amount of property of value not less than the value that is required for repayment to the depositors of such financial establishment.] 9[(7) 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 attached or realized out of the sale. (8) In case the money realized from the sale of property attached is not enough to cover the shortfall, the Special Court may impose fine on every person, including the promoter, partner, director, manager or any other person or an employee responsible for the management of or conducting of the business of the affairs of such financial establishment to cover the shortfall as may be necessary for the purpose of repayment to the depositors. (9) Where an application is made by any person duly authorized or specified by any other State Government under similar enactment empowering him to exercise control -6- over any money or property or assets attached by that State Government, the Special Court shall exercise all its powers as if such an application were made under this Act and pass appropriate order or direction on such application so as to give effect to the provisions of such enactment.] 7. Attachment of property of malafide transferees.— (1) Where 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 after the commencement of this Act or not) any of the property otherwise than in good faith and for 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 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 7, the Special Court is satisfied that the transfer of the property to the said transferee was not in good faith and for consideration, the Special Court shall order the attachment of so much of the said transferee’s property as is in the opinion of the Special Court equivalent to the proper value of the property transferred. 8. Security in lieu of attachment.— 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. 9. Administration of property attached.— 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 in particular, the interest of any partners in such business. -7- 10. Appeal.— 10[(1) Any person including the competent authority, if aggrieved by an order of the Special Court, may appeal to the High Court within thirty days from the date of order. 11[(2) No appeal under sub-section (1), by a person who is in any manner liable to repay the deposit and the interest accrued thereon to the depositors, shall be entertained unless, the appeal is accompanied by satisfactory proof for the deposit with the competent authority of an amount equivalent to seventy five percent of the aggregate amount of deposit liability.] 11. Special Public Prosecutor.— The Government shall, by notification, appoint an Advocate of not less than ten years standing as a Special Public Prosecutor for the purpose of conducting the cases in the Special Court. 12. Procedure and powers of Special Court regarding offences.— (1) The Special 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 warrant cases by Magistrates. (2) The provisions of the Code of Criminal Procedure (Central Act 2 of 1974) 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. 12[13A. Offences to be cognizable.— All offences under this Act shall be cognizable.]. CHAPTER V 13. Act to have overriding effect.— 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. 13[14A. Protection of action taken in good faith.— 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.] 14. Power to make rules.— (1) The Government may make rules for carrying out the provisions of this Act. (2) (a) All rules made under this Act shall be published in the Goa 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. (b) All notifications issued under this Act shall, unless they are expressed to come into force on a particular day, shall come into force on the day on which they are published. -8- Secretariat Annexe, Panaji, Dated: 16-11-1999. B. S. SUBBANNA, Secretary to the Government of Goa, Law Department (Legal Affairs). _________________________________________________________________________ 1.Substituted vide Amendment Act 13 of 2017. Original clause read as follows:"financial establishment" means an individual, an association of individuals or a firm carrying on the business of receiving deposits under any Scheme or arrangement or in any other manner but does not include a company registered under the Companies Act, 1956, or 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 section 5(c) of the Banking Regulation Act, 1949 (Central Act X of 1949) or a non- banking financial company as defined in clause (f) of section 45-I of the Reserve Bank of India Act, 1934 (Central Act 2 of 1934); 2.Sub-section 5 and 6 inserted vide Amendment Act 13 of 2017. 3.Section 4-A inserted vide Amendment Act 13 of 2017. 4.Section 5 substituted vide Amendment Act 13 of 2017.orignal section read as follows:- “Default in repayment of deposits and interests honouring the commitment.— Notwithstanding anything contained in Chapter II, where any financial establishment defaults the return of the deposit or defaults the payment of interest on the deposit, every person responsible for the management of the affairs 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 one lakh of rupees and such financial establishment shall also be liable for fine which may extend to one lakh of rupees.” 5.Title substituted vide Amendment Act 13 of 2017. Original title read as follow “Powers of Special Court regarding attachment” 6.Sub-section (1) substituted vide Amendment Act 13 of 2015. Original provisions read as follows: (1) Upon receipt of an application under section 4, the Special Court shall issue to the financial establishment or to any other person whose property is attached by the Government under section 3, notice accompanied by the application and affidavits and of the evidence, if any, recorded, calling upon him to show cause on a date to be specified in the notice why the order of attachment should not be made absolute. 7.Added vide Amendment Act 13 of 2017 8.Substituted vide Amendment Act 13 of 2017 original provisions read as follows: (6) After investigation under sub-section (5), the Special Court shall pass an order making the ad-interim order of attachment absolute or varying it by releasing a portion of the property from attachment or cancelling the ad-interim order of attachment: Provided that the Special Court shall not release from attachment any interest which it is satisfied that the financial establishment or the person referred to in sub-section (1) has in the property unless it is also satisfied that there will remain under attachment an amount of property of value not less than the value that is required for repayment to the depositors of such financial establishment. 9.Sub-section 7,8 and 9 inserted vide Amendment Act 13 of 2017. 10. Numbered(1) vide Amendment Act 13 of 2017. 11. Inserted vide Amendment Act 13 of 2017 12. Inserted vide Amendment Act 13 of 2017 13. Inserted vide Amendment Act 13 of 2017 Department of Law & Judiciary Legal Affairs Division The Goa Protection of Interests of Depositors (in Financial Establishments) Act, 1999