The MPID Act, 1999 is a valid enactment and is not rendered unconstitutional by the Reserve Bank of India Act, 1934 or the Indian Companies Act, 1956.

S.C. Dharmadhikari, J.

1. In all these matters, the contention that is raised by Mr. Pradhan, learned counsel appearing for the Petitioners, is that the judgment of the Honourable Supreme Court reported in (2011) 3 SCC 793 (K.K. Baskaran v/s State represented by its Secretary, Tamil Nadu and others) overruling that of a Full Bench of this Court [Vijay C. Puljal v. State of Maharashtra, reported in (2005) 4 CTC 705 (Bom.)], will not conclude the matter and particularly the question that the Maharashtra Enactment, namely, the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999 (for short “MPID Act, 1999”) cannot encroach or usurp the field occupied by the laws of Parliament. In his submission, the field in this case is occupied by the Reserve Bank of India Act, 1934, the Banking Regulation Act, 1949 and the Indian Companies Act, 1956.

2. The present cases deal with non banking financial company. When such company invites deposits and the depositors invest their monies in them, the grievance of such depositors and investors can be taken note of by the Redressal Mechanism provided in the Indian Companies Act, 1956. They cannot approach the authorities under the State Act and particularly alleging offences punishable thereunder because the Parliament Statute enacts penal provisions as well. Mr. Pradhan submits that this question and issue has not been answered and dealt with by the Honourable Supreme Court in the judgment in Baskaran's case (supra).

3. Mr. Pradhan submits that now the Petitioners have obtained a clarification from the Honourable Supreme Court on this point and therefore, after being shown the Supreme Court order, we have allowed Mr. Pradhan to elaborate his contentions and have heard him at length.

4. Hence, RULE. The Respondents waive service. By consent, Rule made returnable forthwith.

5. We have taken the facts in Writ Petition No.3801/2012. The Petitioner has approached this Court for quashing of the proceedings initiated under the MPID Act, 1999 being MPID Special Case No.1/2004 pending on the file of the learned Special Judge (designated court under the MPID Act, 1999), Pune on the ground that he was the Director of Kirloskar Investment & Finance Ltd. (for short “KIFL”) which was a Non Banking Financial Company (for short “NBFC”) regulated and controlled under Chapter IIIB of the Reserve Bank of India Act 1934 and the same is under liquidation at the instance of the Reserve Bank of India in exercise of powers under Section 45MC of the Reserve Bank of India Act 1934 by the order of the High Court of Karnataka.

6. It is stated that on 06th April, 1999, the Petitioner resigned from the “KIFL”. On 01st September, 1998 and 31st January, 1998, the Complainant invested amounts in KIFL which were due on 26.09.2000 and 27.02.2000 respectively. The Petitioner not being an Executive Director on the date of maturity of the said amounts, cannot be held liable for the default thereof. Further the Reserve Bank of India had preferred Company Petition No.2 of 2000 before the Karnataka High Court for winding up of KIFL. By the judgment and order dated 24.12.2010, the KIFL was declared to be wound up and the Official Liquidator was appointed.

7. It is stated that earlier the Petitioner had preferred Writ Petition No.1427 of 2004 inter alia challenging the constitutional validity of the MPID Act, 1999. The Full Bench of this Court by the judgment and order dated 05.09.2005 declared the MPID Act, 1999 as ultra vires the Constitution. The State had challenged the said judgment before the Honourable Supreme Court in Appeal Nos.1382-1446 of 2005. Similarly, the Constitutional validity of the Tamil Nadu Protection of Interest of Depositors (in Financial Establishments) Act, 1997 was challenged before the Madras High Court which upheld it and observed that it is Constitutionally valid. The same was challenged before the Honourable Supreme Court by K.K.Baskaran. The Honourable Supreme Court by th