ANDHRA PRADESH PROTECTION OF DEPOSITORS OF FINANCIAL ESTABLISHMENTS ACT, 1999
(1) This Act may be called the Andhra Pradesh Protection of Depositors of Financial Establishments Act, 1999.
(2) It extends to the whole of the State of Andhra Pradesh.
(3) It shall come into force on such date * as the Government may, by notification, appoint.
In this Act, unless the context otherwise requires, _
(a) "competent authority" means the authority appointed under Section 4;
(b) "deposit" means the deposit of a sum of money either in lumpsum or instalments made with a financial establishment for a fixed period, for interest or return in any kind;
(c) "Financial Establishment" means an individual, an association or body 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 (Central Act 1 of 1956) or a Corporation or a Co-operative Society owned and 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 (C
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 allege
(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 and discharge such other functions as may be prescribed, in addition to the powers and functions specified under 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 committed any default or is likely to defr
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 lakh.
(1) For the purpose 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 (Central Act III of 1909) and the Provincial Insolvency Act, 1920 (Central Act V of 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 dep
(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, a notice accompanied by the application and affidavits and of the evidence, if any, recorded, calling upon to show-cause on a date to be specified in the notice why the order of attachment should not be made absolute.
(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 desires, to the attachment of the property or any portion thereof on the ground that he has an interest in such property or po
(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 transferees property as is equivalent to the value of the property transferred should not be attached.
(2) Wh
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 of the Special Court, may appeal to the High Court within thirty days from the date of such order.
The Andhra Pradesh Protection of Depositors of Financial Establishments Act, 1999 (hereinafter "the Act") was enacted to protect the deposits made by the public in financial establishments and for matters connected therewith. Section 11 of the Act deals with the provision for appeals against orders passed under the Act.
Section 11 of the Andhra Pradesh Protection of Depositors of Financial Establishments Act, 1999 provides for the right of appeal. The section states that any person, including the Competent Authority, if aggrieved by an order passed by the Special Court under the Act, may prefer an appeal to the High Court within a prescribed period. The provision also addresses the filing of false or vexatious complaints, prescribing punishment for such conduct.
The essential ingredients of Section 11 include:- Right of appeal available to any person including the Competent Authority- Appeal lies against orders of the Special Court- Appeal lies to the High Court- Provision for punishment for filing false or vexatious complaints
The scope of Section 11 extends to:- Providing a statutory remedy of appeal to aggrieved parties- Covering both the Competent Authority and private persons- Ensuring judicial oversight over orders of the Special Court- Deterring frivolous litigation through penal provisions
Under Section 11, 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 ten years and with fine which may extend to rupees one lakh.
Appellate Remedy - Section 11 provides a statutory right of appeal to any person including the Competent Authority, ensuring judicial oversight over Special Court orders. [Source: ]
False Complaint Penalty - Making a complaint knowing it to be false or vexatious is punishable with imprisonment up to ten years and fine up to one lakh rupees, serving as a deterrent against frivolous litigation. [Source: ]
Competent Authority's Role - The Competent Authority under the Act is empowered to launch prosecution when a financial establishment has committed a default punishable under Section 5 of the Act. [Source: ]
Depositor Protection Objective - The Act's primary purpose is to protect deposits made by the public in financial establishments, with Sections 8, 9, and 11 addressing criminal liability for default, payment obligations, and penalties. [Source: ]
Maximum Punishment Comparison - For offences under Section 420 IPC, the maximum punishment is 7 years, while under Section 5 of the AP Protection of Depositors Act, the maximum punishment is 10 years, indicating the seriousness with which deposit defaults are treated. [Source: ]
Narrow Interpretation Rejected - Courts have held that enabling only the Competent Authority to file applications would be a very narrow interpretation and would defeat the very purpose for which the Act was promulgated; depositors may also come forward and file applications. [Source: Garnet Finance Limited, Rep. by its Managing Director Challa Sudhakar VS Commissioner of Police, Hyderabad City - 2015 0 Supreme(AP) 153]
Share Conversion Validity - Where depositors voluntarily request conversion of their deposits into shares of the company, with share certificates issued and intimation given to ROC and Income Tax Department, such conversion may be valid and not constitute default under the Act. [Source: Garnet Finance Limited, Rep. by its Managing Director Challa Sudhakar VS Commissioner of Police, Hyderabad City - 2015 0 Supreme(AP) 153]
Attachment and Sale - The Act provides a complete scheme for attachment of properties and their sale to realize amounts for payment to depositors, with Section 11 being part of this comprehensive framework. [Source: Ramesh S/o Ramchandra Havele VS State of Maharashtra - 2018 0 Supreme(Bom) 1379]
Security in Lieu of Attachment - It is open to the accused to show bona fides, and if the Designated Court is satisfied, it can release attachment by accepting security offered, demonstrating the Act's balanced approach. [Source: Ramesh S/o Ramchandra Havele VS State of Maharashtra - 2018 0 Supreme(Bom) 1379]
Default Determination - The failure of accused persons to take steps to show bona fides or offer security indicates that they are defaulters of the nature mentioned in the Act. [Source: Ramesh S/o Ramchandra Havele VS State of Maharashtra - 2018 0 Supreme(Bom) 1379]
Equitable Distribution - Distribution of amounts received from sale of attached properties must be "equitable," with the intention to protect interests of depositors from the public, mostly middle class and poor economic strata. [Source: NSEL Investors Action Group VS Chandravali Manek - 2023 0 Supreme(Bom) 331]
Inter-Corporate Deposits Excluded - Inter-corporate deposits/loans (loans advanced by one company to another registered under Companies Act) would not amount to a "deposit" within the meaning and purpose of the MPID Act, a principle applicable analogously. [Source: NSEL Investors Action Group VS Chandravali Manek - 2023 0 Supreme(Bom) 331]
Senior Citizen Protection - The Act's provisions have been interpreted to prioritize distribution to vulnerable depositors, including senior citizens aged 91 years who are bedridden and suffering from health issues. [Source: NSEL Investors Action Group VS Chandravali Manek - 2023 0 Supreme(Bom) 331]
No Repugnancy to Central Law - The Andhra Pradesh Protection of Depositors of Financial Establishments Act, 1999 does not create any repugnancy to any Central law, establishing its constitutional validity. [Source: ]
Exclusion of Government Entities - The definition of "Financial Establishments" under the Act excludes corporations or cooperative societies owned or controlled by any State Government or the Central Government. [Source: ]
Territorial Application - The Act extends to the whole of the State of Andhra Pradesh (and now Telangana post-bifurcation). [Source: ]
Competent Authority's Powers - The Competent Authority has powers to examine any person who may be able to give information about the financial establishment, its business, or deposits. [Source: ]
State Law Character - The Act is a state-specific legislation that received the assent of the President on 23.06.1999, making it a valid enactment under the constitutional framework. [Source: ]
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 (Central Act 2 of 1974) for the trial of warrant cases by Magistrate.
(2) 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 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 inforce or any custom or usage or any instrument having affect by virtue of any such law.
Section 14 of the Andhra Pradesh Protection of Depositors of Financial Establishments Act, 1999, primarily deals with the overriding effect of the Act over other laws, ensuring the supremacy of its provisions in matters related to depositors' protection and enforcement actions. It emphasizes the Act's authority to prevail in case of any inconsistency with other laws.
Section 14 states that the Act shall have overriding effect over any other law to the extent of any inconsistency. It explicitly provides that provisions of this Act shall prevail over conflicting laws, ensuring the enforcement of depositor protections without legal hindrance.
Section 14 itself does not prescribe any punishment; rather, it provides a legal principle of overriding effect. Punishments for violations of the Act's provisions are specified elsewhere, such as penalties for default or misconduct under other sections.
Note: The references are based on the provided sources, primarily from the case law and legal commentary in "Tadepalli Surya Venkata Subbayya Sarma VS State of Andhra Pradesh".
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 there 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 there- under.
If any doubt or difficulty arises in giving effect to the provision 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.
(1) The Government may, by notification make Rules to carry out the purposes of this Act.
(2) Every rule made under this Act, shall immediately after it is made, be laid before the Legislative Assembly of the State, if it is in session and if it is not in session, in the session immediately following for a total period of fourteen days which may be comprised in one session or in two successive sessions, and if, before the expiration of the session in which it is so laid or the session immediately following the Legislative Assembly agrees in making any modification in the rule or in the annulment of the rule, the rule shall, from the date on which the modification or annulment is notified, have effect only in such modified form or shall stand annulled as the case may be so, however, that any such modification or annulment shall be without prejudice to the validity of anything previo
Elevate your legal practice with advanced AI-driven research and drafting solutions. Experience unmatched efficiency, precision, and security, tailored exclusively for legal professionals.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
AI Assistant
