THE GUJARAT PROTECTION OF INTEREST OF DEPOSITORS (IN FINANCIAL ESTABLISHMENTS) ACT, 2003.

GUJARAT ACT No. 1 OF 2004.

22nd January, 2004

AN ACT to protect the interest of depositors of the Financial Establishments and for the matters connected therewith or incidental thereto.

Read full Act

1 Short title and commencement

(1) This Act may be called the Gujarat Protection of Interest of Depositors (in Financial Establishments) Act, 2003.

(2) It shall come into force on such date as the State Government may, by notification in the Official Gazette, appoint.

2 Definitions

In this Act, unless the context otherwise requires, -

• "Competent Authority" means the Competent Authority appointed under section 5;
• "Designated Court" means the Designated Court constituted under section 9;
• "deposit" includes and shall be deemed always to have been included any receipt of money or acceptance of any valuable commodity by any Financial Establishment to be returned after a specified period or otherwise, either in cash or in kind or in the form of a specified service with or without any benefit in the form of interest, bonus, profit or in any other form, but does not include —

• amounts raised by way of share capital or by way of debenture, bond or any other instrument covered under the guidelines given and regulations made by the Securities and Exchange Board of India, established under the Securities and Exchange Board of India Act, 1992;
• amounts contributed as capital by partners of a firm;
• amounts r
  

3 Fraudulent defaults by Financial Establishment

Any Financial Establishment, which fraudulently defaults any repayment of deposit on maturity alongwith 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, 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 six years and with fine which may extent to ten lacs of rupees and such Financial Establishment also shall be liable for a fine which may extend to ten lacs of rupees:

Provided that in the absence of special and adequate reasons recorded in the judgement of the court, the imprisonment shall not be less than three years and the fine shall not be less than one lac of rupees and in case of imposition of fine on Financial Establishment, it s

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Legal Commentary on Section 3 of The Gujarat Protection of Interest of Depositors (In Financial Establishments) Act, 2003

Introduction

The Gujarat Protection of Interest of Depositors (In Financial Establishments) Act, 2003 (hereinafter "GPID Act") was enacted to protect the interests of depositors who have been defrauded by unscrupulous financial establishments. Section 3 of the Act is a pivotal penal provision that creates criminal liability for default in repayment of deposits by financial establishments.

What Section 3 Says

Section 3 of the GPID Act establishes the criminal offence of default by a financial establishment in returning deposits. While the source materials do not reproduce the exact text of Section 3 of the GPID Act verbatim, the provision is consistently invoked in conjunction with Sections 406, 409, 420, and 120B of the Indian Penal Code for offences involving cheating, criminal breach of trust, and criminal conspiracy in the context of deposit defaults [Chiman Singh S/o Khuma Ji VS State Of Gujarat - 2022 0 Supreme(Guj) 464, Niteshkumar Bhaichadbhai Sorathiya VS State of Gujarat - 2019 0 Supreme(Guj) 37].

Essential Ingredients

Based on judicial interpretation of analogous provisions across similar state enactments, the essential ingredients typically include:

1. Existence of a Financial Establishment: The entity must fall within the statutory definition of a "financial establishment" that accepts deposits [Lotus Refineries Private Ltd VS State of Maharashtra - 2023 0 Supreme(Bom) 2058, N. S. Agro Farm & Hatchery VS Competent Authority & District Revenue Officer - 2014 0 Supreme(Mad) 156].

2. Collection of Deposits: The establishment must have received deposits from the public under any scheme, arrangement, or other manner [P. S. Sekar VS State rep. by The Inspector of Police, District Crime Branch, Theni District - 2012 0 Supreme(Mad) 4888].

3. Default in Repayment: The establishment must have defaulted in returning the deposit after maturity or on demand, or failed to pay interest or render promised services [P. S. Sekar VS State rep. by The Inspector of Police, District Crime Branch, Theni District - 2012 0 Supreme(Mad) 4888].

4. Fraudulent Intent: The government must have reason to believe that the financial establishment acted in a calculated manner with an intention to defraud depositors [STATE REPRESENTED BY THE PRINCIPAL SECRETARY TO GOVERNMENT, HOME (POLICE XIX) DEPARTMENT VS K. S. PALANICHAMY - 2017 4 Supreme 385].

Scope of Section

The scope of Section 3 extends to:

• All Financial Establishments: Including individuals, firms, associations, and companies carrying on the business of receiving deposits [New Horizon Sugar Mills Ltd. , Pondicherry & Another VS Union of India & Others - 2007 0 Supreme(Mad) 1076].

• Attachment of Properties: The government may attach properties acquired from deposits, including properties standing in the name of third parties or personal assets of promoters, partners, directors, and managers [M. S. Shivashankar VS State of Karnataka - 2009 0 Supreme(Kar) 84].

• Protective Legislation: The Act is a special law intended to protect the interests of depositors and operates as a self-contained code with inbuilt mechanisms [Vallabhbhai Laljibhai Pambhar VS State Of Gujarat - 2022 0 Supreme(Guj) 765].

Punishment

The punishment under Section 3, read with Section 5 of the GPID Act, provides for imprisonment which may extend to ten years and fine that may extend to one lakh rupees, with every person responsible for the management of the affairs of the financial establishment being liable [G. S. Ramarao Gupta VS The Competent Authority & District Revenue Officer, Salem - 2010 0 Supreme(Mad) 5131].

Legal Comments

• Constitutional Validity - The Supreme Court has upheld the constitutional validity of analogous state legislation protecting depositors' interests, affirming legislative competence under Entry 32 of the State List. - [Sonal Hemant Joshi VS State Of Maharashtra - 2011 0 Supreme(SC) 1213]

• Legislative Competence - The GPID Act falls within Entries 1, 30, and 32 of List II (State List) of the Seventh Schedule to the Constitution, relating to public order, money lending, and trading establishments. - [Dulisons Cereals, Through its proprietor Smt. Kanta Gupta vs State of Maharashtra, (Through Competent Authority appointed under the MPID Act, 1999) - 2026 0 Supreme(Bom) 273]

• Protective Intent - The Act is a special enactment to ameliorate the interest of depositors and to deal with financial establishments grabbing money from the public, mostly middle class and poor, on promises of high returns. - [PRAMOD BHAICHAND RAISONI VS STATE OF MAHARASHTRA - 2019 0 Supreme(Bom) 764]

• Quasi-Criminal Nature - Proceedings under the MPID Act (and by analogy the GPID Act) are quasi-civil and quasi-criminal, arising from financial fraud inducing deposits with false promises, aimed at safeguarding innocent depositors. - [Dulisons Cereals, Through its proprietor Smt. Kanta Gupta vs State of Maharashtra, (Through Competent Authority appointed under the MPID Act, 1999) - 2026 0 Supreme(Bom) 273]

• No Repugnancy with IBC - The MPID Act and the Insolvency and Bankruptcy Code, 2016 occupy distinct legislative fields; the non-obstante clause in Section 238 of IBC does not override the special public law remedy under the MPID Act for depositor protection. - [Dulisons Cereals, Through its proprietor Smt. Kanta Gupta vs State of Maharashtra, (Through Competent Authority appointed under the MPID Act, 1999) - 2026 0 Supreme(Bom) 273]

• Distinct from Banking - The GPID Act deals with unincorporated trading establishments accepting deposits, which is distinct from "banking" under Entry 45 of the Union List, and thus falls within state legislative competence. - [Thiru Muruga Finance VS State of Tamil Nadu - 2000 0 Supreme(Mad) 899]

• Anticipatory Bail Restriction - By virtue of Section 17(2) of the GPID Act, the Designated Court has been denuded of its powers under Section 438 of Cr.P.C. to grant anticipatory bail, though the High Court retains its inherent powers. - [Jigarbhai Parshottambhai (Dasbhai) Thakkar Alias Pragneshbhai Parshottambhai (Dasbhai) Thakkar VS State Of Gujarat - 2020 0 Supreme(Guj) 750, Kureshi Irfan Hasambhai Thro Kureshi Kalubhai Hasambhai VS State of Gujarat - 2021 0 Supreme(Guj) 345]

• Bail Considerations - Courts consider the nature of allegations, gravity of offences, role attributed to the accused, and whether the prime accused have already been enlarged on regular bail when deciding bail applications under Section 3. - [Chiman Singh S/o Khuma Ji VS State Of Gujarat - 2022 0 Supreme(Guj) 464]

• Economic Offence Gravity - The seriousness of economic offences and the larger interests of the public and State are paramount considerations; custodial interrogation may be necessary in large-scale deposit frauds. - [Sohail Raza Khan S/O Mohammed Raza Khan VS State Of Gujarat - 2024 0 Supreme(Guj) 502, Prasan Kumar Patra VS State of Odisha - 2019 0 Supreme(Ori) 184]

• Definition of Deposit - The term "deposit" includes both money and valuable commodities, and the repeated use of the expression "any" reflects the legislative intent to cast the net broadly to protect depositors. - [State of Maharashtra VS 63 Moons Technologies Ltd. - 2022 0 Supreme(SC) 372]

• Corporate Deposits Exclusion - Inter-corporate deposits/loans made by one company with another company registered under the Companies Act may not amount to "deposit" within the meaning of depositor protection laws, as corporate entities are expected to make informed business decisions. - [Ashish Mahendrakar VS State of Maharashtra - 2019 0 Supreme(Bom) 1493]

• Vicarious Liability - Mere canvassing for deposits does not establish management responsibility under Section 5 of the TNPID Act (analogous to GPID Act); family members should not be implicated without clear evidence of involvement in management. - [Geethalakshmi vs State Rep. by The Inspector of Police - 2025 0 Supreme(Mad) 3512]

• Continuing Offence - The offence under Section 6 of the O.P.I.D. Act (analogous to GPID Act) is a continuing offence, and the Court takes note of the continuing nature of the default. - [Prasan Kumar Patra VS State of Odisha - 2019 0 Supreme(Ori) 184]

• Attachment Powers - The government is empowered to attach not only properties acquired from deposits but also personal assets of promoters, partners, directors, managers, or members of the financial establishment. - [M. S. Shivashankar VS State of Karnataka - 2009 0 Supreme(Kar) 84]

• Property Linkage - Properties can be attached if the funds used for their purchase are linked to deposits collected by the financial establishment, regardless of the legitimacy of the income at the time of purchase. - [K. Nagarathinam VS Competent Authority - 2024 0 Supreme(Mad) 1480]

• Compounding of Offences - Under analogous legislation, offences under the Act can be compounded before the Competent Authority with the permission of the Special Court, upon payment of the entire amount due to depositors. - [Desappan & Others VS State represented by Inspector of Police - 2006 0 Supreme(Mad) 401]

• Non-Obstante Clause - Section 3 operates notwithstanding anything contained in any other law for the time being in force, giving it overriding effect over other statutory provisions. - [M. S. Shivashankar VS State of Karnataka - 2009 0 Supreme(Kar) 84, STATE REPRESENTED BY THE PRINCIPAL SECRETARY TO GOVERNMENT, HOME (POLICE XIX) DEPARTMENT VS K. S. PALANICHAMY - 2017 4 Supreme 385]

• Designated Court Jurisdiction - The Gujarat Protection of Interest of Depositors Act, 2003 has an inbuilt mechanism where the Designated Court has exclusive jurisdiction over matters relating to attachment, sale of properties, and repayment to depositors. - [Vallabhbhai Laljibhai Pambhar VS State Of Gujarat - 2022 0 Supreme(Guj) 765]

• Real Estate Exclusion - The Odisha Protection of Interests of Depositors Act (analogous to GPID Act) was not intended to apply to real estate transactions, as such transactions involve sale agreements and not deposits under any scheme or arrangement. - [Mahasweta Biswal VS State of Odisha - 2020 0 Supreme(Ori) 109]

• Self-Contained Code - The Act is a self-contained code providing for investigation, attachment, management of properties, adjudication by Special Court, and appeals, creating a comprehensive mechanism for depositor protection. - [New Horizon Sugar Mills Ltd. , Pondicherry & Another VS Union of India & Others - 2007 0 Supreme(Mad) 1076]

4 Attachment of properties on default of return of deposit

(1) Notwithstanding anything contained in any other law for the time being in force, -

• Where upon complaint received from the depositor or otherwise, the State Government is satisfied that any Financial Establishment has failed, -
• to return the deposit on maturity on demand by the depositor; or
• to pay interest or other assured benefit; or
• to provide the service promised against such deposit; or
• Where the State Government has reason to believe that any Financial Establishment is acting in a calculated manner detrimental to the interest of the depositors with an intention to defraud them; and if the State Government is satisfied that such Financial Establishment is not likely to return the deposits or make payment of interest or other benefits assured or to provide the services against which the deposit is received, the State Government may, in order to protect the interest of the depositors of such Financial Establishment, a
  

5 Appointment of Competent Authority

(1) The State Government shall while issuing the order under sub-section (1) of section 4, appoint an officer not below the rank of the Deputy Collector to be the Competent Authority to exercise control over the moneys, properties and assets attached by the State Government under section 4.

(2) The Competent Authority shall have such other powers and discharge such other functions as may be prescribed by rules for carrying out the purposes of this Act.

(3) The Competent Authority shall apply, within thirty days from the date of the publication of the order made under section 4 to the Designated Court, accompanied by one or more affidavits stating therein the grounds on which the State Government has issued the said order and the amount of moneys or other properties or assets belonging to or believed to have been acquired out of the deposits and the details, if any, or persons in whose name such property is believed to have been invested or acquired or any other propert

6 Duties and powers of Competent Authority

(1) The Competent Authority, on receipt of order of his appointment, shall take such necessary actions as it is necessary or expedient for taking physical possession of all the moneys, properties and assets of the concerned Financial Establishment expeditiously and he shall have all the powers which are necessary for the aforesaid purpose.

(2) Without prejudice to the generality of the powers vested under sub-section (1), the Competent Authority shall be entitled to -

• require assistance of any police authority or any other authority or person and on such requisition, it shall be the duty of the police authority or such other authority or person to extend necessary assistance;
• open bank accounts in any scheduled commercial bank and credit all moneys realised and operate the bank accounts while dealing;
• to direct the person to furnish the necessary information relating to moneys, properties and assets of the Financial Establishment to hand over po
  

7 Assessment of assets, deposits and liabilities

(1) The Competent Authority shall, within thirty days from the date of his appointment, assess the assets, deposits and liabilities of the Financial Establishment and submit the statement thereof to the Designated Court.

(2) The Competent Authority thereafter shall issue notice either individually or by means of effective media publication inviting the claims by secured creditors, if any, and also the depositors of the Financial Establishment to submit their claims with sufficient proof in support thereof.

(3) Every notice under sub-section (2) shall specify that if the statement of claims is not sent to the Competent Authority before the expiry of the period of one month from the date of such notice, the claims shall not be treated as claim entitled to be paid under the provisions of this Act.

(4) Every notice to a secured creditor shall require him to value the security before the expiry of the period of one month from the date of the notice and such notice sh

8 Report by Competent Authority

The Competent Authority shall, after complying with the provisions of section 7, make an application to the Designated Court seeking permission to make payment to the depositors from out of the money realised. While making such application, the Competent Authority shall assess the liability to the depositors and the other liabilities and in case the money realised or realisable is not sufficient to meet with the entire liability, make a submission to the Designated Court seeking permission for making payment to the depositors and disburse the money as per the orders of the Designated Court.

9 Designated Court

(1) For the purposes of this Act, the State Government may, with the concurrence of the Chief Justice of the High Court of Gujarat, by notification, in the Official Gazette, constitute one or more Designated Court of the level of the Court of a District and Sessions Judge for such area or for such case or group of cases or such class as may be specified in the notification.

(2) No Court, other than the Designated Court shall have jurisdiction to deal with or decide any question which the Designated Court is empowered to deal with or decide by or under this Act.

(3) Any case or proceeding pending before any Court or any authority in relation to the moneys, properties or assets of the Financial Establishment covered by an order made under section 4, shall stand transferred to the respective Designated Court and shall be dealt with and decided by such Court in accordance with the provisions of this Act.

10 Powers of Designated Court regarding attachment

(1) Upon receipt of an application made under section 5, the Designated Court shall issue to the Financial Establishment or to any other person whose moneys, properties or assets are attached by the State Government and vested in the Competent Authority under section 4, a notice accompanied by the application and affidavits and copies of the evidence, if any, recorded, calling upon the said 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.

(2) The Designated 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 of the person to whom the notice is issued under sub-section (1), calling upon all such persons to appear on the same date as that specified in the notice and to make objection if they so desire, to the attachment of the moneys, properties or assets

11 Powers of Designated Court regarding realisation of assets and payment to depositors

(1) The Designated Court shall have all the powers for giving effect to the provisions of this Act.

(2) Without prejudice to the generality of sub-section (1), the Designated Court may —

• give any direction to the Competent Authority as it deems fit, for effective implementation of the provisions of this Act;
• approve the statement of dues of the Financial Establishment which is due from various debtors, the assessment of the value of the assets of the Financial Establishment and finalise the list of the depositors and their respective dues;
• direct the Competent Authority to take possession of any property or assets belonging to or in the control of the Financial Establishment and to sell, transfer or realise the attached property or assets either by public auction or by private sale as it deems fit depending upon the nature of property or assets and credit the sale proceeds thereof to the bank accounts;
• approve the necessary expenditure
  

12 Attachment of property of malafide transferees

(1) Where the property or 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 depositors and where the Designated Court is satisfied by an affidavit or otherwise, that there is reason to believe that the said Financial Establishment has transferred any of the property otherwise than in good faith or for inadequate 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

13 Security in lieu of attachment

Any Financial Establishment or person whose moneys, properties or assets have been or are 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 the security offered and given is, in the opinion of the Designated Court, satisfactory and sufficient, the Designated Court may modify or cancel the order of attachment or as the case may be, refrain from passing the order of attachment.

14 Administration of property attached

The Designated Court may, on the application of any person interested in any moneys, properties or assets attached and vested in the Competent Authority under this Act and after giving the Competent Authority an opportunity of being heard, make such order as the Designated Court considers just and reasonable for -

• providing from such of the moneys, properties or assets attached and 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;
• safeguarding, so far as may be practicable, the interest of any business affected by the attachment and in particular, the interest of any partner or any other person connected with such business.

15 Appeal

(1) Any person, including the Competent Authority, if aggrieved by an order of the Designated Court, may appeal to the High Court within thirty days from the date of such order.

(2) In computing the period of limitation, the provisions of sections 4 and 12 of the Limitation Act, 1963 shall so far as may be, apply.

16 Special Public Prosecutor

The State Government may, by an order, appoint one or more advocates of not less than ten years standing, as a Special Public Prosecutor as well as Special Government Pleader for the purpose of conducting the case in the Designated Court.

17 Procedure and powers of Designated Court regarding offences

(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 for the trial of warrant cases by Magistrates.

(2) The provisions of the Code of Criminal Procedure, 1973 except section 438 thereof shall, so far as may be, apply to the proceedings before a Designated Court and for the purposes of the said provisions a Designated Court shall be deemed to be a Magistrate.

18 Act to override other laws

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.

19 Protection of action taken in good faith

No suit, prosecution or other legal proceedings shall lie against the State Government or the Competent Authority or an officer or employee of the State Government for anything which is in good faith done or intended to be done in pursuance of the provisions of this Act, or rules made thereunder.

20 Power to make rules

(1) The State Government may, by notification in the Official Gazette, make rules for carrying out the purposes of this Act.

(2) All rules made under this section shall be laid for not less than thirty days before the State Legislature as soon as may be after they are made and shall be subject to rescission by the State Legislature or to such modification as the State Legislature may make during the session in which they are so laid or the session immediately following.

(3) Any rescission or modification so made by the State Legislature shall be published in the Official Gazette, and shall thereupon take effect.

21 Power to remove difficulty

If any difficulty arises in giving effect to the provisions of this Act, the State Government may, by order, do anything, not inconsistent with the provisions of this Act, as appears it to be necessary or expedient for removing the difficulty:

Provided that no such order shall be made under this section after the expiry of three years from the commencement of this Act.

S.1 Short title and commencement.

(1) This Act may be called the Gujarat Protection of Interest of Depositors (in Financial Establishments) Act, 2003.

(2) It shall come into force on such date as the State Government may, by notification in the Official Gazette, appoint.

S.2 Definitions.

In this Act, unless the context otherwise requires, -

• (a) "Competent Authority" means the Competent Authority appointed under section 5;
• (b) "Designated Court" means the Designated Court constituted under section 9;
• (c) "deposit" includes and shall be deemed always to have been included any receipt of money or acceptance of any valuable commodity by any Financial Establishment to be returned after a specified period or otherwise, either in cash or in kind or in the form of a specified service with or without any benefit in the form of interest, bonus, profit or in any other form, but does not include –
  • (i) amounts raised by way of share capital or by way of debenture, bond or any other instrument covered under the guidelines given and regulations made by the Securities and Exchange Board of India, established under the Securities and Exchange Board of India Act, 1992 (15 of 1992);
  • (ii) amounts contributed as capital by pa
    

S.3 Fraudulent defaults by Financial Establishment.

Any Financial Establishment, which fraudulently defaults any repayment of deposit on maturity alongwith 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, 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 six years and with fine which may extent to ten lacs of rupees and such Financial Establishment also shall be liable for a fine which may extend to ten lacs of rupees:

Provided that in the absence of special and adequate reasons recorded in the judgement of the court, the imprisonment shall not be less than three years and the fine shall not be less than one lac of rupees and in case of imposition of fine on Financial Establishment, it

S.4 Attachment of properties on default of return of deposit.

(1) Notwithstanding anything contained in any other law for the time being in force, -

• (i) Where upon complaint received from the depositor or otherwise, the State Government is satisfied that any Financial Establishment has failed, -
  • (a) to return the deposit on maturity on demand by the depositor; or
  • (b) to pay interest or other assured benefit; or
  • (c) to provide the service promised against such deposit; or
• (ii) Where the State Government has reason to believe that any Financial Establishment is acting in a calculated manner detrimental to the interest of the depositors with an intention to defraud them;

and if the State Government is satisfied that such Financial Establishment is not likely to return the deposits or make payment of interest or other benefits assured or to provide the services against which the deposit is received, the State Government may, in order to protect the interest of

S.5 Appointment of Competent Authority.

(1) The State Government shall while issuing the order under sub-section (1) of section 4, appoint an officer not below the rank of the Deputy Collector to be the Competent Authority to exercise control over the moneys, properties and assets attached by the State Government under section 4.

(2) The Competent Authority shall have such other powers and discharge such other functions as may be prescribed by rules for carrying out the purposes of this Act.

(3) The Competent Authority shall apply, within thirty days from the date of the publication of the order made under section 4 to the Designated Court, accompanied by one or more affidavits stating therein the grounds on which the State Government has issued the said order and the amount of moneys or other properties or assets belonging to or believed to have been acquired out of the deposits and the details, if any, or persons in whose name such property is believed to have been invested or acquired or any other proper

S.6 Duties and powers of Competent Authority.

(1) The Competent Authority, on receipt of order of his appointment, shall take such necessary actions as it is necessary or expedient for taking physical possession of all the moneys, properties and assets of the concerned Financial Establishment expeditiously and he shall have all the powers which are necessary for the aforesaid purpose.

(2) Without prejudice to the generality of the powers vested under sub-section (1), the Competent Authority shall be entitled to -

• (a) require assistance of any police authority or any other authority or person and on such requisition, it shall be the duty of the police authority or such other authority or person to extend necessary assistance;
• (b) open bank accounts in any scheduled commercial bank and credit all moneys realised and operate the bank accounts while dealing;
• (c) to direct the person to furnish the necessary information relating to moneys, properties and assets of the Financial Establishment to
  

S.7 Assessment of assets, deposits and liabilities.

(1) The Competent Authority shall, within thirty days from the date of his appointment, assess the assets, deposits and liabilities of the Financial Establishment and submit the statement thereof to the Designated Court.

(2) The Competent Authority thereafter shall issue notice either individually or by means of effective media publication inviting the claims by secured creditors, if any, and also the depositors of the Financial Establishment to submit their claims with sufficient proof in support thereof.

(3) Every notice under sub-section (2) shall specify that if the statement of claims is not sent to the Competent Authority before the expiry of the period of one month from the date of such notice, the claims shall not be treated as claim entitled to be paid under the provisions of this Act.

(4) Every notice to a secured creditor shall require him to value the security before the expiry of the period of one month from the date of the notice and such notice s

S.8 Report by Competent Authority.

The Competent Authority shall, after complying with the provisions of section 7, make an application to the Designated Court seeking permission to make payment to the depositors from out of the money realised. While making such application, the Competent Authority shall assess the liability to the depositors and the other liabilities and in case the money realised or realisable is not sufficient to meet with the entire liability, make a submission to the Designated Court seeking permission for making payment to the depositors and disburse the money as per the orders of the Designated Court.

S.9 Designated Court.

(1) For the purposes of this Act, the State Government may, with the concurrence of the Chief Justice of the High Court of Gujarat, by notification, in the Official Gazette, constitute one or more Designated Court of the level of the Court of a District and Sessions Judge for such area or for such case or group of cases or such class as may be specified in the notification.

(2) No Court, other than the Designated Court shall have jurisdiction to deal with or decide any question which the Designated Court is empowered to deal with or decide by or under this Act.

(3) Any case or proceeding pending before any Court or any authority in relation to the moneys, properties or assets of the Financial Establishment covered by an order made under section 4, shall stand transferred to the respective Designated Court and shall be dealt with and decided by such Court in accordance with the provisions of this Act.

S.10 Powers of Designated Court regarding attachment.

(1) Upon receipt of an application made under section 5, the Designated Court shall issue to the Financial Establishment or to any other person whose moneys, properties or assets are attached by the State Government and vested in the Competent Authority under section 4, a notice accompanied by the application and affidavits and copies of the evidence, if any, recorded, calling upon the said 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.

(2) The Designated 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 of the person to whom the notice is issued under sub-section (1), calling upon all such persons to appear on the same date as that specified in the notice and to make objection if they so desire, to the attachment of the moneys, properties or asset

S.11 Power of Designated Court regarding realization of assets and payment to depositors.

(1) The Designated Court shall have all the powers for giving effect to the provisions of this Act.

(2) Without prejudice to the generality of sub-section (1), the Designated Court may –

• (a) give any direction to the Competent Authority as it deems fit, for effective implementation of the provisions of this Act;
• (b) approve the statement of dues of the Financial Establishment which is due from various debtors, the assessment of the value of the assets of the Financial Establishment and finalise the list of the depositors and their respective dues;
• (c) direct the Competent Authority to take possession of any property or assets belonging to or in the control of the Financial Establishment and to sell, transfer or realise the attached property or assets either by public auction or by private sale as it deems fit depending upon the nature of property or assets and credit the sale proceeds thereof to the bank accounts;
• (d) approve the neces
  

S.12 Attachment of property of malafide transferees.

(1) Where the property or 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 depositors and where the Designated Court is satisfied by an affidavit or otherwise, that there is reason to believe that the said Financial Establishment has transferred any of the property otherwise than in good faith or for inadequate 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 i

S.13 Security in lieu of attachment.

Any Financial Establishment or person whose moneys, properties or assets have been or are 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 the security offered and given is, in the opinion of the Designated Court, satisfactory and sufficient, the Designated Court may modify or cancel the order of attachment or as the case may be, refrain from passing the order of attachment.

S.14 Administration of property attached.

The Designated Court may, on the application of any person interested in any moneys, properties or assets attached and vested in the Competent Authority under this Act and after giving the Competent Authority an opportunity of being heard, make such order as the Designated Court considers just and reasonable for -

• (a) providing from such of the moneys, properties or assets attached and 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 partner or any other person connected with such business.

S.15 Appeal.

(1) Any person, including the Competent Authority, if aggrieved by an order of the Designated Court, may appeal to the High Court within thirty days from the date of such order.

(2) In computing the period of limitation, the provisions of sections 4 and 12 of the Limitation Act, 1963 (36 of 1963) shall so far as may be, apply.

S.16 Special Public Prosecutor.

The State Government may, by an order, appoint one or more advocates of not less than ten years standing, as a Special Public Prosecutor as well as Special Government Pleader for the purpose of conducting the case in the Designated Court.

S.17 Procedure and powers of Designated Court regarding offences.

(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 (2 of 1974) for the trial of warrant cases by Magistrates.

(2) The provisions of the Code of Criminal Procedure, 1973 except section 438 thereof shall, so far as may be, apply to the proceedings before a Designated Court and for the purposes of the said provisions a Designated Court shall be deemed to be a Magistrate.

S.18 Act to override other laws.

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.

S.19 Protection of action taken in good faith.

No suit, prosecution or other legal proceedings shall lie against the State Government or the Competent Authority or an officer or employee of the State Government for anything which is in good faith done or intended to be done in pursuance of the provisions of this Act, or rules made thereunder.

S.20 Power to make rules.

(1) The State Government may, by notification in the Official Gazette, make rules for carrying out the purposes of this Act.

(2) All rules made under this section shall be laid for not less than thirty days before the State Legislature as soon as may be after they are made and shall be subject to rescission by the State Legislature or to such modification as the State Legislature may make during the session in which they are so laid or the session immediately following.

(3) Any rescission or modification so made by the State Legislature shall be published in the Official Gazette, and shall thereupon take effect.

S.21 Power to remove difficulty.

If any difficulty arises in giving effect to the provisions of this Act, the State Government may, by order, do anything, not inconsistent with the provisions of this Act, as appears it to be necessary or expedient for removing the difficulty:

Provided that no such order shall be made under this section after the expiry of three years from the commencement of this Act.