The Andhra Pradesh Protection of Depositors of Financial Establishments Act, 1999

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THE ANDHRA PRADESH PROTECTION OF DEPOSITORS OF FINANCIAL
ESTABLISHMENTS ACT, 1999
ACT NO. 17 OF 1999
ARRANGEMENT OF SECTIONS
SECTIONS
1. Short title, extent and commencement
2. Definitions
3. Attachment of properties on default in respect of deposits.
4. Competent Authority
5. Penalty for default
6. Special Court
7. Powers of Special Court regarding attachment
8. Attachment of property of certain transferees
9. Security in lieu of attachment
10. Administration of property attached
11. Appeal
12. Special Public Prosecutor and Special Government Pleader
13. Procedure and Powers of Special Court regarding offences
14. Act to override other laws
15. Penalty for false or vexatious complaints
16. Protection of action taken in good faith
17. Power to remove doubts and difficulties
18. Power to make rules
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THE ANDHRA PRADESH PROTECTION OF DEPOSITORS OF FINANCIAL
ESTABLISHMENTS ACT, 1999
ACT NO. 17 OF 1999
(1st July, 1999)
AN ACT TO PROTECT THE DEPOSITS MADE BY THE PUBLIC IN
FINANCIAL ESTABLISHMENTS AND FOR MATTERS CONNECTED
THEREWITH OR INCIDENTAL THERETO.
Be it enacted by the Legislative Assembly of the State of Andhra Pradesh
in the Fiftieth Year of the Republic of India as follows:-
1. Short title, extent and commencement- (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.
2. Definitions - 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;
1 [(c) "Financial Establishment" means any person or group of
individuals accepting deposit 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).]
(d) "Government" means the State Government of Andhra Pradesh;
(e) "Notification" means the notification published in Andhra
Pradesh Gazette and the word "notified" shall be construed accordingly; and
(f) "prescribed" means prescribed by rules made under this Act.
3. Attachment of properties on default in respect of deposits  -
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
1 . The clause (c) substituted by the Act No. 12 of 2003, Section 2.
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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.
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 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 thead-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 defraud, is founded, the
amount of money or value of other property believed to have been procured by
means of the deposits, and the details, if any, of persons in whose names such
property is believed to have been invested or purchased out of the deposits or
any other property attached under section 3.
5. Penalty for default - 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.
6. Special Court - (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 (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 depositors of the money realised from out of
the property attached.
7. Powers of Special Court regarding attachment - (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
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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 objections are made and no cause is shown on or before the
specified date, the Special Court shall forthwith pass an order making the ad-
interim order of attachment absolute.
(5) If any objection is made or cause is shown 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
power of 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.
(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 or property of value not less
than the value that is required for re-payment to the depositors of such
financial establishment.
8. Attachment of property of certain transferees - (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.
9. 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.
10. Administration of property attached - The Special Court may, on the
application of any person interested in any property attached under this Act,
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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.
11. Appeal- 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.
12. Special Public Prosecutor and Special Government Pleader - 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.
13. Procedure and Powers of Special Courts regarding offences - (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 Magistrates.
(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.
14. 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 inforce or any custom
or usage or any instrument having affect by virtue of any such law.
15. Penalty for false or vexatious complaints - 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 with fine
which may extend to rupees one lakh, or with both.
16. Protection of action taken in good faith - 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 make thereunder.
17. Power to remove doubts and difficulties - 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.
18. Power to make rules - (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
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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 previously done under that rule.

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