The Haryana Protection of Interest of Depositors in Financial Establishment Act, 2013 (32 of 2014)

   
   
   
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 THE HARYANA PROTECTION OF INTEREST OF DEPOSITORS 
IN FINANCIAL ESTABLISHMENT ACT, 2013 
(Haryana Act No. 32 of 2014) 
Table of Contents 
Sections: 
1. Short title. 
2. Definitions.  
3. Fraudulent default by financial establishment. 
4. Attachment of properties on default of return of deposit. 
5. Appointment of competent authority. 
6. Duties and powers of competent authority. 
7. Assessment of assessed and deposit liabilities. 
8. Report by competent authority. 
9. Designated court. 
10. Power of designated court regarding attachment. 
11. Attachment of property of malafide transferees. 
12. Security in lieu of attachment. 
13. Administration of property attachment. 
14. Appeal. 
15. Special public prosecutor. 
16. Procedure and powers of designated court regarding offences. 
17. Act to override other laws. 
18. Protection of action taken in good faith. 
19. Power to make rules. 
20. Power to remove difficulties. 
 
 
 
  
   
   
   
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2014:  Hr.  Act  32] PROTECTION OF INTEREST OF DEPOSITORS IN FINANCIAL 
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1 THE HARYANA PROTECTION OF INTEREST OF DEPOSITORS IN 
FINANCIAL ESTABLISHMENT ACT, 2013 
(Haryana Act No. 32 of 2014) 
[Received the assent of the President of India on the 27th October, 2014, 
and was first published for general information in the Haryana Government 
Gazette (Extraordinary), Legislative Supplement Part 1 of the 27th November, 
2014]. 
1 2 3 4 
Year  No. Short Title Whether repealed or otherwise 
affected by legislation 
2014 32 The Haryana Protection of 
Interest of Depositors in 
Financial Establishment  
Act, 2013 
 
 
 
AN 
ACT 
to protect the interest of depositors in financial establishment and for matters 
connected therewith or incidental thereto. 
Be it enacted by the Legislature of the State of Haryana in the  
Sixty–fourth Year of the Republic of India as follows:– 
 
1. This Act may be called the Haryana Protection of Interest of Depositors 
in Financial Establishment Act, 2013. 
Short title.  
2. In this Act, unless the context otherwise requires,— 
(a) “competent authority” means the authority appointed under  
section 5; 
(b) “deposit” includes and shall be deemed always to have 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) an amount raised by way of share capital or by way of 
debenture, bond or any other instrument covered under the 
guidelines issued and regulations made under the Securities 
and Exchange Board of India Act, 1992 (Central Act 15 of 
1992); 
(ii) an amount contributed as capital by partners of a firm; 
(iii) an amount received from a Scheduled bank or a cooperative 
bank or any other banking company as defined in clause (c) of 
section 5 of the Banking Regulation Act, 1949 (Central Act 
10 of 1949); 
 
 
Definitions. 
1. For Statement of Objects and Reasons, see Haryana Government Gazette (Extra.) dated  
the 7th September, 2013, page 4037. 
   
   
   
198   
 
 
 
 (iv) any amount received from— 
(I) the Industrial Development Bank of India; 
(II) a State Financial Corporation; 
(III) any financial institution specified in section 4A of the 
Companies Act, 1956 (Central Act 1 of 1956); or 
(IV) any other institution that may be specified by 
Government in this behalf; 
(v) amounts received in the ordinary course of business by way 
of– 
(I) security deposit; 
(II) dealership deposit; 
(III) earnest money; or 
(IV) advance against order for goods or services; 
(vi) any amount received from an individual or a firm or an 
association of individuals not being a body corporate, 
registered under any enactment relating to money lending for 
the time being in force in the State; 
(vii) any amount received by way of subscriptions in respect of a 
Chit. 
 Explanation.– For the purpose of this clause, “Chit” shall 
have the same meaning as assigned to it under clause (b) of 
section 2 of the Chit Funds Act, 1982 (Central Act 40 of 
1982); and 
(viii) any credit given by a seller to a buyer on the sale of any 
property (whether movable or immovable); 
(c) “designated court” means the court constituted under section 9; 
(d) “financial establishment” means an individual, an association of 
individuals, a firm or a company registered under the Companies 
Act, 1956 (Central Act 1 of 1956) or limited liability partnership 
registered under the Limited Liability Partnership Act, 2008 
(Central Act 6 of 2009) accepting deposit under any scheme or 
arrangement or in any other manner but does not include a 
corporation or a cooperative 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); 
(e) “Government” means the Government of the State of Haryana in 
the Administrative Department.
 
   
   
   
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3. (1) A financial establishment which commits default in repayment of 
deposit or benefit 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 inability 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 the 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. 
 (2) If any financial establishment 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 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 be punished with 
imprisonment for a term which may extend upto seven years and with fine upto 
two lakh rupees. Such financial establishment shall also be liable for a fine 
which shall not be less than five lakh rupees or where such deposit is 
quantifiable in terms of money twice the defrauded amount whichever is more: 
  Provided that in the absence of special and adequate reasons 
recorded, the imprisonment shall not be less than three years with fine which 
shall not be less than fifty thousand rupees as against each individual and not 
less than two lakh rupees against such financial establishment. 
Fraudulent 
default by 
financial 
establishment. 
4. (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 
District Magistrate is satisfied that any financial establishments has 
failed— 
(a) to return the deposit after maturity or 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 District Magistrate has reason to believe that any 
financial establishment is acting in a calculated manner detrimental 
to the interests of the depositor, with intention to defraud them and 
if the District Magistrate 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 District Magistrate may, 
in order to protect the interest of the depositors of such financial 
establishment, after giving an opportunity of hearing and recording 
Attachment of 
properties on 
default or return 
of deposit. 
   
   
   
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  reasons in writing, issue an order by publishing it in the Official 
Gazette, for attaching the money, property or assets belonging to or 
believed to have been acquired by such financial establishment 
either in its own name 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 or assets, is not 
available for attachment or are not sufficient for repayment of the 
deposits, may order attachment of such other property or assets of 
the said financial establishment or the personal assets of the 
promoters, partners, directors, managers, members or any other 
person of the said financial establishment, as the District Magistrate 
may deem fit. 
 (2) On the publication of the order under sub-section (1), all money, 
properties and assets of the financial establishment and in the name of the 
persons mentioned therein shall forthwith vest in the competent authority 
appointed by the District Magistrate pending further order from the designated 
court. 
 (3) On receiving a complaint under sub-section (1), the District 
Magistrate shall forward such complaint, along with his report to the 
Government at the earliest and shall send a copy of the complaint to the 
concerned Superintendent of Police in the district for investigation. 
 (4) The attachment shall be made in the manner provided for 
attachment of property in execution of a decree under the Code of Civil 
Procedure, 1908 (Central Act 5 of 1908).
 
Appointment of 
competent 
authority. 
5. The District Magistrate may while issuing order under sub-section (1) of 
section 4, appoint any officer not below the rank of the Assistant Collector First 
Grade as the competent authority to exercise control over the money and the 
properties attached by the District Magistrate under section 4. 
Duties and 
powers of 
competent 
authority. 
6. (1) On receipt of order of appointment, the competent authority shall 
take such necessary steps, as it deems necessary or expedient for taking physical 
possession of all monies, properties and assets of the concerned financial 
establishment attached by the District Magistrate under section 4. 
 (2) The competent authority shall, within thirty days from the date of 
the publication of the said order, apply to the designated court, accompanied by 
one or more affidavits stating the gro unds on which the District Magistrate has 
issued the said order under section 4 and the amount of money or other 
properties or assets belonging to or believed to have been acquired out of the 
deposits and the details, if any, of persons in whose name such property is 
believed to have been invested or acquired or any other property attached under 
section 4, for such further orders as designated court may deem fit. 
   
   
   
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 (3) Without prejudice to the generality of the foregoing powers vested 
under sub-section (1) and (2), the competent authority may— 
(a) seek 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 provide 
necessary assistance; 
(b) open bank accounts in any Scheduled bank and credit all 
money realised and operate the bank account while dealing 
with the money received in his capacity as competent 
authority; 
(c) direct the person in possession or control over any money, 
property or assets of the financial establishment to furnish 
necessary information or to handover possession of such 
money, property and assets and such person shall comply 
with the directions forthwith; 
(d) appoint legal practitioner or chartered accountant or any other 
person whose services are necessary for taking possession and 
realisation of the assets of the financial establishment; and 
(e) make payment as per the order passed by the designated court 
from the bank account. 
 (4) The competent authority may also make an application to any court 
or any other judicial forum established or constituted or entrusted with the 
powers by any other State Government under any similar enactment for 
adjudicating any issue or subject matter pertaining to money or property or 
assets belonging to a financial establishment situated within the territorial 
jurisdiction of that court or any judicial forum, as the case may be, for passing 
appropriate orders. 
 
7. (1) Within thirty days from the date of appointment, the competent 
authority shall assess the deposit liabilities and the assets of the financial 
establishment and submit a report 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 proper proof to establish the same. 
 (3) Every notice under sub-section (2) sent to or deemed to have been 
effected to claimants shall state that if the statement of claim is not sent to the 
competent authority before the expiry of the period of one month from the date 
of notice, the claim shall not be considered under the provisions of this Act. 
 (4) Every notice sent 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 shall also state that if the statement of the claim together with 
the valuation of the security is not sent to the competent authority, the 
competent authority shall value the security and such valuation shall be binding. 
Assessment of 
assets and 
deposit liabilities. 
   
   
   
202   
 
 
 
Report by 
competent 
authority. 
8. After making a report under section 7, the competent authority shall 
make an application to the designated court seeking permission to make 
payment to the depositors 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 attached or realisable is not 
sufficient to meet 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. 
Designated court. 9. (1) For the purposes of this Act, the Government may, with the 
concurrence of the Chief Justice of the Punjab and Haryana High Court, by 
notification in the Official Gazette, constitute one or more designated courts in 
the cadre of a District Judge including Additional District J udge for such area or 
areas or for such case or class or group of cases, as may be specified in the 
notification. 
 (2) No court other than the designated court, shall have jurisdiction in 
respect of any matter to which the provisions of this Act are invoked. 
 (3) Any pending case in any other court to which the provisions of this 
Act apply, shall, stand transferred to the designated court from the date of issue 
of notification under sub-section (1). 
Power of 
designated court 
regarding 
attachment. 
10. (1) Upon receipt of an application under section 6, the designated court 
shall issue to the financial establishment or to any other person whose property 
is attached and vested in the competent authority under section 4, a notice 
accompanied by the application, affidavits and other evidence, if any, recorded, 
calling upon the said establishment or the person to show cause on or before a 
date to be specified in the notice, as to why the order of the 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 the person to whom the notice is 
issued under sub-section (1), calling upon all such persons to appear on the same 
date as specified in the notice and make objection, if they so desire, to the 
attachment of the property or any portion thereof, on the ground that they have 
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 designated court at 
 
any time on or before the specified date before an order is passed under  
sub-section (4) or sub-section (6). 
 (4) The designated court shall if no cause is shown and no objection is 
made on or before the specified date under sub-section (1), forthwith pass an 
order making the order of attachment absolute, and issue such direction as may 
be necessary for realisation of the assets attached and for the equitable 
distribution amongst the depositors of the money realised from and out of the 
property so attached. 
   
   
   
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 (5) If cause is shown or any objection is made as aforesaid, the 
designated court shall proceed to investigate the same and in so doing, as 
regards the examination of the parties and in all other respect, the designated 
court shall, subject to the provisions of this Act, follow the summary procedure 
as contemplated under the Code of Civil Procedure, 1908 (Central Act 5 of 
1908), and exercise all the powers of a civil court in hearing a suit. Any person 
making an objection shall be required to adduce evidence to show that on the 
date of the attachment, he had some interest in the property so attached. 
 (6) After investigation under sub-section (5), the designated court shall 
pass an order, as early as possible, preferable within one year of the reference of 
the case to it, either making the order of attachment passed under sub-section (1) 
of section 4 absolute or varying it by realising a portion of the property from 
attachment or cancelling the order of attachment: 
  Provided that the designated court shall not release from attachment 
any interest which the financial establishment or the person referred to in 
 
sub-section (1) has in the property, unless it is satisfied that there shall remain 
under attachment an amount or property of value not less than the value that is 
required for repayment to the depositors of such financial establishment. 
 (7) Where the designated court passes an order under sub-section (6), 
making the order of attachment absolute or varying the order of attachment by 
releasing a portion of the property from attachment, it may issue such direction 
as may be necessary for realization of the assets attached and for the equitable 
distribution amongst the depositors of the money realised from and out of the 
assets so attached. 
 
11. (1) Where the 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 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 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 
as to 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 10, the designated court is satisfied that the transfer of the 
property to the said transferee was not in good faith and for consideration, the 
designated court shall order the attachment of so much of the said transferee’s 
property as is in the opinion of the designated court is equivalent to the proper 
value of the property transferred. 
Attachment of 
property of 
malafide 
transferees. 
   
   
   
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Security in lieu 
of attachment. 
12. 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 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, it may cancel the order of attachment or refrain from making the 
order of attachment absolute, as the case may be. 
Administration of 
property 
attached. 
13. The designated court may, on the application of any person interested in 
any property attached and vested in the competent authority under this Act and 
after giving the competent authority an opportunity of being heard, pass such 
order as the designated court considers just and reasonable for– 
(a) providing from such property, so attached and vested in the 
competent authority as the applicant claims, an interest in such 
sums as may be reasonably necessary for the maintenance of the 
applicant and 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 partners in such business. 
Appeal. 14. Any person including the competent authority, if aggrieved by an order 
of the designated court, may appeal to the High Court within sixty days from the 
date of the order. 
Special public 
prosecutor. 
15. The Government shall, by notification, appoint an advocate of not less 
than ten years standing at Bar as a Special Public Prosecutor or Special 
Government Pleader for the purpose of conducting the case in the designated 
court. 
Procedure and 
powers of 
designated court 
regarding 
offences. 
16. (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 
(Central Act 2 of 1974), for the trial of Sessions cases. 
 (2) All 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 
designated court and for the purposes of the said provisions, a designated court 
shall be deemed to be the court of Magistrate. 
 (3) The offence punishable under this Act shall be congnizable.  
Act to override 
other laws. 
17. 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. 
Protection of 
action taken in 
good faith. 
18. 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. 
   
   
   
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19. (1) The Government may, by notification in the Official Gazette, make 
rules to carry out the purposes of this Act. 
 (2) Every rule made under this Act shall be laid, as soon as may be, 
after it is made, before the House of the State Legislature, while it is in session. 
Power to make 
rules. 
20. If any difficulty arises in giving effect to the provisions of this Act, the 
Government may, by order, do anything, not inconsistent with the provisions of 
this Act, which appears to it to be necessary or expedient to remove the 
difficulty. 
Power to remove 
difficulties. 
 
 
 
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