The Himachal Pradesh Protection of Interests of Depositors (in Financial Establishments) Act, 1999

THE HIMACHAL PRADESH 1[PROTECTION OF INTERESTS 
OF DEPOSITORS (IN FINANCIAL ESTABLISHMENTS)] ACT, 
1999 
ARRANGEMENT OF SECTIONS 
Sections: 
CHAPTER-I 
1. Short title and commencement. 
2. Definitions. 
CHAPTER-II 
3. Attachment of properties on default of returns of deposits. 
4. Competent Authority. 
CHAPTER-III 
5. Default in repayment of deposit and interest honouring the 
commitment. 
CHAPTER-IV 
6. Special Court. 
7. Powers of Special Court regarding attachment. 
8. Attachment of property of malafide transferees. 
9. Security in lieu of attachment. 
10. Administration of property attached. 
11. Appeal. 
12.  Appointment of Special Public Prosecutor. 
13. Procedure and powers of Special Court regarding offences. 
CHAPTER -V 
14. Act to over-ride other laws. 
15. Power to make rules. 
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1. Substituted for the words “REGULATION OF PUBLIC DEPOSITS” vide 
H.P. Act No. 4 of 2002. 
2  THE HIMACHAL PRADESH PROTECTION OF INTERESTS OF DEPOSITORS (IN 
FINANCIAL STABLISHMENTS ACT, 1999 
 
THE HIMACHAL PRADESH 1[PROTECTION OF INTERESTS 
OF DEPOSITORS (IN FINANCIAL ESTABLISHMENTS)] ACT, 
1999 
(ACT NO. 19 OF 2000)2 
(Received the assent of the President on the 29th July, 2000 and was 
published both in Hindi and English in the Rajpatra, Himachal Pradesh 
(Extra-ordinary), dated 18th August, 2000, pp. 2517-2529) 
Amended, repealed or otherwise affected by,- 
(i) H.P. Act No. 4 of 20023, assented to by the Governor on the 
4th February, 2002, published both in Hindi and English in the 
Rajpatra, Himachal Pradesh (Extra-ordinary), dated the 11th 
February, 2002, pp. 4115-4118. 
(ii)  H.P. Act No.7 of 20074, assented to by the Governor on the 
3rd March, 2007, published both in Hindi and English in  the 
Rajpatra, Himachal Pradesh (Extra-ordinary), dated 6th 
March, 2007 pp. 11573-11576. 
An Act to protect the deposits made by the public in the Financial 
Establishments and matters relating thereto. 
BE it enacted by the Legislative Assembly of the State of Himachal 
Pradesh in the Fiftieth Year of the Republic of India as follows:- 
CHAPTER-I  
1. Short title and commencement.- (1) This Act may be called the 
Himachal Pradesh 5[Protection of Interests of Depositors (in Financial 
Establishments)] Act, 1999.  
(2) It shall come into force at once.  
2. Definitions.- In this Act, unless the context otherwise requires,- 
(a)  "Competent Authority" means the authority appointed under 
section 4;  
                                                 
1.  Substituted for the words “REGULATION OF PUBLIC DEPOSITS” vide 
H.P. Act  No. 4 of 2002. 
2. Passed in Hindi by the Himachal Pradesh Vidhan Sabha. For Statement of 
Objects and Reasons see the Rajpatra, Himachal Pradesh (Extra-ordinary), dated 
9th April, 1999, pp. 1255 and 1262. 
3. Passed in Hindi by the Himachal Pradesh Vidhan Sabha. For Statement of Objects 
and Reasons see the Rajpatra, Himachal Pradesh (Extra-ordinary), dated 18th 
December, 2001, pp. 3602 and 3604. 
4 Passed in Hindi by the Himachal Pradesh Vidhan Sabha. For Statement of 
Objects and Reasons see the Rajpatra, Himachal Pradesh (Extra-ordinary), dated 
27th December, 2006 pp. 9182 and 9185. 
5. Substituted for the words “Regulation of Deposits” vide H.P. Act No. 4 of 
2002. 
THE HIMACHAL PRADESH PROTECTION OF INTERESTS OF DEPOSITORS      3 
(IN FINANCIAL STABLISHMENTS ACT, 1999    
(b)  "deposit" means the deposit of a sum of money made with a 
Financial Establishment for a fixed period, for interest or 
return in any kind;  
(c)  "Financial Establishment" means an individual, an association 
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 corporation or a co-operative 
society owned or 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 (Central 
Act No. X of 1949);  
(d) "Government" means the State Government of Himachal 
Pradesh; and  
(e) "authorised officer" means an officer empowered, by the 
Government, by notification in the Official Gazette, to 
exercise the powers of the Government under section 3 of this 
Act.  
CHAPTER-II  
3. Attachment of properties on default of returns of deposits.- 
Notwithstanding anything contained in any other law for the time being in 
force,- 
(i)  where, upon the complaints received from a depositor(s) that 
any Financial Establishment defaults in the return of deposits 
after maturity,  
(ii)  where the Government or authorised officer has reason to 
believe that any Financial Establishment is acting in a 
calculated manner with an intention to defraud the depositors, 
and if the Government or the authorised officer is satisfied 
that such Financial Establishment is not likely to return the 
deposits, the Government or the authorised officer 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 of the said Financial Establishment or the 
promoter, manager or member of the said Financial 
Establishment, as the Government or the authorised officer 
may think fit, transfer the control over the said money or 
property to the Competent Authority. 
4  THE HIMACHAL PRADESH PROTECTION OF INTERESTS OF DEPOSITORS (IN 
FINANCIAL STABLISHMENTS ACT, 1999 
 
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 or the authorised 
officer under section 3.  
(2) The Competent Authority shall have such other powers as may be 
necessary for carrying out the purposes of this Act.  
(3) On receipt of the orders of the Government or the authorised 
officer under section 3, the Competent Authority shall apply within fifteen 
days to the special court constituted under this Act for making an 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 it is believed that the 
Financial Establishment has committed any default or is likely to defraud, the 
amount of money or value of other property believed to have been procured 
by means of the deposit, and the details, if any, of persons in whose name 
such property is believed to have been invested or purchased out of the 
deposits or any other property attached under section 3. 
CHAPTER-III  
5. Default in repayment of deposit and interests honouring the 
commitment.- Notwithstanding anything contained in Chapter II, where any 
Financial Establishment defaults the return of the deposit or defaults the 
payment of interest on the deposit, every person responsible for the 
management of the affairs 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 one lakh rupees and such Financial Establishment is 
also liable for fine which may extend to one lakh rupees.  
CHAPTER-IV 
6. Special Court.- (1) For the purposes of this Act, the Government, 
may, with the concurrence of the Chief Justice of the High Court, by 
notification, constitute a Special Court in the cadre of a District and Sessions 
Judge or designate 1[all or any of the District and Session Courts as Special 
Court] for the purposes of this Act.  
(2) No Court including the court constituted under the Provincial 
Insolvency Act, 1920 (Central Act No. 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 
                                                 
1. Substituted for the words “one of the Session Courts as a Special Court” vide H.P. 
Act No. 7 of 2007. 
THE HIMACHAL PRADESH PROTECTION OF INTERESTS OF DEPOSITORS      5 
(IN FINANCIAL STABLISHMENTS ACT, 1999    
equitable distribution among the depositors, the money realised from, out of 
the property attached.  
7. Powers of Special Court regarding attachment.- (1) On 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 him 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 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 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 cause is shown and no objections are made on or before the 
specified date, the Special Court shall forthwith pass an order making the ad-
interim order of attachment absolute.  
(5) If cause is shown or any objection is made as aforesaid, the 
Special Court shall proceed to investigate the same, and in doing so, as 
regards the examinations 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 powers of a court in hearing a suit under the Code of Civil 
Procedure, 1908 (Central Act No. 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, where it is satisfied that the Financial Establishment or the person 
referred to in sub-section (1) has interest 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 repayment to the depositors 
of such Financial Establishment.  
8. Attachment of property of malafide 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 
6  THE HIMACHAL PRADESH PROTECTION OF INTERESTS OF DEPOSITORS (IN 
FINANCIAL STABLISHMENTS ACT, 1999 
 
such Financial Establishment is required to repay to the depositors and where 
the Special Court is satisfied by affidavit or otherwise that there is a 
reasonable cause for believing that the said Financial Establishment has 
transferred (whether after the commencement of this Act or not) any of the 
property otherwise than in good faith and for 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 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 7, the Special Court is satisfied that the transfer of the 
property to the said transferee was not in good faith and for consideration the 
Special Court shall order the attachment of so much of the said transferee's 
property as is in the opinion of the Special Court equivalent to the proper 
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, 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 in particular 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 order. 
12. Appointment of Special Public Prosecutor.- The Government 
shall, by notification appoint an Advocate of not less than ten years standing 
as a Special Public Prosecutor for the purposes of conducting the cases in the 
Special Court.  
THE HIMACHAL PRADESH PROTECTION OF INTERESTS OF DEPOSITORS      7 
(IN FINANCIAL STABLISHMENTS ACT, 1999    
13. Procedure and powers of Special Court regarding offences.- 
The Special 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 No. II of 1974) for the trial of warrant cases by Magistrates. 
(2) The provisions of the Code of Criminal Procedure, 1973 (Central 
Act No. II 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.  
CHAPTER-V  
14. Act to over-ride 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 or any instrument having effect by virtue of any such 
law.  
15. Power to make rules.- (1) The State Government may, by 
notification in the Official Gazette of the State of Himachal Pradesh, subject 
to previous publication, make rules for carrying out the purposes of this Act.  
(2) Every rule made or notification issued under this Act, shall, as 
soon as possible after it is made or issued be placed on the Table of the 
Legislative Assembly and if before the expiry of the session in which it is so 
placed or the next session, the Legislative Assembly agrees in making any 
modification in any such rule or notification or the Legislative Assembly 
agrees that the rule or notification should not be made or issued, the rule or 
notification shall, thereafter have effect only in such modified form or be of 
no effect, 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 or notification.  
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