The SIKKIM PROTECTION OF INTERESTS OF DEPOSITORS (IN FINANCIAL ESTABLISHMENTS ) ACT,2009

SIKKIM
GOVERNMENT GAZETTE
EXTRAORDINARY
PUBLISHED BY AUTHORITY
Gangtok Wednesday 24th February, 2010 'I, No. 62
GOVERNMENT OF SIKKIM
LAW DEPARTMENT
GANGTOK
No. 121LDIP/2010 Date: 24.2.2010
NOTIFICATION
The following Act passed by the Sikkim Legislative Assembly having received the assent of the
Governor on the 22nd day of January, 2010 is hereby published for general information:
THE SIKKIM PROTECTION OF INTERESTS OF DEPOSITORS,
(IN FINANCIAL ESTABLISHMENTS) ACT, 2009
(ACT NO. 12 OF 2009)
AN
ACT
to protect the deposits made by the public in Financial Establishments and matter relating thereto,
Be it enacted by the Legislature of Sikkim in the Sixtieth Year of the Republic of India as follows:-
Short title and
commencement.
CHAPTER I
1. (1) This Act may be called the Sikkim Protection of Interests of
Depositors (in Financial Establishments) Act, 2009.
(2) It extends to the whole of Sikkim.
(3) It shall come into force at once.
Definitions.
2. In this Act, unless the context otherwise requires:-
(a) "Act" means the Sikkim Protection of Interests of Depositors
(in Financial Establishments) Act, 2009;
(b) "Competent Authority" means the Authority appointed under
sub-section (1) of section 3 of the Act;
(c) "deposit" means the deposit of money either in one lump sum or
by installments made with a Financial Establishment for afixed period.
for interest or for return in any kind or for any .service:
(d) "Financial Establishment" means an individual or an association
of individuals, a firm or a company registerGd under the Companies
Act, 1956 (1 of 1956) or under the Registration of Companies Act
Sikkim, 1961 carrying on the business of receiving ceposrts under
any scheme or arrangement or in any other mariner but does not
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Competent Authority 3.
Trade license and
office.
Registration with
Competent
Authority.
Permission for
accepting deposits.
include a corporation or a cooperative society owned or controlled by
the Central Government, any State Government or a banking company
as deflned in section 5 ( c ) of the BankingRegulationAct,1949 (Xof
1949);
(e) "Government' means the State Government of Sikkim;
(f) "prescribed" means prescribed by rules made under this Act.
CHAPTER II
(1) The Government may, by notification, appoint one or more
authorities for such area or areas or for such case or cases as may
be specified in the notification as Competent Authority to exercise
powers authorized by this Act.
(2) The Competent Authority shall have such other powers as may be
necessary for carrying out the purposes of this Act.
4. A Financial Establishment intending to carry out its business in the
State shall obtain a trade license from the Urban Development and
Housing Department and shall also establish its office in the State.
5. (1) Upon grant of a trade license by the Urban Development and Housing
Department, the-Financial Establishment shall apply to the Competent
Authority for registration in such form as may be prescribed, and shall
also pay such fee as may be prescribed.
(2) The Competent Authority may register the Financial
Establishment upon fulfilling allthe conditions prescribed for registration,
and issue a certificate of registration:
Provided that the registration so granted shall become void at
the expiry of validity of the trade license from the Urban Development
and Housing Department.
6. (1) A registered Financial Establishment shall apply to the
Competent Authority for permission to accept deposits, duly specifying
the maximum amount that the Financial Establishment intends to
receive as deposits, and furnishing such information and documents
as may be prescribed, and no deposit shall be received by the
Financial Establishment without prior written permission from the
Competent Authority.
(2) A Financial Establishment may, at any time, apply to the Competent
Authority for enhancement of the maximum amount which it is
authorized to receive as deposit, and the Competent Authority may
consider such request on merit and pass appropriate orders provided
that the Financial Establishment furnishes adequate security as
required under sub-section (1) of section 7,
Security to be 7.
furnished.
(1) Before issue of permission under section 6, the Financial execute
a bond in favour of the Competent Authority charging immovable
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Bar on receiving
certain deposits.
Application for
deposits.
property for the value of not less than 50 (sixty)per cent of the proposed
total amount of deposits which it intends to receive; or
(i) make a fixed deposit of an amount not less than 60 (sixty) per
cent of the proposed total amount of deposits which itintends to receive,
in a Schedule bank in favour of the Competent Authority for a period
not less than 36 (thirty-six) months or
(ii) invest in Government securities in favour of theCompetent
Authority an amount not less than 50(sixty) per cent of the proposed
total amount of deposits which it intends to receive; or
(iii) furnish a bank guarantee valid for 3 (three) years from a
Scheduled bank in favour of the Cornpetent-Authority for an amount
not less than 50 (sixty) per cent of the proposed total amount ofdeposits
which it intends to receive:
Provided that the bank guarantee so furnished shall be converted
by the Competent Authority to afixed deposit in itsfavour in a Scheduled
bank if a fresh bank guarantee or any other instrument of security
mentioned at serial numbers (i), (ii) or (iii) above for an equal amount is
not furnished by the Financial Establishment not less than five working
days before the date of expiry of the existing bank guarantee;
(2) The Competent Authority may at its discretion permit the Financial
Establishment to furnish security in more than one manner mentioned
above for an aggregate amount not less than 60 (sixty) per cent of the
proposed total amount of deposits which it intends to receive.
(3) The Competent Authority may at any time permit the Financial
Establishment the substitution of one or more security with another
security mentioned at sub-section(1)
(4) The security furnished by the Financial Establishment shall not
be liable to be attached in execution of a decree or otherwise until the
deposits with the returns thereof are fully paid to the depositors.
8. (1) A Financial Establishment shall not receive or renew any deposit
which is repayable on demand
(2) A Financial Establishment shall not receive or renew any deposit
which is repayable before a period of 6 (six) months or after expiry of
36 (thirty-six) months.
(3) A Financial Establishment shall not invite, receive or renew any
deposit at a rate of interest which is more than 3 (three) per cent by a
Scheduled commercial bank for the corresponding amount and period
of deposit.
() (1) A Financial Establishment shall not accept or renew any deposit
except on a written application from the depositor in the form as may
be prescribed to be supplied by the Financial Establishment at its own
cost.
(2) Such application form shall inter alia contain the following
particulars, namely:-
(a) the name, address and phone number of the registered office of
the Financial Establishment;
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Receipts to be issued
for deposits.
Record of money
received from
depositors.
Security deposits
from employees.
(b) the name, address and phone number of the main office of the
FinancialEstablishmentinSikkim;
(c) the category" of the depositor, namely whether the depositor is
a shareholder or a director or a promoter the Financial Establishment
or a member of the public;
(d) introduction of the depositor if he/she is a new depositor;
(e) the period of deposit;
(f) the rate of interest, and the total amount payable to the depositor
by the financial Establishment on maturity of the deposit;
(g) the date on which the maturity amount will be payable to the
depositor;
(h) the rate of interest which will be payable to the depositor incase
the depositor withdraws the deposit prematurely.
10. Every Financial Establishment shall, for every amount received by
it as deposit, furnish to the depositor or his agent a receipt containing
the date of deposit, the name and address of the depositor, the amount
received in figures and words, the rate of interest and the date on
which the deposit is repayable, and such receipt shall be signed by
an officer authorized by the Financial Establishment in this behalf:
Provided that ifsuch receipt pertains to installments subsequent
to the first installment of a recurring deposit, it need not contain
particulars other than the name of the depositor, the date of receipt
and the amount deposited.
11. Every Financial Establishment shall keep in book form or electronic
form, details of all deposits received by its separately in respect of
each depositor, with the following particulars, namely:-
(a) name, address and phone number of the depositor,
(b) date, receipt number and amount of each deposit,
(c) duration and the due date of each deposit,
(d) date and the amount of interest accrued on each deposit,
(e) date of receipt of claim from the depositor for refund,
(f) date and amount of each repayments.
(g) reasons for delay in repayment beyond five working days.
12. (1) A Financial Establishment receiving any amount in the ordinary
course of its business assecurity deposit from any of its employees
for due performance of his/her duties in shall keep such amount an
account at a Scheduled commercial bank or post office Sikkim in
the joint names of the employee and the company. The account
shall be operated only jointly by the employee and the company.
(2) The amount shall be repayable to the employee along with
interest payable on such deposit account, unless such amount or
any part thereof is liable to be appropriated by the company for the
failure on the part of the employee for due performance of his/her
duties.

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I.
Intimations
regarding key.
to functionaries
be furnished.
Half yearly return of
deposits to be
furnished.
Closure or shifting
of offices to be
Publicized.
Return of deposits
13. Every Financial Establishment shall, while applying for registration
under section 5 and within one month from the information, namely:- "
(a) the complete postal address, telephone numbers and fax
numbers of its registered office and the main office in Sikkim;
(ii) the name and residential address of the directors;
(iii) the name and official designation of its principal officers in the
registered office; ~
(iv) the name and official designation of its principal officers in its
main in Sikkim.
(v) name, address, official deslqnation and specimen signatures of
the officers authorized to sign cash deposit receipts on behalf of the
financial Establishment, along with the date from which they are so
authorized.
14. Every Financial Establishment shall submit to the competent
Authority half yearly returns as on 3151 March and 30lh September in
the proforma as may be prescribed, so as to reach it not later than15
(fifteen) days thereafter. The proforma shall include year, information
regarding the total amount of deposits as on the first day of the half
the total amount of deposits collected during the half year, total maturity
amount that became due for repayment but remained unpaid at the
close of the previous half year, total maturity amount that became
due during the half year and the amount paid there-from, grand total of
maturity amounts that remained unpaid at the close of the financial
year, and the reasons for non-payment of the outstanding maturity
amount.
15. A Financial Establishment shall not close or shift its office without
publishing such intention in at least two national newspapers and in
one vernacular and one English local newspapers which are in
circulation in the relevant place, and without obtaining prior written
approval of the Competent Authority.
CHAPTER \\I
16. (1) It shall be the obligation of the Financial Establishment to
intimate the depositor the details including date of maturity of the
deposit at least 2(two) weeks before the date of maturity of the deposit.
(2) The maturity amount shall be payable to the depositor on the
first bank working day following the day on which the deposit becomes
mature:
Provided that ifthe rnaturity amount of adeposit has been pledged
by the depositor against any loan taken by him from the Financial
Establishment, the maturity amount may be adjusted against
repayment of such loan to the extent required for discharging the loan,
and the balance amount if any shall be payable to the depositor.
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· Default of return
deposits.
Attachment of
properties of
default of return of
deposits.
\
17. (1) A Financial Establishment which fails to make repayment 0\
maturity amount to a depositor on the date on which it b8{;omes'
payable, shall, in addition to any civil or criminal action which the·
depositor or Competent Authority may initiate against the Financial
Establishment,_ also be liable to pay the depositor interest on the
maturity amount due to the depositor, from the third day following the
date on which the maturity amount became payable till the date of
actual payment, at 2 (two) percent more than the rate of interest at
which such deposit was received from the depositor.
(2) A depositor who does not receive the maturity amount due may
prefer a complaint to this effect to the Competent Authority on expiry
of 15 (fifteen) days from the date on which such amount became
payable.
(3) Onreceipt of a complaint under sub-section (2), the Competent
Authority shall, within 7 (seven) days there-from, direct the defaulting
Financial Establishment to make payment due to the depositor together
with the interest mentioned at sub-section (1) within 10 (ten) days
after issue of such direction.
(4) A Financial Establishment which fails to comply with the direction
issued under sub-section (3) will be liable to be debarred by the
Competent Authority without issuing a notice to show cause, from
accepting any deposit until the full amount due is paid to the
complainant.
(5) Ifa Financial Establishment defaults on repayment of the maturity
amount along with interest prescribed under sub-section (1) of section
16 to the depositor for 30 (thirty) days after issue of a direction under
sub-section (3), the Competent Authority shall, without issue of a notice
to the Financial Establishment to show cause, take action to pay the
amount due to the complainant depositor from the securities furnished
by the defaulting Financial Establishment under sub-section (1) of
Section 7.
(5) A Financial Establishment shall be permitted to resume
acceptance of deposits unless the security utilized for repayment of
dues to the depositor under sub-section (5) is replenished by it.
CHAPTER IV
18. Notwithstanding anything contained in any other law for the time being
in force :-
(i) where, upon complaints received from a number of depositors
that any Financial Establishment has defaulted the return of deposits
after maturity, or has failed to pay interest on deposits or has failed to
provide the service for which the deposit had been made and the
Government is of the opinion that an action under the sub-section (5)
of section 17 is not in public interest or that it is likely to adversely
affect the interest of other depositors, or
(ii) where the Government has reason to believe that any Financial
Establishment is acting in a calculated manner with an intention to
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Application to the
District and Session
Court.
Punishment for
offences.
Compunding
of offence.
defraud the depositors, and the Government is satisfied that such
Financial Establishment is not likely to return the deposits or to make
payment of interest or to provide the service, the Governmentmay, in
order to protect the interest of the depositors of such Financial
Establishment, pass an ad-interim order attaching the movable or
immovable 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 movable or immovable property is not
available for attachment or not sufficient for repayment of the deposits,
such other property of the said Financlal Establishment or the
promoter, partner, director, manager or member of the said Financial
Establishment to the extent of his default, or such other properties of
that person in whose name properties were purchased from and out
of the deposits collected by the Financial Establishment, as the
Government may deem fit, and transfer the control over the said
movable or immovable property to the Competent Authority.
19. (1) Upon receipt of the orders of the Government under section 18,
the Competent Authority shall apply within 30 (thirty) days to the District
and Sessions Court having jurisdiction for making the ad-interim order
of attachment absolute, and for a direction to sell the property so
attached by public auction and realize the sales proceeds.
(2) An application under sub-section (1) 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, 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
the persons in whose name such property is believed to have been
.invested or purchase out of the deposits or any other property attached
under section 18.
(3) For the purpose of crediting and dealing with the money realized
by the Competent Authority, it shall open a separate bank account in
any Scheduled commercial bank.
CHAPTER V
20. Notwithstanding anything contained in chapter IV, where any Financial
Estabiishment defaults the return of the deposits, or fails to return in
any kind, or fails to render service for which the deposit had been
made, 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 my extend
to one lakh of rupees or both, and such Financial Establishment shall
also be liable for fine which my extend to one lakh of rupees.
21. (1) An offence punishable under section 20 may, before the institution
of the prosecution, be compounded by the Competent Authority, and
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Power to try
offences
Power to Court for
attachment, sale,
realization, and
distribution.
after the institution of the prosecution, be compounded by the
Competent. Authority with the permission of the Court, on payment of ,_
the entire amount dug tothg caoosrtorswith interest.
(2) Where an offence has been compounded under sub-section
(1), no proceeding or further proceeding, as the case may be, shall
be taken or continued against the offender, in respect of the offence
so compounded and the offender if in custody, shall be discharged
forthwith.
CHAPTER VI
22. (1) An offence punishable under this 'Act shall be tried by a Court of
Session having jurisdiction. Any case pending in any other Court to
which the provisions of this Act apply shall stand transferred to the
respective Court of Sessions having jurisdiction.
(2) When trying any case, the Court may also try any offence,
other than an offence specified in section 20, with which the accused
may, under the Code of Criminal Procedure, 1973 (2 of 1974), be
charged, at the same trial
23. (1) Upon receipt of an application under section 19, the Court shall
issue to the Financial Establishment or to any other person whose
property is attached by the Government under section 18, a notice
accompanied by copies of the application and affidavits, and of the
evidence ifany recorded, calling upon it/him to show cause on a date
to be specified in the notice why the order of attachment should not
be made absolute, and the property so attached sold in public auction.
(2) The Court shall also issue such notice to all other persons
represented to it as having or being likely to claim any interest in the
property of the Financial Establishment or the person to whom the
notice is issued, calling upon such person to appear on the same
date as that specified in the notice and make objection if he so desires
to the attachment of the property or any portion thereof on the ground
that he has an interest in such property or 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
Court at any time before an order is passed under sub-section (4) or
sub-section (6).
(4) Ifno cause is shown and no objection are made on or before the
specified date, the Court shall forthwith pass an order making the ad-
interim order of attachment absolute, and direct the Competent
Authority to sell the property so attached by public auction and realize
the sales proceeds.
(5) If cause is shown or any objection is made as a aforesaid, the
Court shall proceed to investigate the same, and in doing so as regards
the examination of the parties and in other respect the Court shall,
subject to the provisions of this Act, follow the procedure and exercise
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j
Attachment of
property of maJafide
transferees.
Security in lieu of
attachment.
all the powers of a Court in hearing a suit under the Code of Civil
Procedure, 1908 (V of 1908) and any person making an-objection
shall ·be required to adduce evidence to show that at the date of
attachment he had some interest in the property attached.
(6) After investigation under sub-section (5), the Court shall pass
an order within a period of one hundred and eighty days from the date
of receipt of an application under sub-section(1) of section 19 either
making the ad-interim order of attachment absolute or varying it by
releasing a portion of the property from attachment or canceling the
ad-interim order of attachment, and then direct the Competent Authority
to sell the property attachment by public auction and realize the sale
proceeds:
Provided that the 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 amount or property
of value not less than the value that is required for repayment to the
depositors of such Financial Establishment.
(7) The 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 attached or
realized out of the sale of attached property.
24. (1) Where the assets available for attachment of a Financial
Establishment or the other person referred to in section 18 are
found to be less than the amount or value which such Financial
Establishment is required to repay to the depositors and where the
Court is satisfied by affidavit or otherwise that there is reasonable
cause for believing that the said Financial Establishment has property
otherwise than in good faith and for consideration, the 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 23, the Court is satisfied that the transfer
of the property to the said transferee was not in good faith and for
consideration, the Court shall order the attachment of so much of the
said transferee's property as in the opinion of the Court is equivalent
to the proper value of the property transferred.
25. Any Financial Establishment or person whose property has been or is
about to be attached under the Act may at any time apply to the Court
for permission to give security in lieu of such attachment, and where
the security offered and given is in the opinion of the Court satisfactory
and sufficient, it may cancel the ad-interim order of attachment or, as
the case may be, refrain from passing an order of attachment.
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~dministration of
)ropertyattached.
Appeal.
Act to override
other laws.
Power to make rules.
26. The Court may, on the application of any person interested in any
propertyattachedunderthis Act, and after giving the Competent
Authority an opportunity of being heard, make such orders as the
Court considers just and reasonable for:
(a) providing from such of the property attached as the applicant
claims as 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 defense ofthe applicant where criminalprcceedinqs
have been instituted against him in the Court under section 20;
(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.
27. Any person including the Competent Authority, if aggrieved by an
order of the Court, may appeal to the High Court within thirty days
from the date of order.
CHAPTER VII
28. Save as otherwise provided in this Act, the provision of this Act shall
have effect, notwithstanding anything inconsistent therewith contained
in any otherlaw or custom or usage or instrument for the time being in
force.
29. (i) The Government may make rules for carrying out the provisions
of this Act.
(ii) Every rule made State Government under this Act shall be laid,
as soon after it is made, before the State Legislature.
By Order.
R.K. PURKA YASTHA (SSJS)
Legal Remembrancer- cum- Secretary
Law Department
File No: 16 (82)ILDIP12010
J'
S.G.P.G. -62/Gazette/100 Cps./24.02.2010

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