The Telangana Protection of Depositors of Financial Establishments Act, 1999.

THE TELANGANA 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 Courts 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. 
 
THE TELANGANA PROTECTION OF DEPOSITORS OF 
FINANCIAL ESTABLISHMENTS ACT, 1999.1 
 
Act No.17 of 1999. 
 
1. (1) This Act may be called the 2Telangana Protection of 
Depositors of Financial Establishments Act, 1999. 
 
 (2) It extends to the whole of the State of 2Telangana. 
 
 (3) It shall come into force on such date as the 
Government may, by notification, appoint. 
 
2. 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 installments made with a financial 
establishment for a fixed period, for in terest or return in any 
kind; 
 
 3[(c) “Financial Establishments”  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 
                                                           
1. The Andhra Pradesh Protection of Depositors of Financial 
Establishments Act, 1999 received th e assent of the President on  
23.06.1999. The said Act in force in the combined State, as on 
02.06.2014, has been adapted to the State of Telangana, under section 
101 of the Andhra Pradesh Reorganisation Act, 2014 (Centra l Act 6 of 
2014) vide. the Notification issue in G.O.Ms.No.81, Home (Legal) 
Department, dated 21.05.2016.  
2. Substituted by G.O.Ms.No.81, Home (Legal ) Department, dated 
21.05.2016. 
3. Substituted by Act No.12 of 2003.  
Short title, extent 
and 
commencement. 
Definitions. 
2  [Act No.17 of 1999] 
banking company as defined under clause (c) of section 5 
of the Banking Regulation Act, 1949;] 
 
 (d) “Government” means the State Government of 
4Telangana; 
 
 (e) “Notification” means the notification published in 
the 4Telangana Gazette and the word “notified” shall be 
construed accordingly; and 
 
 (f) “prescribed” means prescribed by rules made under 
this Act. 
 
3. 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 financi al 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 
                                                           
4. Substituted by G.O.Ms.No.8 1, Home  (Legal) Department, dated 
21.05.2016.  
Central Act 10 of 1949. 
Attachment of 
properties on 
default in respect 
of deposits. 
[Act No.17 of 1999]  3 
out of the deposits collected by the financial esta blishment, 
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 financ ial establishment, as the Government may think 
fit, and transfer the control over the said money or property 
to the competent authority. 
 
4. (1) The Government may, by notification, appoint an 
authority hereinafter called “the compe tent authority” to 
exercise control over the properties attached by the 
Government under section 3. 
 
 (2) The c ompetent authority shall have 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 c ompetent authority shall apply within fifteen 
days to the Special Court constituted under this Act for 
making the 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 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. 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 
Competent 
Authority. 
Penalty for 
default. 
4  [Act No.17 of 1999] 
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 lakhs. 
 
6. (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 Sess ions Court as a 
Special Court. 
 
 (2) No court including a court constituted under the 
Presidency Towns Insolvency Act, 1909 and the Provincial 
Insolvency Act 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 applicat ion 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 realized from out of the 
property attached. 
 
7. (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 o f 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. 
Special Court. 
Central Act III of 1909. 
Central Act V of 1920. 
Powers of Special 
Court regarding 
attachment. 
[Act No.17 of 1999]  5 
 (2) The Special Court shall also issue such notice, to all 
other persons represented to it as hav ing 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 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 s pecified 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 
case, 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 a Court in hearing a suit under 
the Code of Civil P rocedure, 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 
Central Act v of 1908. 
6  [Act No.17 of 1999] 
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. (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 establishm ent 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 receive d 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 wa s 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. 
Attachment of 
property of certain 
transferees. 
[Act No.17 of 1999]  7 
9. 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. 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 proceedi ngs 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. Any person including the competent authority, if 
aggrieved by an order or the Special Court, may appeal to 
the High Court within thirty days from the date of such order. 
 
12. 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. 
Administration of 
property attached. 
Security in lieu of 
attachment. 
Appeal. 
Special Public 
Prosecutor and 
Special 
Government 
Pleader. 
8  [Act No.17 of 1999] 
13. (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 Crim inal Procedure, 1973 for the 
trial of warrant cases by Magistrates. 
 
 (2) The provisions of the Code of Criminal Procedure, 
1973 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. 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. Whoever makes a complaint knowing or having reason 
to believe it to be false or vexatious shall be punished with 
imprisonment for a term whi ch may extend to one year or 
with fine which may extend to rupees one lakh, or with both. 
 
16. 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 made 
thereunder. 
 
17. If any doubt or difficulty arises in giving effect to the 
provisions 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. (1) The Government may, by notification make rules to 
carry out the purposes of this Act. 
 
Procedure and 
powers of Special 
Courts regarding 
offences. 
Central Act 2 of 1974. 
Act to override 
other laws. 
Central Act 2 of 1974. 
Penalty for false 
or vexations 
complaints. 
Protection of 
action taken in 
good faith. 
Power to remove 
doubts and 
difficulties. 
Power to make 
rules. 
[Act No.17 of 1999]  9 
 (2) Every rule made under this Act, shall immediately 
after it is made, be laid before the Legislat ure 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 fourte en 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 Legislature agrees in making any modification 
in the rule or in the annulment of the rule, the rule shall, from 
the 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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