Banning of Unregulated Deposit Schemes Act, 2019
Sections 18, 19 and 20: Designated Court Powers, High Court Appeal and Supreme Court Transfer
Sections 18 to 20 form part of the statutory mechanism for restitution and court supervision under the Banning of Unregulated Deposit Schemes Act, 2019 (BUDS Act). Section 18 sets out the powers of the Designated Court, Section 19 provides a statutory appeal to the High Court against a final order of the Designated Court, and Section 20 empowers the Supreme Court to transfer specified cases from one Designated Court to another.
Official India Code - BUDS Act, 2019
- Section 18: authorises the Designated Court to supervise dues, assets, sale or realisation, repayment to depositors and related matters.
- Section 19: permits an aggrieved person, including the Competent Authority, to appeal a final order to the High Court within 60 days, subject to condonation for sufficient cause.
- Section 20: permits the Supreme Court, on an affidavit-supported application by the Competent Authority or an interested party, to transfer a qualifying case between Designated Courts.
Section 18 - Powers of Designated Court
Meaning: Section 18 gives the Designated Court broad supervisory and remedial powers over attached assets, determination of dues and repayment to depositors. It also allows the Court to protect certain interests in attached property and to make incidental orders needed for effective realisation and distribution.
Section 18(1): principal powers
The Designated Court shall exercise the following powers:
- approve the statement of dues of the deposit taker due from various debtors;
- assess the value of the assets of the deposit taker and finalise the list of depositors and their respective dues;
- direct the Competent Authority to take possession of assets belonging to or in the control of the deposit taker, sell, transfer or realise attached assets by public auction or private sale as appropriate, and credit the sale proceeds to its bank account;
- approve necessary expenditure incurred by the Competent Authority for taking possession and realisation of the assets of the deposit taker;
- order full payment to depositors, or proportionate payment where the realised amount is insufficient to meet the entire deposit liability;
- direct a person who made profit or averted loss through activity contrary to the Act to disgorge an amount equivalent to the wrongful gain or loss averted; and
- pass any other order considered fit for realisation of assets, repayment to depositors, or any matter incidental thereto.
Section 18(2): relief concerning attached property
On an application by a person interested in property attached and vested in the Competent Authority, and after giving the Competent Authority an opportunity of being heard, the Designated Court may make such order as it considers just and reasonable for:
- providing, from the attached property in which the applicant claims an interest, sums reasonably necessary for maintenance of the applicant and family and for defence expenses where criminal proceedings have been initiated against the applicant before the Designated Court under the Act; or
- safeguarding, so far as practicable, the interest of any business affected by the attachment.
Explanation to Section 18: For this section, the expression "deposit taker" includes directors, promoters, managers or members of the establishment and any other person whose property or assets have been attached under the Act.
Section 19 - Appeal to High Court
Meaning: Section 19 creates the appellate remedy against a final order passed by the Designated Court under the relevant Chapter of the Act.
Any person, including the Competent Authority, who is aggrieved by a final order of the Designated Court may appeal to the High Court within 60 days from the date of the order.
The High Court may entertain an appeal filed after the 60-day period if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal in time.
Explanation: For Section 19, "High Court" means the High Court of the State or Union territory in which the Designated Court is situated.
Section 20 - Power of Supreme Court to transfer cases
Meaning: Section 20 provides a central transfer mechanism where a qualifying default affects a deposit scheme or schemes of the nature referred to in Section 30. It enables the Supreme Court to move a particular case from one Designated Court to another when the statutory conditions are met.
Section 20(1): Whenever it is made to appear to the Supreme Court that there is a default in a deposit scheme or deposit schemes of the nature referred to in Section 30, the Supreme Court may direct that a particular case be transferred from one Designated Court to another Designated Court.
Section 20(2): The Supreme Court may exercise this power only on an application filed by the Competent Authority or an interested party. Every such application must be supported by an affidavit.
Section 20(3): If such an application is dismissed and the Supreme Court considers it frivolous or vexatious, it may order the applicant to pay compensation to a person who opposed the application, up to Rs. 50,000, as considered appropriate in the circumstances.