The depositors of unregulated deposit schemes and BUDS Act, 2019

Kh Surajfrengko Singh
Contd from previous issue
The banning of Unregulated Deposit Schemes Act, 2019 (herein under referred to as BUDS Act, 2019 in the article) became an Act on the 31st July, 2019. It is indeed a boon to all the aggrieved depositors who have deposited in the unregulated deposit schemes. With the BUDS Act, 2019 coming into force, a hope for the depositors is revived. Basically, it is an Act to provide for a comprehensive mechanism to ban the unregulated deposit schemes, other than deposits taken in the ordinary course of business, and to protect the interest of depositors and for matter connected therewith or incidental thereto.
(i) Section 3 of the Act speaks about the banning of the unregulated deposit schemes and further highlights that deposit taker should not directly or indirectly promote, operate, issue any advertisement soliciting participation or enrolment in or accept deposits in pursuance of an Unregulated Deposit Scheme.
(ii) Section 4 of the Act explains that no deposit taker should default in the repayment or return of deposit on maturity or rendering any specified service promised against such deposit.
(iii) Under Section 7 of the BUDS Act, 2019, there is a provision of appointment of the Competent Authority to take up the matters.
As per Notification No. 3/366/2018-D/IF dated 4th August, 2021, the Government of Manipur has appointed 4 (Four) Officers as Competent Authorities thereby assigning districts as below:-
Sl. No. Competent Authority District
1. Commissioner (Revenue) Bishnupur, Thoubal
2. Commissioner (Art & Culture) Imphal East, Imphal West
3. Commissioner (Works) Churachandpur, Chandel, Tamenglong, Senapati
4. Commissioner (Power) All other left out districts
The above officers are empowered to take up the matters related to BUDS Act, 2019.
(iv) Sec. 8 speaks about the constitution of Designated Courts.
(v) Sec. 12 of the said Act emphasizes on the priority to be given to the depositors’ dues and repayment.
(vi) Sec. 13 talks about the precedence of attachment- The order of provisional attachment of property passed by the Competent Authority shall have precedence and priority to the extent of the claims of the depositors over any other attachment by any other authority, competent to attach property for repayment of any debts, which are payable to the appropriate Government or the local authority.
(vii) Sec. 14 and Sec 15 of the BUDS Act, 2019 speak about application for confirmation of attachment, sale of property and the confirmation of attachment by the Designated Court.
(viii) Sec. 19 defines the provisions of appeal to the Hon’ble High Court if at all aggrieved by any order.
(ix) Sec. 21 to Sec. 24  highlight the penal provision under the BUDS Act, 2019 of which the punishment involves imprisonment of different terms according to nature of the offences as elucidated in each sections.
The author believes that out of many provisions of the BUDS Act, 2019, the above highlighted provisions are some of the very essential ingredients of the Act, which the common men including the depositors will benefit as an eye-opener for their issues at present. The Competent Authority is the most appropriate Authority to be approached for such nature of issues or cases. The clueless depositors can now have a sigh of relief as they have finally understood whom to approach for issues arising out of the unregulated deposit schemes prevalent in the State. Through this article, an attempt has been made to give certain interpretation of the most essential provisions of the BUDS Act, 2019 though it does not cover the entire provisions of the Act. It is very important on the part of the aggrieved depositors who have been victimized at the hands of the not so regulated Financial Entities/Deposit Taker that they must approach the Competent Authority by seeking legal assistance from a legal practitioner. The case or the application is recommended to be neatly drafted by seeking the help of a practicing advocate, who shall mention relevant provisions of the Act, compile the evidences accompanied by an affidavit and a Power of Attorney. The reason for treating such matter just like the Court matter is that it has an opportunity to be further presented to the Designated Court and subject to further appeal to the Hon’ble High Court if aggrieved and deemed necessary. This shall help the Competent Authority to properly investigate the individual matter of the Depositors in course of justice delivery under the Provisions of the Banning of Unregulated Deposit Schemes Act, 2019.
The writer is a practicing advocate and can be contacted through (whatsapp-9774144530) for any clarification with respect to the above article