Banning of Unregulated Deposit Schemes Act, 2019 | One Liner Notes

THE BANNING OF UNREGULATED DEPOSIT SCHEMES ACT, 2019

What is the short title of the Act enacted in 2019 relating to unregulated deposit schemes?	The short title is the Banning of Unregulated Deposit Schemes Act 2019.
What is the Act number of the Banning of Unregulated Deposit Schemes Act 2019?	It is Act No 21 of 2019.
On which date was the Banning of Unregulated Deposit Schemes Act 2019 enacted?	It was enacted on 31st July 2019.
In which year of the Republic of India was the Act enacted?	It was enacted in the Seventieth Year of the Republic of India.
What is the objective of the Banning of Unregulated Deposit Schemes Act 2019?	The objective is to provide a comprehensive mechanism to ban unregulated deposit schemes and protect the interests of depositors.
What type of deposits are excluded under the objective of the Act?	Deposits taken in the ordinary course of business are excluded.
What additional matters are covered under the Act?	Matters connected therewith or incidental thereto are also covered.

CHAPTER-I
PRELIMINARY
What is the short title of the Act?	The short title is the Banning of Unregulated Deposit Schemes Act, 2019.
To what extent does the Banning of Unregulated Deposit Schemes Act, 2019 apply?	It extends to the whole of India.
From which date is the Banning of Unregulated Deposit Schemes Act, 2019 deemed to have come into force?	It is deemed to have come into force on the 21st day of February, 2019.
What does Section 2 of the Act deal with?	Section 2 deals with definitions under the Act.
What is meant by “appropriate Government” in relation to a Union Territory without legislature?	The Central Government.
What is meant by “appropriate Government” in relation to the Union Territory of Puducherry?	The Government of the Union Territory of Puducherry.
What is meant by “appropriate Government” in relation to the Union Territory of Delhi?	The Government of the Union Territory of Delhi.
What is meant by “appropriate Government” in relation to a State?	The State Government.
What is the meaning of “company” under Section 2(2)?	It has the same meaning as assigned in Section 2(20) of the Companies Act, 2013.
What is meant by “Competent Authority” under Section 2(3)?	An Authority appointed by the appropriate Government under Section 7.
What is excluded under Section 2(4)(a) from the definition of “deposit”?	Amounts received as loan from a scheduled bank, co-operative bank or any other banking company as defined in Section 5 of the Banking Regulation Act, 1949.
What is excluded under Section 2(4)(b) from the definition of “deposit”?	Amounts received as loan or financial assistance from Public Financial Institutions notified by the Central Government in consultation with RBI.
Does Section 2(4)(b) exclude amounts received from NBFCs?	Yes, amounts received from an NBFC registered with the Reserve Bank of India are excluded.
Are amounts received from Regional Financial Institutions excluded under Section 2(4)(b)?	Yes, they are excluded.
Are amounts received from insurance companies excluded under Section 2(4)(b)?	Yes, they are excluded from the definition of deposit.
Is consultation with RBI required for notification of Public Financial Institutions under Section 2(4)(b)?	Yes, notification must be made by the Central Government in consultation with RBI.
What is excluded under Section 2(4)(c) from the definition of “deposit”?	Amounts received from the appropriate Government or amounts whose repayment is guaranteed by the appropriate Government or amounts received from a statutory authority constituted under an Act of Parliament or State Legislature.
Are government-guaranteed amounts excluded under Section 2(4)(c)?	Yes, amounts whose repayment is guaranteed by the appropriate Government are excluded.
What is excluded under Section 2(4)(d) from the definition of “deposit”?	Amounts received from foreign Governments, international banks, multilateral financial institutions, foreign development financial institutions, foreign bodies corporate, foreign citizens, foreign authorities or persons resident outside India subject to FEMA.
Is compliance with FEMA required under Section 2(4)(d)?	Yes, such receipts must be subject to the Foreign Exchange Management Act, 1999 and rules and regulations made thereunder.
What is excluded under Section 2(4)(e)?	Contributions towards capital by partners of a partnership firm or a limited liability partnership.
What is excluded under Section 2(4)(f)?	Amounts received by an individual from his relatives or amounts received by a firm from relatives of its partners.
What is excluded under Section 2(4)(g)?	Amounts received as credit by a buyer from a seller on sale of property, whether movable or immovable.
Are trade credits excluded under Section 2(4)(g)?	Yes, buyer’s credit arising from sale of property is excluded.
What is excluded under Section 2(4)(h) from the definition of “deposit”?	Amounts received by an asset reconstruction company registered with RBI under Section 3 of the SARFAESI Act, 2002.
Is RBI registration necessary for exclusion under Section 2(4)(h)?	Yes, the asset reconstruction company must be registered with the Reserve Bank of India.
What is excluded under Section 2(4)(i)?	Any deposit made under Section 34 or any amount accepted by a political party under Section 29B of the Representation of the People Act, 1951.
Are political party contributions excluded under Section 2(4)(i)?	Yes, amounts accepted under Section 29B of the Representation of the People Act, 1951 are excluded.
What is excluded under Section 2(4)(j)?	Periodic payments made by members of self-help groups within ceilings prescribed by the State Government or Union territory Government.
Are self-help group contributions unlimited under Section 2(4)(j)?	No, they must be within prescribed ceilings.
What is excluded under Section 2(4)(k)?	Any other amount collected for such purpose and within such ceilings as may be prescribed by the State Government.
Is there a residuary exclusion under Section 2(4)(k)?	Yes, amounts collected for prescribed purposes within prescribed ceilings by the State Government are excluded.
What is excluded under Section 2(4)(l) from the definition of “deposit”?	Amounts received in the course of or for the purpose of business having a genuine connection with such business.
What is excluded under Section 2(4)(l)(i)?	Payment, advance or part payment for supply or hire of goods or provision of services, repayable if goods or services are not provided.
What is excluded under Section 2(4)(l)(ii)?	Advance received in connection with immovable property subject to adjustment against such property as per agreement.
What is excluded under Section 2(4)(l)(iii)?	Security or dealership deposit for performance of contract for supply of goods or services.
What is excluded under Section 2(4)(l)(iv)?	Advance under long-term projects for supply of capital goods except those specified in item (ii).
When do amounts under Section 2(4)(l)(i) to (iv) become deemed deposits?	If refundable, on expiry of fifteen days from the date they become due for refund.
When do amounts under Section 2(4)(l) become deemed deposits due to lack of permission?	When refundable because the deposit taker failed to obtain necessary legal permission or approval.
What does Explanation (i) to Section 2(4)(l) provide?	In respect of a company, “deposit” has the same meaning as under the Companies Act, 2013.
What does Explanation (ii) to Section 2(4)(l) provide?	In respect of a registered NBFC, “deposit” has the meaning assigned under Section 45-I(bb) of the RBI Act, 1934.
What does Explanation (iii) to Section 2(4)(l) provide?	“Partner” and “firm” have meanings assigned under the Indian Partnership Act, 1932.
What does Explanation (iv) to Section 2(4)(l) provide?	“Partner” in relation to LLP has meaning under Section 2(1)(q) of the LLP Act, 2008.
What does Explanation (v) to Section 2(4)(l) provide?	“Relative” has the meaning assigned under the Companies Act, 2013.
What is meant by “depositor” under Section 2(5)?	Any person who makes a deposit under the Act.
What does Section 2(6) define?	It defines the term “deposit taker”.
Who is included under Section 2(6)(i) as a deposit taker?	Any individual or group of individuals.
Who is included under Section 2(6)(ii)?	A proprietorship concern.
Who is included under Section 2(6)(iii)?	A partnership firm whether registered or not.
Who is included under Section 2(6)(iv)?	A limited liability partnership registered under the LLP Act, 2008.
Who is included under Section 2(6)(v)?	A company.
Who is included under Section 2(6)(vi)?	An association of persons.
Who is included under Section 2(6)(vii)?	A private trust under the Indian Trusts Act, 1882 or a public trust whether registered or not.
Who is included under Section 2(6)(viii)?	A co-operative society or a multi-State co-operative society.
Who is included under Section 2(6)(ix)?	Any other arrangement of whatsoever nature receiving or soliciting deposits.
Who is excluded under Section 2(6) exclusion clause (i)?	A Corporation incorporated under an Act of Parliament or a State Legislature.
Who is excluded under Section 2(6) exclusion clause (ii)?	A banking company, corresponding new bank, State Bank of India, subsidiary bank, regional rural bank, co-operative bank or multi-State co-operative bank as defined in the Banking Regulation Act, 1949.
What is meant by “Designated Court” under Section 2(7)?	A Designated Court constituted by the appropriate Government under Section 8.
What is meant by “insurer” under Section 2(8)?	It has the same meaning as assigned in Section 2(9) of the Insurance Act, 1938.
What is meant by “notification” under Section 2(9)?	A notification published in the Official Gazette.
How is the expression “notify” construed under Section 2(9)?	It is construed in accordance with publication in the Official Gazette.
What does Section 2(10) define?	It defines the term “person”.
Who is included under Section 2(10)(i)?	An individual.
Who is included under Section 2(10)(ii)?	A Hindu Undivided Family.
Who is included under Section 2(10)(iii)?	A company.
Who is included under Section 2(10)(iv)?	A trust.
Who is included under Section 2(10)(v)?	A partnership firm.
Who is included under Section 2(10)(vi)?	A limited liability partnership.
Who is included under Section 2(10)(vii)?	An association of persons.
Who is included under Section 2(10)(viii)?	A co-operative society registered under any law relating to co-operative societies.
Who is included under Section 2(10)(ix)?	Every artificial juridical person not falling within preceding sub-clauses.
What is meant by “prescribed” under Section 2(11)?	Prescribed by rules made by the Central Government or the State Government under the Act.
What is meant by “property” under Section 2(12)?	Property or assets of every description, whether corporeal or incorporeal, movable or immovable, tangible or intangible, including deeds and instruments evidencing title or interest, wherever located.
What is meant by “public financial institution” under Section 2(13)?	It has the same meaning as assigned in Section 2(72) of the Companies Act, 2013.
What is meant by “Regulated Deposit Scheme” under Section 2(14)?	The schemes specified under column (3) of the First Schedule.
What is meant by “Regulator” under Section 2(15)?	The Regulator specified in column (2) of the First Schedule.
What is meant by “Schedule” under Section 2(16)?	The Schedule appended to the Act.
What is meant by “Unregulated Deposit Scheme” under Section 2(17)?	A scheme or arrangement under which deposits are accepted or solicited by way of business and which is not a Regulated Deposit Scheme as specified in the First Schedule.
What is the essential distinction under Section 2(17)?	It distinguishes Unregulated Deposit Schemes from Regulated Deposit Schemes specified in the First Schedule.
Under which Order was the amendment to Section 2(1) for the Union Territory of Jammu and Kashmir made?	Union Territory of Jammu and Kashmir Reorganisation (Adaptation of Central Laws) Second Order, 2020.
What is the Notification number for the amendment inserting Section 2(1)(iiia)?	Notification No. S.O. 3465(E).
On what date was the amendment to Section 2(1) notified?	5-10-2020.
What change was made in Section 2(1)(iii) by the State Amendment?	The word “and” was omitted.
What was inserted after Section 2(1)(iii)?	Sub-clause (iiia) specifying the Union Territory of Jammu and Kashmir and the Government of that Union Territory.
What is the effect of inserting Section 2(1)(iiia)?	It includes the Union Territory of Jammu and Kashmir within the definition of “appropriate Government”.

CHAPTER-II
BANNING OF UNREGULATED DEPOSIT SCHEMES
What does Section 3 of the Act deal with?	Section 3 deals with banning of Unregulated Deposit Schemes.
From when does Section 3 operate?	From the date of commencement of the Act.
What is provided under Section 3(a)?	Unregulated Deposit Schemes are banned.
What prohibition is imposed under Section 3(b)?	No deposit taker shall directly or indirectly promote, operate, advertise, solicit participation or accept deposits under an Unregulated Deposit Scheme.
Does Section 3(b) prohibit indirect promotion of Unregulated Deposit Schemes?	Yes, both direct and indirect promotion are prohibited.
Is acceptance of deposits under an Unregulated Deposit Scheme permitted after commencement?	No, it is prohibited.
What does Section 4 of the Act deal with?	Section 4 deals with fraudulent default in Regulated Deposit Schemes.
To whom does Section 4 apply?	To any deposit taker accepting deposits under a Regulated Deposit Scheme.
What is prohibited under Section 4?	Committing fraudulent default in repayment or return of deposit on maturity.
Does Section 4 apply to specified services promised against deposit?	Yes, fraudulent default in rendering specified service promised against such deposit is also prohibited.
Is default simpliciter prohibited under Section 4?	The section specifically prohibits fraudulent default.
Does Section 4 apply only to Unregulated Deposit Schemes?	No, it applies to Regulated Deposit Schemes.
What does Section 5 of the Act deal with?	Section 5 deals with wrongful inducement in relation to Unregulated Deposit Schemes.
Who is prohibited under Section 5?	No person by whatever name called.
What is prohibited under Section 5?	Knowingly making false, deceptive or misleading statements to induce investment in an Unregulated Deposit Scheme.
Does Section 5 cover promises or forecasts?	Yes, false statements, promises or forecasts are prohibited.
Is concealment of material facts covered under Section 5?	Yes, deliberate concealment of material facts to induce investment is prohibited.
Is knowledge required for liability under Section 5?	Yes, the person must knowingly make such false or misleading statement.
What is the object of wrongful inducement under Section 5?	To induce another person to invest in or become a member or participant of an Unregulated Deposit Scheme.
What does Section 6 of the Act deal with?	Section 6 deals with deeming certain schemes as Unregulated Deposit Schemes.
Which schemes are deemed to be Unregulated Deposit Schemes under Section 6?	Prize chits or money circulation schemes banned under the Prize Chits and Money Circulation Schemes (Banning) Act, 1978.
Is actual proof of being unregulated required under Section 6?	No, such schemes are deemed to be Unregulated Deposit Schemes.
Does Section 6 link this Act with the 1978 Act?	Yes, schemes banned under the 1978 Act are treated as Unregulated Deposit Schemes under this Act.
What is the legal effect of deeming provision under Section 6?	The banned prize chit or money circulation scheme automatically falls within the definition of Unregulated Deposit Scheme.

CHAPTER-III
AUTHORITIES
What does Section 7 of the Act deal with?	Section 7 deals with appointment and powers of the Competent Authority.
Who appoints the Competent Authority under Section 7(1)?	The appropriate Government by notification.
What is the minimum rank required for appointment under Section 7(1)?	Not below the rank of Secretary to that Government.
Can additional officers be appointed under Section 7(2)?	Yes, the appropriate Government may appoint officers to assist the Competent Authority.
What condition must be satisfied before action under Section 7(3)?	The Competent Authority must have reason to believe, recorded in writing, that deposits are being solicited in contravention of Section 3.
On what basis can belief be formed under Section 7(3)?	On the basis of prescribed information and particulars.
What action can be taken under Section 7(3)?	Provisional attachment of deposits and money or property acquired by the deposit taker.
Can property held in another person’s name be attached under Section 7(3)?	Yes, if acquired on behalf of the deposit taker.
From when does attachment take effect under Section 7(3)?	From the date of the written order.
What powers are conferred on the Competent Authority under Section 7(4)?	The Competent Authority has powers of a civil court under the Code of Civil Procedure, 1908 while conducting investigation or inquiry.
Under which law are the civil court powers derived as per Section 7(4)?	The Code of Civil Procedure, 1908.
What power is provided under Section 7(4)(a)?	Power of discovery and inspection.
What power is provided under Section 7(4)(b)?	Power to enforce attendance of any person, including an officer of a reporting entity, and examine him on oath.
What power is provided under Section 7(4)(c)?	Power to compel production of records.
What power is provided under Section 7(4)(d)?	Power to receive evidence on affidavits.
What power is provided under Section 7(4)(e)?	Power to issue commissions for examination of witnesses and documents.
What does Section 7(4)(f) provide?	Power in respect of any other matter which may be prescribed.
What additional power is given under Section 7(5)?	Power to summon any person to give evidence or produce records during investigation or proceedings.
When can summons be issued under Section 7(5)?	During the course of any investigation or proceeding under Section 7.
What obligation is imposed under Section 7(6) on persons summoned?	They are bound to attend in person or through authorised agents as directed.
Are summoned persons required to speak the truth under Section 7(6)?	Yes, they must state the truth on subjects on which they are examined.
What must summoned persons produce under Section 7(6)?	Such documents as may be required.
How are proceedings under Sections 7(4) and 7(5) treated under Section 7(7)?	They are deemed to be judicial proceedings.
Under which IPC provisions are proceedings deemed judicial under Section 7(7)?	Sections 193 and 228 of the Indian Penal Code, 1860.
Who has power to impound records under Section 7(8)?	Any officer referred to in Section 7(2), subject to Central Government rules.
Can records be retained under Section 7(8)?	Yes, for such period as the officer thinks fit.
What condition must be satisfied before impounding records under Section 7(8)(a)?	Reasons must be recorded in writing.
What is the maximum retention period without approval under Section 7(8)(b)?	Three months.
Whose approval is required to retain records beyond three months?	The Competent Authority.
What does Section 8 of the Act deal with?	Section 8 deals with constitution and jurisdiction of the Designated Court.
Who constitutes the Designated Court under Section 8(1)?	The appropriate Government with the concurrence of the Chief Justice of the concerned High Court.
How is the Designated Court constituted under Section 8(1)?	By notification.
What rank must the presiding Judge hold under Section 8(1)?	Not below the rank of District and Sessions Judge or Additional District and Sessions Judge.
Can multiple Designated Courts be constituted under Section 8(1)?	Yes, one or more Designated Courts may be constituted.
Does any other Court have jurisdiction under Section 8(2)?	No, only the Designated Court has jurisdiction.
Can the Designated Court try offences other than those under this Act under Section 8(3)?	Yes, if the accused may be charged with such offences at the same trial under the Code of Criminal Procedure, 1973.

CHAPTER-IV
INFORMATION ON DEPOSIT TAKERS
What does Section 9 of the Act deal with?	Section 9 deals with creation of a Central database on deposit takers.
Who may designate the authority under Section 9(1)?	The Central Government.
What is the function of the authority designated under Section 9(1)?	To create, maintain and operate an online database for information on deposit takers operating in India.
Can the designated authority be an existing authority?	Yes, it may be an existing authority or one to be constituted.
What power is given under Section 9(2)?	The authority may require any Regulator or the Competent Authority to share prescribed information on deposit takers.
What does Section 10 deal with?	Section 10 deals with information of business by deposit taker.
Who must intimate the authority under Section 10(1)?	Every deposit taker commencing or carrying on business on or after commencement of the Act.
To whom must intimation be made under Section 10(1)?	The authority referred to in Section 9(1).
In what manner must intimation be made under Section 10(1)?	In prescribed form, manner and within prescribed time.
What power is given to the Competent Authority under Section 10(2)?	To direct a deposit taker to furnish statements, information or particulars relating to deposits.
When can action under Section 10(2) be taken?	When there is reason to believe deposits are being solicited or accepted under an Unregulated Deposit Scheme.
What does Explanation (a) to Section 10 clarify?	Intimation requirement applies to deposit takers accepting or soliciting deposits as defined in Section 2(4).
What does Explanation (b) to Section 10 clarify?	The intimation requirement applies to a company accepting deposits under Chapter V of the Companies Act, 2013.
What does Section 11 deal with?	Section 11 deals with sharing of information.
With whom must the Competent Authority share information under Section 11(1)?	With the Central Bureau of Investigation and the authority designated under Section 9.
Which information must be shared under Section 11(1)?	All information received under Section 29.
Who is required to share information under Section 11(2)?	The appropriate Government, any Regulator, income-tax authorities or any other investigation agency.
With whom must information be shared under Section 11(2)?	With the police or the Central Bureau of Investigation.
In what context does Section 11(2) apply?	In respect of offences investigated under this Act.
Who has a reporting obligation under Section 11(3)?	The principal officer of specified banking institutions.
When does the obligation under Section 11(3) arise?	When there is reason to believe a client is a deposit taker acting in contravention of the Act.
To whom must such information be reported under Section 11(3)?	To the Competent Authority.

CHAPTER-V
RESTITUTION TO DEPOSITORS
What does Section 12 deal with?	Section 12 deals with priority of depositors’ claims.
Which laws create exceptions to Section 12?	The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and the Insolvency and Bankruptcy Code, 2016.
What amount is given priority under Section 12?	Any amount due to depositors from a deposit taker.
Over which liabilities do depositors’ claims have priority?	Over all other debts and all revenues, taxes, cesses and other rates payable to the appropriate Government or local authority.
Is the priority absolute under Section 12?	No, it is subject to exceptions under the SARFAESI Act, 2002 and the Insolvency and Bankruptcy Code, 2016.
What does Section 13 deal with?	Section 13 deals with precedence of provisional attachment.
Which laws create exceptions to Section 13(1)?	The SARFAESI Act, 2002 and the Insolvency and Bankruptcy Code, 2016.
What precedence is given under Section 13(1)?	Provisional attachment by the Competent Authority has priority over other attachments.
To what extent does priority apply under Section 13(1)?	To the extent of the claims of the depositors.
Over which liabilities does the attachment take precedence?	Over attachments for debts, revenues, taxes, cesses and other rates payable to the appropriate Government or local authority.
How long does attachment continue under Section 13(2)(a)?	Until an order is passed under Section 15(3) or Section 15(5) by the Designated Court.
In whom does attached property vest under Section 13(2)(b)?	In the Competent Authority until further order of the Designated Court.
What must the Competent Authority do under Section 13(3)?	Open an account in a scheduled bank for crediting and dealing with realised money.
Can money in the account be utilised freely under Section 13(3)?	No, it can be utilised only under instructions of the Designated Court.
Can the Competent Authority dispose of attached property under Section 13(4)?	Only in accordance with the order of the Designated Court under Section 15(3) or 15(5).
What exception is provided under Section 13(5)?	The Competent Authority may order immediate sale of perishable items or assets.
How are sale proceeds of perishable items treated under Section 13(5)?	They are utilised in the same manner as other attached property.
What does Section 14 deal with?	Section 14 deals with application for confirmation of attachment and sale of property.
Within what time must application be filed under Section 14(1)?	Within thirty days from the date of provisional attachment.
Can the period under Section 14(1) be extended?	Yes, up to sixty days.
What is required for extension under Section 14(1)?	Reasons must be recorded in writing.
Before which Court must the application be filed under Section 14(1)?	The Designated Court.
For what purposes is the application filed under Section 14(1)?	To make the provisional attachment absolute and to seek permission to sell the attached property.
In what manner may property be sold under Section 14(1)?	By public auction or, if necessary, by private sale.
Where must application be filed under Section 14(2) if attachment was permitted by another Designated Court?	In the Designated Court that granted permission for attachment.
What does Section 15 deal with?	Section 15 deals with confirmation of attachment by the Designated Court.
What must the Designated Court do upon receipt of application under Section 14?	Issue notice to the concerned persons.
To whom must notice be issued under Section 15(1)(a)?	The deposit taker.
To whom must notice be issued under Section 15(1)(b)?	Any person whose property is attached.
Within what time must cause be shown under Section 15(1)?	Within thirty days from the date of issue of notice.
What must the persons show cause against under Section 15(1)?	Why the attachment should not be made absolute and the attached properties sold.
Who else must be notified under Section 15(2)?	Persons having or likely to claim interest or title in the property.
For what purpose are such persons notified under Section 15(2)?	To appear and raise objections to the attachment.
What procedure must the Designated Court follow under Section 15(3)?	Such procedure as may be prescribed.
What order may be passed under Section 15(3)(a)?	Making the provisional order of attachment absolute.
What order may be passed under Section 15(3)(b)?	Varying the attachment by releasing a portion of the property.
What order may be passed under Section 15(3)(c)?	Cancelling the provisional order of attachment.
What direction follows an order under Section 15(3)(a) or (b)?	Direction to the Competent Authority to sell the attached property and realise sale proceeds.
In what manner may sale be conducted under Section 15(3)?	By public auction or, if necessary, by private sale.
What restriction is imposed under Section 15(4) before releasing property?	Court must be satisfied of interest in property and sufficiency for repayment.
What two conditions must be satisfied under Section 15(4)?	(a) Interest of deposit taker/person in property; (b) Sufficient property remains for repayment to depositors.
What power is given under Section 15(5)?	To pass orders for equitable distribution among depositors.
Within what time should proceedings be completed under Section 15(6)?	Within one hundred and eighty days from receipt of application.
What does Section 16 deal with?	Section 16 deals with attachment of property of mala fide transferees.
When can action be taken under Section 16(1)?	When the Designated Court believes property was transferred otherwise than in good faith and not for commensurate consideration.
What must the Court issue under Section 16(1)?	Notice to the transferee.
Can indirect transferees be proceeded against under Section 16(1)?	Yes, whether or not property was received directly from the deposit taker.
What must the transferee show cause against under Section 16(1)?	Why property equivalent to the value transferred should not be attached.
What happens if the transferee fails to appear under Section 16(2)?	The Court may order attachment of equivalent property.
What finding must the Court record under Section 16(2)?	That the transfer was not bona fide and not for commensurate consideration.
To what extent can property be attached under Section 16(2)?	To the extent equivalent to the proper value of the property transferred.
What does Section 17 deal with?	Section 17 deals with payment in lieu of attachment.
Who may apply under Section 17(1)?	The deposit taker, person under Section 15(1), or transferee under Section 16.
When can application under Section 17(1) be made?	Before confirmation of attachment.
For what purpose can application be made under Section 17(1)?	To deposit fair value of property in lieu of attachment.
Before which Court must application be made under Section 17(1)?	The Designated Court.
What power does the Designated Court have under Section 17(2)?	To order payment of costs while permitting deposit.
Who may be directed to pay costs under Section 17(2)?	The deposit taker, person or transferee making the deposit.
What does Section 18 deal with?	Section 18 deals with powers of the Designated Court.
What power is provided under Section 18(1)(a)?	Power to approve the statement of dues of the deposit taker from debtors.
What power is provided under Section 18(1)(b)?	Power to assess value of assets and finalise list of depositors and their dues.
What power is provided under Section 18(1)(c)?	Power to direct Competent Authority to take possession and sell or realise attached assets.
In what manner can assets be sold under Section 18(1)(c)?	By public auction or private sale as deemed fit.
What power is given under Section 18(1)(d)?	Power to approve necessary expenditure for taking possession and realisation of assets.
What power is provided under Section 18(1)(e)?	Power to order full or proportionate payment to depositors.
When is proportionate payment ordered under Section 18(1)(e)?	When realised money is insufficient to meet entire deposit liability.
What power is provided under Section 18(1)(f)?	Power to direct disgorgement of wrongful gain or loss averted.
What residual power is provided under Section 18(1)(g)?	Power to pass any other order for realisation of assets and repayment to depositors.
Who may apply under Section 18(2)?	Any person interested in property attached and vested in the Competent Authority.
What must be given to the Competent Authority under Section 18(2)?	An opportunity of being heard.
What kind of order may the Designated Court pass under Section 18(2)?	Such order as it considers just and reasonable.
What relief is provided under Section 18(2)(a)?	Provision of sums for maintenance of applicant and family and defence expenses.
When can defence expenses be granted under Section 18(2)(a)?	Where criminal proceedings have been initiated in the Designated Court.
What relief is provided under Section 18(2)(b)?	Safeguarding the interest of any business affected by attachment.
What does the Explanation to Section 18 clarify about “deposit taker”?	It includes directors, promoters, managers, members or any person whose property is attached.
What does Section 19 deal with?	Section 19 deals with appeal to the High Court.
Who can file an appeal under Section 19?	Any person including the Competent Authority.
Against which order can appeal be filed under Section 19?	Final order of the Designated Court under this Chapter.
Within what time must appeal be filed under Section 19?	Within sixty days from the date of the order.
Can the High Court condone delay under Section 19?	Yes, if sufficient cause is shown.
What does the Explanation to Section 19 clarify?	High Court means the High Court of the State or Union territory where the Designated Court is situated.
What does Section 20 deal with?	Section 20 deals with power of the Supreme Court to transfer cases.
When can the Supreme Court exercise power under Section 20(1)?	When there is default in deposit schemes referred to in Section 30.
What power is conferred under Section 20(1)?	Power to transfer a case from one Designated Court to another.
Who can apply under Section 20(2)?	The Competent Authority or any interested party.
What must support the application under Section 20(2)?	An affidavit.
What consequence may follow dismissal of application under Section 20(3)?	Payment of compensation if application is frivolous or vexatious.
What is the maximum compensation under Section 20(3)?	Fifty thousand rupees.
To whom may compensation be paid under Section 20(3)?	To any person who opposed the application.

CHAPTER-VI
OFFENCES AND PUNISHMENTS
What does Section 21 deal with?	Section 21 deals with punishment for contravention of Section 3.
What is the punishment under Section 21(1)?	Imprisonment not less than one year up to five years and fine not less than two lakh rupees up to ten lakh rupees.
When does Section 21(1) apply?	When a deposit taker solicits deposits in contravention of Section 3.
What is the punishment under Section 21(2)?	Imprisonment not less than two years up to seven years and fine not less than three lakh rupees up to ten lakh rupees.
When does Section 21(2) apply?	When a deposit taker accepts deposits in contravention of Section 3.
What is the punishment under Section 21(3)?	Imprisonment not less than three years up to ten years and fine not less than five lakh rupees up to twice the aggregate funds collected.
When does Section 21(3) apply?	When a deposit taker accepts deposits in contravention of Section 3 and fraudulently defaults in repayment or service.
How is “fraudulently” defined under Explanation (i)?	As defined in Section 25 of the Indian Penal Code, 1860.
What is clarified under Explanation (ii)?	Impracticable or unviable terms are relevant facts showing intention to defraud.
What does Section 22 deal with?	Section 22 deals with punishment for contravention of Section 4.
Who is punishable under Section 22?	Any deposit taker contravening Section 4.
What is the imprisonment prescribed under Section 22?	Imprisonment which may extend to seven years.
What is the minimum fine under Section 22?	Not less than five lakh rupees.
What is the maximum fine under Section 22?	Up to twenty-five crore rupees or three times the profits made out of fraudulent default, whichever is higher.
Can both imprisonment and fine be imposed under Section 22?	Yes.
What does Section 23 deal with?	Section 23 deals with punishment for contravention of Section 5.
Who is punishable under Section 23?	Any person who contravenes Section 5.
What is the minimum imprisonment under Section 23?	Not less than one year.
What is the maximum imprisonment under Section 23?	Up to five years.
What is the maximum fine under Section 23?	Fine which may extend to ten lakh rupees.
What does Section 24 deal with?	Section 24 deals with punishment for repeat offenders.
To whom does Section 24 apply?	A person previously convicted under this Chapter except for an offence under Section 26.
What is the minimum imprisonment under Section 24?	Not less than five years.
What is the maximum imprisonment under Section 24?	Up to ten years.
What is the minimum fine under Section 24?	Not less than ten lakh rupees.
What is the maximum fine under Section 24?	Up to fifty crore rupees.
What does Section 25 provide under the Banning of Unregulated Deposit Schemes Act 2019?	Section 25 provides for offences by deposit takers other than individuals.
Who is deemed guilty under Section 25 sub section 1?	Every person in charge of and responsible to the deposit taker for conduct of its business as well as the deposit taker shall be deemed guilty.
What defence is available under Section 25 sub section 2?	A person shall not be liable if he proves that the offence was committed without his knowledge or that he exercised due diligence to prevent it.
When are other officers liable under Section 25 sub section 3 clause a?	If the offence was committed with their consent or connivance they shall be deemed guilty.
When are other officers liable under Section 25 sub section 3 clause b?	If the offence is attributable to their neglect they shall be deemed guilty and liable for punishment.
What does Section 26 deal with?	Section 26 deals with punishment for contravention of Section 10.
Who is punishable under Section 26?	Whoever fails to give intimation under Section 10(1) or fails to furnish required information under Section 10(2).
What is the punishment prescribed under Section 26?	Fine which may extend to five lakh rupees.
Does Section 26 prescribe imprisonment?	No, only fine is prescribed.
What does Section 27 provide under the Banning of Unregulated Deposit Schemes Act 2019?	Section 27 provides for cognizance of offences by the Designated Court.
What restriction is imposed under Section 27?	No Designated Court shall take cognizance of an offence punishable under section 4 except upon a complaint made by the Regulator.
What exception is provided under the proviso to Section 27?	The provisions of section 4 and section 27 shall not apply in relation to a deposit taker which is a company.

CHAPTER-VII
INVESTIGATION, SEARCH AND SEIZURE
What does Section 28 deal with?	Section 28 deals with cognizable and non-bailable nature of offences.
Does Section 28 contain a non-obstante clause?	Yes, it overrides the Code of Criminal Procedure, 1973.
What is the general rule under Section 28?	Every offence under the Act is cognizable and non-bailable.
Which offences are excluded from Section 28?	Offences under Section 22 and Section 26.
Are offences under Section 22 cognizable and non-bailable?	No, they are excluded.
Are offences under Section 26 cognizable and non-bailable?	No, they are excluded.
What does Section 29 deal with?	Section 29 deals with intimation to the Competent Authority.
Who has the duty under Section 29?	The police officer.
When must intimation be given under Section 29?	Upon recording information about commission of an offence under the Act.
To whom must the information be given under Section 29?	The Competent Authority.
What does Section 30 deal with?	Section 30 deals with investigation of offences by the Central Bureau of Investigation.
When can Section 30(1) be invoked?	When the Competent Authority has reason to believe certain conditions are satisfied.
What two conditions must exist under Section 30(1)(a) and (b)?	(a) Depositors, deposit takers or properties are in more than one State/UT or outside India; (b) Amount involved significantly affects public interest.
What must the Competent Authority do under Section 30(1)?	Refer the matter to the Central Government for investigation by CBI.
What is the legal effect of reference under Section 30(2)?	It is deemed consent of State Government under Section 6 of DSPE Act, 1946.
What power does the Central Government have under Section 30(3)?	To transfer investigation to CBI under Section 5 of the DSPE Act, 1946.
What does Section 31 deal with?	Section 31 deals with power to enter, search and seize without warrant.
Which police officer can act under Section 31(1)?	An officer not below the rank of officer in-charge of a police station.
What prior requirement is needed under Section 31(1)?	Written authorisation from an officer not below the rank of Superintendent of Police.
What must be recorded before search under Section 31(1)?	The thing for which the search is to be made.
When can search be conducted under Section 31(1)(a)?	Between sunrise and sunset.
What premises can be searched under Section 31(1)(a)?	Building, conveyance or place suspected of being used for contravention.
What power is given under Section 31(1)(b)?	Power to break open doors and remove obstacles in case of resistance.
What power is given under Section 31(1)(c)?	Power to seize records or property connected with contravention.
What power is given under Section 31(1)(d)?	Power to detain, search, take into custody and produce before Designated Court.
What exception is provided in the proviso to Section 31(1)?	Search may be conducted without written authorisation between sunset and sunrise.
What condition must be satisfied for invoking the proviso?	Reason to believe authorisation cannot be obtained without risk of concealment or escape.
What must be recorded under the proviso?	Grounds in writing.
When can freezing be ordered under Section 31(2)?	When it is not practicable to seize the record or property.
What can be frozen under Section 31(2)?	Property, account, deposits or valuable securities of a deposit taker.
What condition must exist under Section 31(2)?	Complaint, credible information or reasonable suspicion of contravention.
Is compliance binding under Section 31(2)?	Yes, on the concerned bank or financial or market establishment.
What is the maximum freezing period without Court order under first proviso?	Thirty days.
Whose authorisation is required beyond thirty days?	The Designated Court.
Can frozen property later be seized?	Yes, if it becomes practicable to seize.
What does “freezing of account” mean under Explanation (i)?	No deposit or withdrawal shall be allowed.
What does “freezing of property” mean under Explanation (ii)?	No transfer, conversion, disposition or movement shall be allowed.
What must be sent to the Designated Court under Section 31(3)?	Copy of information, recorded grounds or written order.
Within what time must it be sent under Section 31(3)?	Within seventy-two hours.
How must it be sent under Section 31(3)?	In a sealed envelope.
Who may obtain a copy under Section 31(3)?	Owner or occupier of building, conveyance or place.
How are searches and seizures governed under Section 31(4)?	In accordance with the Code of Criminal Procedure, 1973.
What does Section 32 deal with?	Section 32 deals with application of the Code of Criminal Procedure, 1973 to proceedings before the Designated Court.
Can the Designated Court take cognizance without committal under Section 32(1)?	Yes.
What is the general rule under Section 32(2)?	The provisions of the Code of Criminal Procedure, 1973 shall apply.
What is the exception mentioned in Section 32(2)?	Save as otherwise provided in Section 31.
To what do CrPC provisions apply under Section 32(2)(a)?	All arrests, searches and seizures under this Act.
To what do CrPC provisions apply under Section 32(2)(b)?	Proceedings under this Act.
How is the Designated Court treated under Section 32(2)(b)?	It is deemed to be a Court of Session.
How are prosecutors treated under Section 32(2)(b)?	They are deemed to be Public Prosecutors.

CHAPTER-VIII
MISCELLANEOUS
What does Section 33 provide under the Banning of Unregulated Deposit Schemes Act 2019?	Section 33 provides for publication of advertisement of Unregulated Deposit Scheme.
What action may be taken under Section 33?	The appropriate Government may direct a newspaper or publication to publish a full and fair retraction.
In what circumstances does Section 33 apply?	It applies where a publication contains any statement, information or advertisement promoting or soliciting deposits for an Unregulated Deposit Scheme.
How shall the retraction be published under Section 33?	The retraction shall be published free of cost in the same manner and position as prescribed.
What does Section 34 deal with?	Section 34 deals with overriding effect of the Act.
What is the effect of Section 34?	The provisions of this Act override any other law in force.
Does Section 34 apply to State or Union territory laws?	Yes, including laws made by any State or Union territory.
Is the overriding effect absolute under Section 34?	No, it is subject to express provisions provided otherwise in this Act.
What does Section 35 deal with?	Section 35 deals with application of other laws not barred.
Does Section 35 give overriding effect?	No, it provides cumulative application.
What is the effect of Section 35?	The provisions of this Act are in addition to other laws.
Does this Act derogate from other laws under Section 35?	No, it is not in derogation of other laws in force.
What does Section 36 deal with?	Section 36 deals with protection of action taken in good faith.
Against whom is protection granted under Section 36?	The appropriate Government, the Competent Authority and any officer of the appropriate Government.
What type of proceedings are barred under Section 36?	Suit, prosecution or other legal proceedings.
What is the condition for protection under Section 36?	The act must be done or intended to be done in good faith.
Does Section 36 apply to actions under rules also?	Yes, it applies to actions under the Act or rules made thereunder.
What does Section 37 provide under the Banning of Unregulated Deposit Schemes Act 2019?	Section 37 provides for the power of the Central Government to make rules.
Who may make rules under Section 37 sub section 1?	The Central Government may by notification make rules.
For what purpose are rules made under Section 37 sub section 1?	Rules are made for carrying out the provisions of this Act.
What is clarified under Section 37 sub section 2?	Without prejudice to the generality of the power the rules may provide for matters specified therein.
What can rules provide for under Section 37(2)(a)?	The information and particulars to be considered and the manner of attachment under Section 7(3).
What can rules provide for under Section 37(2)(b)?	The information to be shared under Section 9(2).
What can rules provide for under Section 37(2)(c)?	The form, manner and time for giving intimation under Section 10(1).
What can rules provide for under Section 37(2)(d)?	The particulars in the application filed before the Designated Court under Section 14(1).
What can rules provide for under Section 37(2)(e)?	The procedure to be adopted by the Designated Court under Section 15(3).
What can rules provide for under Section 37(2)(f)?	Rules relating to Section 31(1).
What can rules provide for under Section 37(2)(g)?	The manner of publication of advertisement under Section 33.
What does Section 37(2)(h) cover?	Any other matter required to be or which may be prescribed.
What does Section 38 provide under the Banning of Unregulated Deposit Schemes Act 2019?	Section 38 provides for the power of the State Government or Union territory Government to make rules.
Who may make rules under Section 38 sub section 1?	The State Government or Union territory Government may make rules in consultation with the Central Government by notification.
For what purpose are rules made under Section 38 sub section 1?	Rules are made for carrying out the provisions of this Act.
What may be prescribed under Section 38 sub section 2 clause a?	Ceiling for self help groups under clause j of sub section 4 of section 2 may be prescribed.
What may be prescribed under Section 38 sub section 2 clause b?	Purpose and ceiling under clause k of sub section 4 of section 2 may be prescribed.
What may be prescribed under Section 38 sub section 2 clause c?	The manner of provisional attachment of property by the Competent Authority under sub section 3 of section 7 may be prescribed.
What may be prescribed under Section 38 sub section 2 clause d?	Other matters under clause f of sub section 4 of section 7 may be prescribed.
What may be prescribed under Section 38 sub section 2 clause e?	Rules relating to impounding and custody of records under sub section 8 of section 7 may be prescribed.
What may be prescribed under Section 38 sub section 2 clause f?	Any other matter which is required to be or may be prescribed may be provided by rules.
What does Section 39 provide under the Banning of Unregulated Deposit Schemes Act 2019?	Section 39 provides for laying of rules before the Legislature.
What is required under Section 39 sub section 1?	Every rule made by the Central Government shall be laid before each House of Parliament for a total period of thirty days.
In how many sessions may the thirty days period be comprised under Section 39 sub section 1?	The thirty days may be comprised in one session or in two or more successive sessions.
What is the effect of modification or annulment under Section 39 sub section 1?	If both Houses agree to modify or annul the rule it shall thereafter have effect in modified form or be of no effect.
What is the saving clause under Section 39 sub section 1?	Any modification or annulment shall be without prejudice to the validity of anything previously done under the rule.
What is required under Section 39 sub section 2?	Every rule made by a State Government or Union territory Government shall be laid before the respective State Legislature or Union territory Legislature.
How are rules laid where the Legislature has two Houses under Section 39 sub section 2?	The rule shall be laid before each House.
How are rules laid where the Legislature has one House under Section 39 sub section 2?	The rule shall be laid before that single House.
What does Section 40 provide under the Banning of Unregulated Deposit Schemes Act 2019?	Section 40 provides for the power of the Central Government to amend the First Schedule.
What power is given under Section 40 sub section 1?	The Central Government may by notification add to or omit from the First Schedule any scheme or arrangement.
What is the effect of addition under Section 40 sub section 1?	On addition such scheme or arrangement shall become a Regulated Deposit Scheme.
What is the effect of omission under Section 40 sub section 1?	On omission such scheme or arrangement shall cease to be a Regulated Deposit Scheme.
What is required under Section 40 sub section 2?	A copy of every notification issued under this section shall be laid before each House of Parliament.
What does Section 41 deal with?	Section 41 deals with deposits to which the Act does not apply.
To which deposits does the Act not apply under Section 41?	Deposits taken in the ordinary course of business.
Does Section 41 create an exception to the Act?	Yes, it excludes certain deposits from the applicability of the Act.
What is the condition for exclusion under Section 41?	The deposits must be taken in the ordinary course of business.
What does Section 42 deal with?	Section 42 deals with amendment to certain enactments.
Which enactments are amended under Section 42?	The enactments specified in the Second Schedule.
How are the enactments amended under Section 42?	In the manner specified in the Second Schedule.
Does Section 42 itself specify the amendments?	No, the amendments are specified in the Second Schedule.
What does Section 43 deal with?	Section 43 deals with power to remove difficulties.
Who can exercise power under Section 43(1)?	The Central Government.
How is the power under Section 43(1) exercised?	By order published in the Official Gazette.
What condition must be satisfied under Section 43(1)?	A difficulty must arise in giving effect to the provisions of the Act.
Can the order under Section 43(1) be inconsistent with the Act?	No, it must not be inconsistent with the provisions of the Act.
What is the time limit under Section 43 proviso?	No order shall be made after three years from the commencement of the Act.
What does Section 43(2) require?	Every order made shall be laid before each House of Parliament.
What does Section 44 deal with?	Section 44 deals with repeal and saving.
Which Ordinance is repealed under Section 44(1)?	The Banning of Unregulated Deposit Schemes Ordinance, 2019.
What is the effect of Section 44(2)?	Anything done or action taken under the repealed Ordinance shall be deemed to have been done or taken under this Act.

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