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Supreme Court declines to hear PIL saying Centre, states not implementing law against unregulated deposits, chits

The petition stated that Union of India enacted The Banning of Unlawful Deposits Schemes Act, 2019 (The Act hereafter). The preamble of the Act reads as under:

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The Supreme Court on Friday declined to hear the PIL filed seeking directions to declare the action of Centre, states and union territories for non-implementation of The Banning of Unregulated Deposit Schemes Act, 2019 as illegal, unconstitutional and contrary to Article 14 and 21 of the Constitution of India. (Telangana Akshaya Gold Customers and Agents Welfare Association Vs Union of India & Ors.) 

A two-judge bench of Justices L. Nageswara Rao and S. Ravindra Bhat asked the petitioner to approach the High Court. 

The petition was filed in the nature of public interest by the Telangana Akshaya Gold Customers and Agents Welfare Association, alleging that states and UTs have failed to implement the legislation enacted by the Centre for the protection of depositors and prevention of financial fraud in the country. 

The petition stated that Union of India enacted The Banning of Unlawful Deposits Schemes Act, 2019 (The Act hereafter). The preamble of the Act reads as under: 

“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 matters connected therewith or incidental thereto” 

The petitioner association had submitted 

“that the above Legislation is not being implemented in the country/respondent States though it was enacted two years ago by Union of India. The investigation in Multi State, Multi crore scams are being conducted by different State police authorities. If the properties are situated in different States all the States, Enforcement Directorate, Income Tax Department are attaching the properties. The Banks are conducting their own auctions for the recovery of loans. They are selling the properties irrespective of market value of the properties without keeping the depositors in the mind. The Respondent States have not set up competent authorities headed by Secretary rank officer. The State of Karnataka has set up Competent authority headed by a Senior Secretary rank officer on the directions of the Hon’ble High Court of Karnataka. Remaining States have not appointed Competent authorities. The properties attached by State governments are lying with the fraudulent companies and they are enjoying them. Several benami properties are being sold out by the fraud companies in Respondent States. There is no coordination between investigating agencies of Respondent States. Due to lack of coordination and effective mechanism by Respondents, lakhs of depositors in the Respondent States are getting distress and hundreds of small depositors, small agents are committing suicides in Respondent States. Since cases are dealt by Crime Investigation Departments of the respective States, the government mechanism is not interfering into the financial frauds/Ponzi schemes.”

The petitioner had sought the following directions:- 

A. issue writ, order or direction more particularly one in the nature of Writ of Mandamus declaring the actions/in actions of Respondents for the non-implementation of The Banning of Unregulated Deposit Schemes Act, 2019 in Respondent States as illegal, unconstitutional and contrary to Article 14 & 21 of the Constitution of India and subsequently direct the Respondents to take appropriate measures for the implementation of the Legislation for submitting an action taken report to this Hon’ble Court and/or : 

B. Issue Writ, order, direction in the nature of Writ of Mandamus directing the Respondents to utilize the resources attached by the competent 59 Authorities in the Respondent States which are belongs to the fraudulent companies, their founders, benamis etc., for the public purposes such as setting up of educational institutions, health facilities, government offices, employees quarters, training institutions, public parks, affordable housing, employment generation activities, industries, stadiums etc and/or; 

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C. Direct the Respondents to repay the customers/depositors of the fraudulent companies/Ponzi schemes referred in Para 2 (i), (ii), (iii) particularly Akshaya Gold Fraud victims of Telangana, Andhra Pradesh, Karnataka, Odisha etc., according to the Section 15(6) of the Banning of Unregulated Deposits Schemes Act, 2019 by setting up Competent Authorities, Designated Courts with the consent of the Hon’ble High Courts as per the Section 7 and 8 of the Act. 

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