2. ActFocuses1. Deposit 2. Financial Establishment Deals Criminal punishment Attachment of property A.P. PROTECTION OF DEPOSITORS OF FINANCIAL ESTABLISHMENT ACT, 1999 NOTE:- FOCUS POINTS HAVE TO BE SATISFIED TO INVOKE THE PROVISIONS OF ACT

3. Deposit Section 2 (b) of the 1999 Act defines “Deposit” It must be a deposit of a sum of money; It can be either in lump sum or in installments; It should be made with a financial establishment as defined in Section 2(c); It should be for a fixed period; It should be either for interest or for return in any kind. A.P. PROTECTION OF DEPOSITORS OF FINANCIAL ESTABLISHMENT ACT, 1999

4. Pleas / Diversion tactics Register under companies Act Register under RBI ActRegister under SEBI Act HOW THE COMPANIES DIVERT THE ATTENTION OF LAW ENFORCING AGENCIES NOTE:- DEFINATION OF DEPOSIT IS DIFFERENT WHEN COMPARED TO THESE ACTS

5. Companies Act, 1956 Act Explanation to Section 58 of the Act defines “Deposit” deposit means any deposit of money with, a company and includes any amount borrowed by, a company but shall not include such categories of amount as may be prescribed in consultation with the Reserve Bank of India. Relevant Rules In exercise of the powers conferred by section 58A, read with section 642 of the Companies Act, 1956(1 of 1956), the Central Government, in consultation with the Reserve Bank of India, made the Rules in this regard. These Rules are called the Companies (Acceptance of Deposits) Rules, 1975. (Advance for sale or service not deposit) These rules shall not apply to Banking CompanyFinancial Company As per Section 58A (2) – No company shall invite, or allow any other person to invite or cause to be invited on its behalf, any deposit unless (1) it is in accordance with Companies (Acceptance of Deposits) Rules, 1975, (2) by issuing advertisement indicating financial position of the company in a prescribed form and (3) the company is not in default in the repayment of any deposit or part thereof and any interest thereupon in accordance with the terms and conditions of such deposit. DEPOSIT UNDER COMPANIES ACT, 1956

6. Differences RBI, Companies Act and SEBI Act AP Depositors Act Advance for sale or service Not a deposit. Acts not applicable It will fall under the Act Collect deposit from relatives Not an offence. But they should certify that the said amount is his own. It will fall under the Act. It is also an offence Over ride They cannot override depositors Act Since received President Assent can override RBI, SEBI & Companies Act- Sec.14. DIFFERENCE AMONG RBI, COMPANY, SEBI AND AP ACT RELATING TO DEPOSIT

7. Section 2(c) FINANCIAL ESTABLISHMENT It must be any person or group of individuals It must accept deposits The acceptance of deposits must be 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 banking company as defined under clause (c) of Section 5 of the Banking Regulation Act, 1949 (Central Act 10 of 1949] FINANCIAL ESTABLISHMENT UNDER THE AP DEPOSITORS ACT, 1999 NOTE: GROUP OF INDIVIDUALS INCLUDES PARTNERSHIPS AND COMPANIES NOTE: ARRANGEMENT OR IN ANY OTHER MANNER INCLUDES PROMISE TO SALE OR SERVICE

8. HIGH COURT JUDGEMENTS RELATING TO FINANCIAL ESTABLISHMENT HIGH COURT OF A.P. Company incorporated under the Companies Act will not go out of the purview of the 1999 Act. Pothani Chandrasheker V. State of A.P. (CRLP 5573/2002-Dt. Jud- 6/4/2005) amended provision of Section 2(c) of the 1999 Act which came into effect from 06.11.2003 will not take away non banking financial company out of the 1999 Act. P. Lakshmi Narayana Reddy V. Commissioner of Police, Hyderabad City Police[WP 18855/2004- Dt.Jud.- 31-7- 2007] In the case of a chit fund transaction, ‘return in any kind’ is by way of dividends. the definitions of ‘deposit’ under Section 2 (b) and ‘financial establishment’ under Section 2 (c) of the 1999 Act are satisfied in case of organizer of a chit fund transaction receiving subscriptions from members of the chit. V.Revathi Vs. State of AP (CRLA 70/2006-Dt.Judmnt-5- 12-2011)

9. Act Deals two points 1. Attachment of properties 2. Criminal prosecution A.P. PROTECTION OF DEPOSITORS OF FINANCIAL ESTABLISHMENT ACT, 1999

10. WHEN ATTACHMENTS CAN BE MADE UNDER THE ACT Sec.3Attachment (1) where upon complaints received from depositor or (2) Govt. has reason to believe that any Financial Establishment (1) defaulted or (2) is likely to default or (3) is acting in a manner prejudicial to the interests of the depositors NOTE: INITIAL ATTACHMENT MUST BE MADE BY THE GOVERNMENT ONLY

11. Section 5Offence 1. default in the return of the deposit either in cash or kind or (2) default in the payment of interest on the deposit as agreed upon Punishment 10 years imprisonment and fine. Nature of Case (As per Cr.P.C. Second Schedule) CognizableNon-Bailable OFFENCE / CRIMINAL PROSECUTION UNDER THE AP DEPOSITORS ACT, 1999

12. Authority appointed to exercise control over the properties attached by Government (Sec.4) COMPETENT AUTHORITY DISTRICT DISTRICT MAGISTRATE G.O.MS.349 HOME (GENL-B) DT. 29.10.1999 COMMISSIO NARATES COMMISSIONER OF POLICE G.O.MS.349 HOME (GENL-B) DT. 29.10.1999 C.I.D. ADDL. DIR. GENL. OF POLICE G.O.MS.193 HOME (GENL-B) DT. 23.8.2001 COMPETENT AUTHORITY UNDER THE AP DEPOSITORS ACT, 1999

13. COMPETENT AUTHORITY (SEC.4) POWER CAN TAKE THE ASSISTANCE OF HIS SUBORDINATES AND/OR ANY OFFICER-IN-CHARGE OF POLICE STATION CAN DEMAND ANY PERSON OR AUTHORITY TO FURNISH INFORMATION RELATING TO F.E. IN ADDITION THE GOVERNMENT MAY SPECIFY POWERS AND FUNCTIONS DUTIES HAVE TO APPLY WITHIN FIFTEEN DAYS TO SPECIAL COURT FOR MAKING THE AD-INTERIM ORDER OF ATTACHMENT ABSOLUTE SHALL MAINTAIN RECORD OF ALL INCOME AND EXPENDITURE OF F.E. APPLICATION / AFFIDAVIT SHOULD CONTAIN 1. GROUNDS FOR BELIEF OF DEFAULT/LIKELY TO DEFAULT 2. AMOUNT OF MONEY OR VALUE OF PROPERTY BELIEVED TO HAVE BEEN PROCURED 3. THE DETAILS, IF ANY, OF PERSOONS IN WHOSE NAME PROPERTIES BELIEVED TO HAVE BEEN INVESTED OR PURCHASED OUT OF DEPOSITS COLLECTED POWERS AND DUTIES OF COMPETENT AUTHORITY UNDER THE ACT

14. SPEICAL COURT (SEC.6) G.O.MS.NO.70 HOME GENL-B DT.22/3/2000 METROPOLITAN SESSIONS JUDGE COURT PRINCIPAL DISTRICT AND SESSIONS JUDGES COURT PROCEDURE CRIMINAL PROCEDURE CODE, 1973 PROSECUTOR SPECIAL PUBLIC PROSECUTOR AND SPECIAL GOVERNMENT PLEADER. ADVOCATE HAVING 10 YEARS STANDING IN PRACTICE POWERMAKE ABSOLUTE THE AD-INTERIM EQUITABLE DISTRIBUTION AMONG THE DESPOSITORS OF THE MONEY REALISED FROM OUT OF THE PROPERTY ATTACHED CONDUCT TRIAL/INVESTIGATIONAPPEALHIGH COURT SPECIAL COURTS UNDER THE ACT

15. SEIZURESCOMPANY PROMOTORS / DIRECOTRS / EMPLOYEES / CUSTOMERS / MEMBERS LIST INCORPORATION DETAILS / MUNICIPAL / VAT AND LABOUR DEPT LICENSES LEASE, AGREEMENTS, PATENTS, TRADE MARK LICENSES. GODOWN DETAILS. BANK STATEMENTS, A/C BOOKS AND I.T. RETURNS. BALANCE SHEET & PROPERTY STATEMENT PROMOTOR/ DIRECTOR OBTAIN LIST OF RELATIVES AND THEIR STATEMENTS STATEMENT OF PERSONAL / RELATIVES ASSETS BANK ACCOUNT / I.T. RETURNS DETAILS OF RELATIVES/PERSONAL E.Cs. OF ASSETS OF RELATIVE/PERSONAL MINIMUM SEIZURES DURING INVESTIGATION