Objective of TNPID Act is to ensure that victims get back their money, says HC
The objective of the Tamil Nadu Protection of Interests of Depositors (TNPID) Act was to ensure that the victims get back their money and registration of an FIR alone would not serve any purpose, observed the Madurai Bench of the Madras High Court while hearing petitions pertaining to Neomax financial fraud case
Justice B. Pugalendhi observed that the data provided by the Economic Offences Wing (EOW) disclosed that not even 10% of the amount had been disbursed to the victims. The government had a moral responsibility to ensure that the victims got back their money.
The court observed that TNPID Act was enacted to regulate financial establishments that were exploiting depositors by promising high returns and subsequently defaulting on repayments leading to widespread public distress.
Many such entities had emerged in Tamil Nadu targeting the middle class and poor investors often leaving them without any effective recourse leading to societal and economic suffering of the public. The government introduced the legislation in public interest to protect the depositors' rights.
It appears that the EOW officers are under the impression that they are supposed to act/prosecute only after a case was reported. They have to understand that they are also liable to prevent such offences.
If any company was offering interest above the rate of interest prescribed by the Reserve Bank of India, it was the duty of the EOW to ascertain from the company whether they have any registration or authority to collect the deposits and whether they were having means to give higher returns, the court observed.
Though every month such cases were being reported, greedy people were also depositing money without ascertaining whether the companies were genuine or not.
Special courts have been constituted to deal with offences of such nature. Provisions have been made to seize the properties and bank accounts of the accused and to realise the amount.
A very few people have benefited out of this Act and got their money back. It appears mainly because of the outdated procedures. The EOW was established not only to prosecute offenders, but also to ensure that the amount cheated by the accused is appropriated and disbursed to the victims, the court observed.
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