Mumbai, July 1 (IANS) In a significant legislative move to crack down on modern financial scams and expedite justice for duped investors, the Maharashtra Legislative Assembly on Wednesday passed a crucial Bill to amend the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999 for addressing modern digital asset fraud and tightening judicial loopholes. The Bill was presented by the Minister of State for Home, Yogesh Kadam.

Acknowledging the evolving landscape of financial crime, the government noted a sharp rise in unauthorised deposit schemes and investor deception being carried out through cryptocurrencies, digital coins, and other blockchain-based instruments.

Because these virtual digital assets were historically excluded from the definition of a “deposit” under Section 2(c) of the original Act, scammers frequently exploited this regulatory gap.

The proposed amendment will officially bring all virtual digital assets within the purview of the Act, allowing law enforcement to prosecute crypto-based Ponzi and fraudulent deposit schemes.

To prevent prolonged legal battles and expedite relief for depositors, the Bill targets the stalling tactics frequently used during court proceedings.

Aligning with the provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023, the amendment to Section 7 will strictly limit court adjournments. Under the new rules, the Designated Court will be restricted to granting a maximum of two adjournments, with a provision for only one additional adjournment under exceptional circumstances.

The government further observed that fraudulent financial establishments often file appeals against court orders solely to delay recovering and returning depositors’ money.

To curb this practice, the proposed amendment to Section 11 introduces a stringent pre-condition. Accordingly, no appeal by a financial establishment will be entertained unless it deposits 50 per cent of its total liability with the Competent Authority upfront.

Minister Kadam said that the Bill hopes to reinforce consumer safety in the state’s financial sector, especially when the recovery of a whopping Rs 38,000 crore involved in such financial frauds was pending for long.

Earlier, Chief Minister Devendra Fadnavis during the Winter Session of the state Legislature had announced the amendments to the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999 (MPID Act) to ensure a faster, more punitive tool for recovering investor funds.

The amendments will be pertaining to 180 days (six months) mandate as a strict statutory deadline.

The Designated Court is now required to decide on making a property attachment “absolute” within 180 days of the initial application. CM Fadnavis addressed the core issue where properties remain “attached on paper” but cannot be sold.

“To stop the practice of ‘date-seeking’ by defense lawyers, the proposed amendment will now strictly limit adjournments to just two. Justice for depositors cannot wait for the convenience of the accused,” he said, adding that once the order is absolute, the government is empowered to start the auction process immediately.

The proceeds can be distributed to investors even while the accused is still being tried for the crime.

–IANS

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