(1) The Government or the District Magistrates in their respective jurisdiction, suo motu or on receipt of any complaint may cause investigation of a complaint or fraudulent transaction referred to in this section. The District Magistrate shall forward his report together with the complaint to the Government at the earliest.
(2) Notwithstanding anything contained in any other law for the time being in force.--
(i) where, upon complaint received from any depositors or otherwise, the Government is satisfied that any financial establishment has failed.--
(a) to return the deposit after maturity or on demand by depositor; or
(b) to pay interest or other assured benefit; or
(c) to provide the service against such deposit; or
(ii) Where the Government has reason to believe that any financial establishment is acting in and detrimental to the interest of the depositors with an intention to defraud them; or
(iii) Where the Government satisfied that such financial establishment is not likely to return the deposits or make payment of interest or other benefits assured or to provide the services against which the deposit is received,
the Government may, in order to protect the interests of the depositors of such financial establishments, after recording reasons in writing, issue an order by publishing it in the Official Gazette, attaching the money or property believed to have been acquired by such financial establishment either in its own name or in the name of any other person from and out of the deposits collected by the financial establishments, and where it transpires that such money or other property is not available for attachment or not sufficient for the repayment of the deposits, such other property of the said financial establishments, or the personal assets of the promoters, partners, directors, managers or members or any other person of the said financial establishments.
(3) The Government shall also notify the ad interim order made under sub-section (2) in the Official Gazette and two newspapers having wide circulation and shall also cause to be affixed a copy of such order on some conspicuous place of the properly so attached.
(4) On the publication of the order made under sub-section (2), all the properties and assets of the financial establishment and the persons mentioned therein shall forthwith vest in the Competent Authority appointed by the Government, pending further order from the Special Court.
Section 4 - Power to enter premises and inspect certain documents
(1) The Competent Authority or any other authority authorised by the designated authority in order to carry out the purposes of this Act shall have power to enter and search any premises where it has reason to believe that any register, book, record, paper, application, information in electronic storage and retrieval device or medium, instrument or proceedings are kept and to inspect them and to take such notes and extracts as it may deem necessary.
(2) Every person having in his custody or maintaining such register, book, record, paper, application, instrument or proceedings shall at all reasonable limes produce or permit the designated authority or any other authority authorised by the designated authority to inspect them and to lake notes and extracts as it may deem necessary and if necessary seize and impound them:
Provided that no residential accommodation (not being a place of business-cum-residence) shall be so entered into and searched except on the authority of a search warrant issued by a Magistrate having jurisdiction over the area, and all searches under this section shall, so far as may be made in accordance with the provisions of the Code of Criminal Procedure, 1973 (Central Act II of 1974).
Section 5 - Competent Authority
(1) The Government shall, by notification, appoint an officer not below the rank of an Assistant Commissioner to be the Competent Authority for the purpose of this Act.
(2) The Competent Authority shall within thirty days from the date of receipt of the order made under Section 3, apply to the Special Court for further order of attachment absolute.
(3) An application made under sub-section (2) shall be accompanied by one or more affidavits, staling the grounds on which the order is made under Section 3 and the amount of money or other properly believed to have been acquired from out of the deposits and the details, if any, of persons in whose name such properly is believed to have been invested or acquired or any property attached under Section 3.
(4) The Competent Authority may also make an application to any Special Court or Designated Court or any other judicial forum established or constituted or entrusted with the powers by any other State Government under any similar enactment for adjudicating any issue or subject-matter pertaining to money or property or assets belonging to or ostensibly belonging to a financial establishment or any person notified under this Act situated within the territorial jurisdiction of that Special Court or Designated Court or any judicial forum, as the case may be for passing appropriate orders to give effect to the provisions of this Act.
Section 6 - Duties and powers of Competent Authority
(1) On receipt of order of appointment, the Competent Authority shall take such necessary actions as it is necessary or expedient for taking physical possession of all the monies and assets of the concerned financial establishment expeditiously and the Competent Authority shall have all the powers which arc necessary for the aforesaid purpose.
(2) Without prejudice to the generality of the power vested under sub-section (1), the Competent Authority may carry out the purposes of this Act and shall be entitled to:
(a) require assistance of any police authority or any other authority or person and on such requisition it shall be the duty of the police authority or such other authority or person to extend necessary assistance;
(b) open bank accounts in any scheduled commercial bank and credit all monies realised and operate the bank accounts while dealing with the money received in his capacity as Competent Authority;
(c) require any person believed to be in possession of control over any money or assets of the financial establishment, to furnish necessary information, and to hand over possession of such assets to the Competent Authority and such person shall comply with the requisition without any loss of time;
(d) appoint legal practitioner or Chartered Accountant or any other person whose services arc necessary for taking possession of assets and realisation of the assets of the financial establishment;
(e) sell, receive, transfer, endorse, negotiate, or otherwise deal with any marketable security or negotiable instrument belonging to or in the control of the financial establishment and give proper discharge for the same;
(f) sell, transfer or otherwise realise any movable or immovable property belonging to or in the control of the financial establishment or sell the property belonging to or in the control of the financial establishment, by public auction or with the prior approval of the Special Court by private arrangements:
Provided that the perishable items of assets shall be sold by public auction as soon as the Competent Authority deems fit;
(g) make payment as per the orders passed by the Special Court from out of the bank accounts, and
(h) do all and every acts which would be necessary for the speedy realisation of the assets of the financial establishment.
Explanation.--For the purpose of this section the expression "financial establishment" includes the directors, partners, promoters, managers or member of said establishment or any other person whose properly or assets have been attached under Section 3.
Section 7 - Assessment of assets and deposit liabilities
(1) Within thirty days from the date of appointment, the Competent Authority shall assess the deposit liabilities and the assets of the financial establishment and submit a report thereof to the Special Court.
(2) The Competent Authority thereafter shall issue notice either individually or by means of effective media publication, inviting the claims by secured creditors, if any, and also the depositors of the financial establishments to submit their claims with proper proof of establish the same.
(3) Every notice under sub-section (2) sent to or deemed to have been effected to claimants shall slate that if the statement or claim is not sent to the Competent Authority before the expiry of the period of one month from the date of notice, the claims shall not be treated as claim entitle to be paid under the provision of this Act.
(4) Every notice sent to a secured creditor shall require him to value the security before the expiry of the period of one month from the dale of the notice and such notice shall also stale that if the statement of the claim together with the valuation of the security is not sent to the Competent Authority, the Competent Authority itself shall value the security and its valuation shall be binding on such secured creditors.
(5) If the claimant fails to comply with the notice as per sub-section (4), such security shall be valued by the Competent Authority to the best of its judgment.
Section 8 - Report by the Competent Authority
After making a report under Section 7, the Competent Authority shall make an application to the Special Court seeking permission to make payment to the depositors from out of the money realised. While making such application, the Competent Authority shall assess the liability to the depositors and other liabilities and in case the money realised or realizable is not sufficient to meet the entire liability, seek permission of the Special Court for making payment to the depositors and disburse the money as per the orders of the Special Court.