12. Priority of depositors’ claim. — Save as otherwise provided in the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002) or the
Insolvency and Bankruptcy Code, 2016 (31 of 2016), any amount due to depositors from a deposit taker
shall be paid in priority over all other debts and all revenues, taxes, cesses and other rates payable to the
appropriate Government or the local authority.
13. Precedence of attachment. — (1) Save as otherwise provided in the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002) or the
Insolvency and Bankruptcy Code, 2016 (31 of 2016), an order of provisional attachment passed by the
Competent Authority, shall have precedence and priority, to the extent of the claims of the depositors,
over any other attachment by any authority competent to attach property for repayment of any debts,
revenues, taxes, cesses and other rates payable to the appropriate Government or the local authority.
(2) Where an order of provisional attachment has been passed by the Competent Authority—
(a) such attachment shall continue until an order is passed under sub-section (3) or sub-section (5)
of section 15 by the Designated Court;
(b) all the attached money or property of the deposit taker and the persons mentioned therein shall
vest in the Competent Authority and shall remain so vested till further order of the Designated Court.
(3) The Competent Authority shall open an account in a scheduled bank for the purpose of crediting
and dealing with the money realised under this Act, which shall not be utilised except under the
instructions of the Designated Court.
(4) The Competent Authority shall not dispose of or alienate the property or money attached, except in
accordance with the order of the Designated Court under sub-section (3) or sub-section (5) of section 15.
(5) Notwithstanding anything contained in sub-section (4), the Competent Authority may, if it thinks it
expedient, order the immediate sale of perishable items or assets, and the proceeds of the sale shall be
utilised in the same manner as provided for other property.
14. Application for confirmation of attachment and sale of property.—(1) The Competent
Authority shall, within a period of thirty days, which may extend up to sixty days, for reasons to be
recorded in writing, from the date of the order of provisional attachment, file an application with such
particulars as may be prescribed, before the Designated Court for making the provisional attachment
absolute, and for permission to sell the property so attached by public auction or, if necessary, by private
sale.
(2) In case where the money or property has been attached on the permission granted by a Designated
Court in another State or Union territory, the application for confirmation of such attachment shall be filed
in that Court.
15. Confirmation of attachment by Designated Court. — (1) Upon receipt of an application under
section 14, the Designated Court shall issue notice to—
(a) the deposit taker; and
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(b) any person whose property is attached under section 14,
to show cause, within a period of thirty days from the date of issue of notice, as to why the order of
attachment should not be made absolute and the properties so attached be sold.
(2) The Designated Court shall also issue notice to all other persons represented to it as having or
being likely to claim any interest or title in the property, to appear on the same date as persons referred to
in sub-section (1) to raise objections, if they so desire, to the attachment of the property.
(3) The Designated Court shall, after adopting such procedure as may be prescribed, pass an order—
(a) making the provisional order of attachment absolute; or
(b) varying it by releasing a portion of the property from attachment; or
(c) cancelling the provisional order of attachment, and in case of an order under clause (a) or clause
(b), direct the Competent Authority to sell the property so attached by public auction or, if necessary,
by private sale and realise the sale proceeds.
(4) The Designated Court shall not, in varying or cancelling the provisional order of attachment,
release any property from attachment, unless it is satisfied that—
(a) the deposit taker or the person referred to in sub-section (1) has interest in such property; and
(b) there shall remain an amount or property sufficient for repayment to the depositors of such
deposit taker.
(5) The Designated Court shall pass such order or issue such direction as may be necessary for the
equitable distribution among the depositors of the money attached or realised out of the sale.
(6) The Designated Court shall endeavour to complete the proceedings under this section within a
period of one hundred and eighty days from the date of receipt of the application referred to in
sub-section (1).
16. Attachment of property of mala fide transferees.—(1) Where the Designated Court is satisfied
that there is a reasonable cause for believing that the deposit taker has transferred any property otherwise
than in good faith and not for commensurate consideration, it may, by notice, require any transferee of
such property, whether or not he received the property directly from the said deposit taker, to appear on a
date to be specified in the notice and show cause why so much of the transferee’s property as is equivalent
to the proper value of the property transferred should not be attached.
(2) Where the said transferee does not appear and show cause on the specified date or where the
Designated Court is satisfied that the transfer of the property to the said transferee was not a bona fide
transfer and not for commensurate consideration, it shall order the attachment of so much of the said
transferee’s property as in its opinion is equivalent to the proper value of the property transferred.
17. Payment in lieu of attachment.—(1) Any deposit taker or a person referred to in subsection (1) of section 15, or transferee referred to in section 16 whose property is about to be attached or
has been provisionally attached under this Act, may, at any time before the confirmation of attachment,
apply to the Designated Court for permission to deposit the fair value of the property in lieu of
attachment.
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(2) While allowing the deposit taker or person or transferee referred to in sub-section (1) to make the
deposit under sub-section (1), the Designated Court may order such deposit taker or person or transferee
to pay any sum towards costs as may be applicable.
18. Powers of Designated Court. — (1) The Designated Court shall exercise the following powers,
namely:—
(a) power to approve the statement of dues of the deposit taker due from various debtors;
(b) power to assess the value of the assets of the deposit taker and finalise the list of the depositors
and their respective dues;
(c) power to direct the Competent Authority to take possession of any assets belonging to or in the
control of the deposit taker and to sell, transfer or realise the attached assets, either by public auction or
by private sale as it deems fit depending upon the nature of assets and credit the sale proceeds thereof
to its bank account;
(d) power to approve the necessary expenditure to be incurred by the Competent Authority for
taking possession and realisation of the assets of the deposit taker;
(e) power to pass an order for full payment to the depositors by the Competent Authority or an
order for proportionate payment to the depositors in the event, the money so realised is not sufficient to
meet the entire deposit liability;
(f) power to direct any person, who has made profit or averted loss by indulging in any transaction
or activity in contravention of the provisions of this Act, to disgorge an amount equivalent to the
wrongful gain made or loss averted by such contravention; and
(g) power to pass any other order which the Designated Court deems fit for realisation of assets of
the deposit taker and for repayment of the same to the depositors of such deposit taker or on any other
matter or issue incidental thereto.
(2) On the application of any person interested in any property attached and vested in the Competent
Authority under this Act and after giving such Competent Authority an opportunity of being heard, make
such order as the Designated Court considers just and reasonable for—
(a) providing from such of the property attached and vested in the Competent Authority as the
applicant claims an interest in, such sums as may be reasonably necessary for the maintenance of the
applicant and of his family, and for expenses connected with the defence of the applicant where
criminal proceedings have been initiated against him in the Designated Court under this Act; or
(b) safeguarding, so far as may be practicable, the interest of any business affected by the
attachment.
Explanation.—For the purposes of this section, the expression “deposit taker” includes the
directors, promoters, managers or members of said establishment or any other person whose property
or assets have been attached under this Act.
19. Appeal to High Court. — Any person including the Competent Authority, if aggrieved by any
final order of the Designated Court under this Chapter, may appeal to the High Court, within a period of
sixty days from the date of such order:
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Provided that the High Court may entertain the appeal after the expiry of the said period of sixty days,
if it is satisfied that the appellant was prevented by sufficient cause from preferring the appeal in time.
Explanation.—The expression “High Court” means the High Court of a State or Union territory where
the Designated Court is situated.
20. Power of Supreme Court to transfer cases. — (1) Whenever it is made to appear to the Supreme
Court that there is a default in any deposit scheme or deposit schemes of the nature referred to in section
30, the Supreme Court may, by an order, direct that any particular case be transferred from one
Designated Court to another Designated Court.
(2) The Supreme Court may act under this section only on an application filed by the Competent
Authority or any interested party, and every such application shall be supported by an affidavit.
(3) Where an application for the exercise of the powers conferred by this section is dismissed, the
Supreme Court may, if it is of opinion that the application was frivolous or vexatious, order the applicant
to pay by way of compensation to any person who has opposed the application such sum not exceeding
fifty thousand rupees as it may consider appropriate in the circumstances of the case.