Monday, May 23, 2011

Maharashtra Protection of Interests of Depositors (in Financial Establishments) Act, 1999 (MPIDA)

The Supreme Court on Monday declared as valid the Maharashtra Protection of Interests of Depositors (in Financial Establishments) Act, 1999 (MPIDA), which offers relief to depositors who have been duped by non-banking financial institutions.

An SC division bench of justice Markandey Katju and justice Gyan Sudha Misra set aside the Bombay High Court's judgement of September 5, 2005, which declared the Act to be "unconstitutional".

Monday's Supreme Court order was passed while deciding on an appeal filed by depositor Sonal Hemant Joshi and others.

These depositors had challenged the HC judgment which said that it was outside the competence of the Maharashtra legislature to enact such an Act, as banking was in the Union List under the Constitution.

The SC referred to its March 4 judgment in the case of K K Baskaran and the state of Tamil Nadu where the petitioners had challenged the constitutional validity of the Tamil Nadu Protection of Interest of Depositors (in Financial Establishments) Act, 1997, and the subsequent judgment given by the Madras HC upholding the validity of the said Act. The petitioners here had argued that the Tamil Nadu Act was similar to MPIDA and hence should also be declared unconstitutional as was ruled by the Bombay HC in the case of the MPIDA.

Giving its verdict in this case, the SC had, however, ruled, "We are of the opinion that the judgment by the Madras HC is correct while the judgment of the full bench of the Bombay HC is not correct. The Act is a salutary measure to remedy a great social evil. A systematic conspiracy was effected by certain fraudulent financial establishments which not only committed fraud on the depositors, but also siphoned off or diverted the depositors fund malafide."


  1. As I am working on a case and representing several innocent depositors in the Vatsa Corporation Ltd and Vatsa Music Ltd. this is a very welcome relief and should be read along with "Maharashtra Thevidar Guntanwanukdar Mahasangh vs Vijay C Punjal and Ors" and "K.K. Baskaran vs State of Tamil Nadu through its Secretary"

  2. Thank you for the info. It sounds pretty user friendly. I guess I’ll pick one up for fun. thank u

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