Here’s a ray of hope for investors who’ve been cheated of their hard-earned money. The state government has reinstated the Maharashtra Protection of Interest of Depositors (MPID) Act, which had been struck down by the Bombay High Court in 2005.
Last week, the state Home Department issued the order of reinstatement after the Supreme Court held the Act constitutionally valid.
SpeakAsia may slip out?
In the recent, multi-crore SpeakAsia scam, the police are however at a loss to apply the Act, which provides for attachment of properties owned by a fraudulent investment firm. The properties can be auctioned to pay off depositors’ investments.
In the case of SpeakAsia, the company is neither registered in India, nor has it bought any property here.
“The scam is devised such that it is difficult to pin them down under stringent laws. The MPID can’t be applied in SpeakAsia’s case as there is nothing to attach or auction,” said a senior officer with the Economic Offences Wing (EOW) of the Mumbai Crime Branch. “So, we have registered the case under the Circulation of Money Act.”
This act applies to cases of illegal circulation of funds.
The EOW has, however, frozen 31 bank accounts of SpeakAsia’s franchisees in India.
“We are doing all we can to recover investors’ hard earned money. We have recovered Rs 135 crore from these accounts,” the officer said. “Beyond this, we have little hope of recovering any more money. They have parked over Rs 600 crore abroad on paper. There could be more.”
The court case
The MPID was enacted in 1999 to combat fraudulent investment schemes. It rattled non-banking financial institutions so much that a consortium of 29 companies challenged the Act in the Bombay High Court, which struck the law down in September 2005, saying enactment of such a law was beyond the jurisdiction of the state legislature.
The state suspended the Act, but contested its repeal in Supreme Court (SC). The case is still on. However, the SC’s observation in a recent case has brought relief to the Mumbai police.
While hearing a case on May 11, the Supreme Court said the HC’s order of repealing the Act was not correct. “We uphold the Act’s constitutional validity,” the order said.
Armed with this order, the state last week issued an order reinstating the Act to be applied to cases of investment frauds.
Last week, the state Home Department issued the order of reinstatement after the Supreme Court held the Act constitutionally valid.
SpeakAsia may slip out?
In the recent, multi-crore SpeakAsia scam, the police are however at a loss to apply the Act, which provides for attachment of properties owned by a fraudulent investment firm. The properties can be auctioned to pay off depositors’ investments.
In the case of SpeakAsia, the company is neither registered in India, nor has it bought any property here.
“The scam is devised such that it is difficult to pin them down under stringent laws. The MPID can’t be applied in SpeakAsia’s case as there is nothing to attach or auction,” said a senior officer with the Economic Offences Wing (EOW) of the Mumbai Crime Branch. “So, we have registered the case under the Circulation of Money Act.”
This act applies to cases of illegal circulation of funds.
The EOW has, however, frozen 31 bank accounts of SpeakAsia’s franchisees in India.
“We are doing all we can to recover investors’ hard earned money. We have recovered Rs 135 crore from these accounts,” the officer said. “Beyond this, we have little hope of recovering any more money. They have parked over Rs 600 crore abroad on paper. There could be more.”
The court case
The MPID was enacted in 1999 to combat fraudulent investment schemes. It rattled non-banking financial institutions so much that a consortium of 29 companies challenged the Act in the Bombay High Court, which struck the law down in September 2005, saying enactment of such a law was beyond the jurisdiction of the state legislature.
The state suspended the Act, but contested its repeal in Supreme Court (SC). The case is still on. However, the SC’s observation in a recent case has brought relief to the Mumbai police.
While hearing a case on May 11, the Supreme Court said the HC’s order of repealing the Act was not correct. “We uphold the Act’s constitutional validity,” the order said.
Armed with this order, the state last week issued an order reinstating the Act to be applied to cases of investment frauds.
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