President allows Ladakh LG to use BUDS Act to ban ponzi schemes, unregulated deposits

New Delhi [India], June 2 (ANI): President Ram Nath Kovind on Thursday directed the Ladakh Lieutenant Governor RK Mathur to exercise the powers and discharge the functions of the appropriate government under the Banning of Unregulated Deposit Schemes Act, 2019 in the Union Territory to curb Ponzi schemes, unregulated deposits.
The move was made public through a notification issued on Thursday by the Ministry of Home Affairs (MHA) in the Gazette of India.
"In pursuance of clause (1) of article 239 of the Constitution, the President hereby directs that the Lieutenant Governor of the Union Territory of Ladakh shall, subject to the control of the President and until further orders, exercise the powers and discharge the functions of the appropriate Government under the Banning of Unregulated Deposit Schemes Act, 2019 (21 of 2019) within the said Union territory," reads the notification.
The Banning of Unregulated Deposit Schemes Act, 2019 was notified on February 21, 2019, for providing a comprehensive mechanism to ban unregulated deposit schemes, other than deposits taken in the ordinary course of business, and to protect the interest of depositors. The Bill was introduced in 2015 as the Banning of Unregulated Deposit Schemes and Protection of Depositors' Interests Bill.
The BUDS rules define the term 'competent authority' as an authority appointed by the appropriate government under Section 7 of the BUDS Act, according to which the authority has the same powers as vested in a civil court under the civil procedure code (CPC) while conducting investigation or inquiry in respect of offences under the Act.
For provisionally attaching a deposit-taker's property, the competent authority would consider any complaint against the promotion or operation of an unregulated deposit scheme, whether the complainant is a depositor in the said unregulated deposit scheme or not, the rules say.
However, to make the attachment absolute, the competent authority will have to file an application before the designated court. The rules also outline procedure to be followed by the designated court and lay down the material to be searched by the officer-in-charge of a police station for investigating into any offence under the BUDS Act.
The rules further state that the designated authority would operate a central database to the public, containing information relating to deposit-takers, including a list of deposit-takers operating in India, the extent and areas of their operation.
Importantly, as per the rules, the government can direct any newspaper or publication to a full and fair retraction, unequivocally withdrawing any offer, promotion or inducement made earlier in any advertisement, statement or information.
"The Government shall direct the owner of any newspaper or other publication of any nature either in print or in electronic form, to publish a full and fair retraction, unequivocally withdrawing any offer, promotion or inducement made earlier in any advertisement, statement or information to any person to become a member of any Unregulated Deposit Scheme," the rules say. (ANI)