Beware of Fraudulent Investment Schemes: Protecting Yourself Under the MPID Act
Have you been induced for investment? Or have you been convinced to deposit a lump sum amount or a specific amount by any Financial Establishment, under any scheme or any arrangement or in any other manner, with an assurance to receive interest, bonus, profit or any other form as promised against the deposit on maturity? Hold on, take a pause, and think hundred times, before you entering into such contract, it may be a fraudulent default by such financial establishment, which may lead to huge loss for you and go through financial harassment
Generally financial harassment is a situation in which someone harms another person in close and trustworthy relations, in ways that relates to money. Common man, relatives and family friends are the victims of such a fraudulent default by financial establishments, because the representatives or agents of such financial establishments are the closed ones or nearest relatives or trustworthy people in one’s life.
But how does it happen? You are the trap by such closed ones, like it can initiate with a normal friendship with unknowns, like sudden initiation of talks by people you meet in the gym, park, mall, hotel, restaurants or pubs etc places. Where usually a person is lonely ad in needs of a good company, once they make a good talk which may be so impactful that you start sharing your personal details and you become the trusted friends.
Looking into the latest News by 21 Mar 2023, the court noted that there are approximately 2,040 individual investors who are having receivable outstanding in the range of Rs 10 lac to Rs 20 lac. In fact, it is in view of the intention of the legislature to protect the interest of depositors from public, mostly middle class and poor economic strata of the society (through MPID Act) and not the corporate entities,” said the bench. The intention of Maharashtra’s pro-investor MPID Act is to protect the interest of depositors belonging to the middle class and poor economic strata of the society, the Bombay High Court said while refusing to quash a special court order directing graded distribution of funds in connection with a 2013 case related to an alleged scam at the National Spot Exchange Ltd (NSEL).
MPID Act, This Act may be called the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999. It came into force on 29th April 1999, and received the assent of President on the 20th January 2000. An Act to protect the interest of depositors in the Financial Establishments and matters relating thereto.
The Act clearly defines the terms like “Deposit” that includes and shall be deemed always to have included any receipt of money or acceptance of any valuable commodity by any Financial Establishment to be returned after a specified period or otherwise, either in cash or in kind or in the form of a specified service with or without any benefit in the form of interest, bonus, profit or in any other form, the Act clearly mentions “Financial Establishment” means any person accepting deposit under any scheme or arrangement and affair of such Financial Establishment shall on conviction, be punished with Imprisonment for a term which may extend to six years and with fine which may extend to one Lac of rupees.
Recently in case of Ravindra Shah vs State Of Maharashtra on 17 March, 2023 Bench: Krishna Murari, Sanjay Karol, Having discussed the judgments of this Court on the constitutional validity of the state legislations governing financial establishments offering deposit schemes, including the MPID Act, there is no reason for us to reopen the question. This Court has held that the MPID Act is constitutionally valid on the grounds of legislative competence and when tested against the provisions of Part III of the Constitution.”
How to know and report the offence?
When you have the knowledge that you have been cheated or on asking for the said return on investment made in such financial establishments are not been received, or the person whom you trustfully handed over the amount to invest in such schemes, is now not reachable on asking for the same, or he replies with so many excuses therein, or he has run away on receiving such a handsome amount from you, the person may be either an agent or the representative of company. In many cases, the agents or representatives get into trouble, as they may not be aware of the fraud and company runs away putting them into trouble, where the common people only knows these agents or representatives and not the main company.
The first and ever most important step is to file a complaint in local police station, where the dispute has aroused, the normal procedure to get registered the said crime under MPID Act is to inform Police station about the investments made to such financial establishments, schemes offered, and the assured return on investments on said schemes, these schemes are usually discussed orally by closed connections or by written expressions like email, Whats App, or by prospectus. The closed ones are so smart in gaining your trust, that on first instance, they give you a good return on investments, and once your trust is gained, they fly away with your hard earned money. You need to mention all the minute the details about the accused and specific points in the discussions with accused since beginning of your connection.
concern Police station on satisfaction on the primary inquiry, submits report about primafacie case and takes approval of Deputy commissioner of police to get the offence registered. Once the First Information Report is filed, The Police ceases all the bank accounts , properties and any other material involved in the crime. , Police officer of concern police station can arrest the Accused and present him/her before the Special Court, The Accused may file an application for regular Bail, whereas the Court also directs the Accused on conditional Bail, mentioning to deposit the disputed amount to the Court’s account, which remains with the Court till the matter is decided or the trial is pending before the court. Such amount is later distributed to the appropriate depositors.
The one must have these knowledge about latest trend in cheating and fraud, especially in the matters of investments where huge amount of money is involved, and one shall take advice of an advocate who deals in such matters. The ultimate goal of this Act was to protect the interest of Depositors. After all it’s the matter of hard earned money and life savings.
