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TMI Blog2024 (10) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... vate Company, a Company registered under the provisions of the Companies Act, had collected deposits from various persons in the State of Tamil Nadu and State of Karnataka and failed to repay the same. On account of the default of the Company, proceedings have been initiated against the Company under the provisions of the Tamil Nadu Protection of Interests of Depositors [in Financial Establishments] Act, 1997 [hereinafter referred to as ''the TNPID Act'']. However, one of the depositors also filed a petition under Section 9 of Insolvency and Bankruptcy Code, 2016 [in short ''IB Code''] before the National Company Law Tribunal [NCLT], Chennai Bench, for initiation of Resolution process. (2) Neither the Compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the provisions of TNPID Act as null and void. (5) The TNPID Act is a special enactment which is intended to protect the rights of depositors and provide a mechanism for the disbursement of the assets of the accused apart from punishing the accused. The NCLT, Chennai Bench, has relied upon the judgment of Hon'ble Supreme Court in Innoventive Industries Limited Vs. ICICI Bank and Another [2018 [1] SCC 407] for the proposition that the provisions of the IB Code shall have effect not withstanding anything inconsistent therewith contained in any other law for the time being in force, particularly referring to Section 238 of the IB Code, 2016. Similarly, the judgment of Hon'ble Supreme Court in PR.Commissioner of Income Tax Vs. Monn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eiterated that the Courts should be guided by Doctrine of pith and substance and consider which constitute in pith and substance the true subject matter of legislation to find out whether the subject matter of the State legislature encroaches the field of Union Government. For the principles reiterated by the Full Bench of this Court, when we examine the provisions of the TNPID Act as a whole, its object and the scope and the power and jurisdiction conferred under the Special Court, this Court is convinced that the provisions of TNPID Act should stand, despite provisions of IB Code. Therefore, the Full Bench of this Court considered the issue whether the TNPID Act is ultra vires the constitution since the provisions of the Act are repugnant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Maharashtra Act does not fall within the subject matter of Sections 58-A and 58-AA of Companies Act. While holding that Courts should look at the legislation as a whole and there is a presumption that the legislature does not exceed its constitutional limits, the Hon'ble Supreme Court accepted the view that incidental trenching in exercise of ancillary powers into a forbidden legislative territory is permissible if a legislation is in substance one on a matter assigned to legislature then it must be held to be valid even though it incidentally trenches on matters beyond its legislative competence. (8) The collection of deposit, ignoring the contractual obligation of the person collecting such deposits is now made liable for a crimina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S of RBI Act, 1934, collection of deposit itself is an offence if such a collection is by anyone who is not a Bank or Financial Institution or Non-Banking Financial Institution who are permitted to collect deposits under different statutes. Under Section 6 of TNPID Act, the Special Court while trying any case, may also try any offence other than the offence specified in Section 5 of the Act at the same trial. Therefore, even an offence under Section 45-S of RBI Act or Section 420 of IPC etc., can be tried by the Special Court. Since Section 45-S of RBI Act contemplates punishment for collection of deposits, the Police Department can register cases even when deposits are collected by persons who are not authorised under the RBI Act, 1934. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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