Sections 24, 25, 26 and 27 of the Banning of Unregulated Deposit Schemes Act, 2019
Sections 24 to 27 form part of Chapter VI of the Banning of Unregulated Deposit Schemes Act, 2019 (BUDS Act). They deal with enhanced punishment for repeat offenders, liability where the deposit taker is not an individual, punishment for failure to comply with Section 10, and the conditions for cognizance of certain offences by the Designated Court.
- Section 24: enhanced imprisonment and fine for repeat convictions under Chapter VI, except repeat conviction for the Section 26 offence.
- Section 25: fixes responsibility on a non-individual deposit taker and persons in charge, subject to the statutory defence of lack of knowledge or due diligence.
- Section 26: provides a monetary penalty for failure to give the intimation or information required under Section 10.
- Section 27: regulates when the Designated Court can take cognizance of an offence punishable under Section 4.
| Section | Subject | Key consequence |
|---|---|---|
| 24 | Repeat offenders | Imprisonment from 5 to 10 years and fine from Rs. 10 lakh up to Rs. 50 crore. |
| 25 | Non-individual deposit takers | Entity and responsible persons may be deemed guilty; statutory defence and specific liability for consent, connivance or neglect apply. |
| 26 | Contravention of Section 10 | Fine up to Rs. 5 lakh. |
| 27 | Cognizance of Section 4 offence | Complaint by the Regulator is required, subject to the proviso relating to a deposit taker that is a company. |
Section 24 - Punishment for repeat offenders
Whoever, having been previously convicted of an offence punishable under this Chapter, except the offence under section 26, is subsequently convicted of an offence shall be punishable with imprisonment for a term which shall not be less than five years but which may extend to ten years and with fine which shall not be less than ten lakh rupees but which may extend to fifty crore rupees.
What Section 24 means
Section 24 is an enhanced-punishment provision for a person who has already been convicted of an offence punishable under Chapter VI and is later convicted again. The section expressly excludes the offence under Section 26 from the earlier-conviction limb. Where Section 24 applies, the court must impose at least five years of imprisonment and a fine of at least Rs. 10 lakh, subject to the statutory maximums of ten years and Rs. 50 crore.
Section 25 - Offences by deposit takers other than individuals
(1) Where an offence under this Act has been committed by a deposit taker other than an individual, every person who, at the time the offence was committed, was in charge of, and was responsible to, the deposit taker for the conduct of its business, as well as the deposit taker, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.
(2) Nothing contained in sub-section (1) shall render any such person liable to any punishment provided in this Act, if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence.
(3) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed by a deposit taker other than an individual, and it is proved that the offence -
(a) has been committed with the consent or connivance of; or
(b) is attributable to any neglect on the part of any director, manager, secretary, promoter, partner, employee or other officer of the deposit taker,
such person shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
Meaning and liability under Section 25
Section 25 applies where the deposit taker is an entity or other person that is not an individual. Sub-section (1) creates deemed liability for the deposit taker and for persons who were in charge of, and responsible for, the conduct of its business when the offence occurred.
Sub-section (2) provides a statutory defence to such a person if the person proves either that the offence occurred without his knowledge or that he exercised all due diligence to prevent it. Sub-section (3) separately covers a director, manager, secretary, promoter, partner, employee or other officer where the offence is proved to have occurred with that person's consent or connivance, or is attributable to that person's neglect.
Section 26 - Punishment for contravention of Section 10
Whoever fails to give the intimation required under sub-section (1) of section 10 or fails to furnish any such statements, information or particulars as required under sub-section (2) of that section, shall be punishable with fine which may extend to five lakh rupees.
What Section 26 covers
Section 26 is tied directly to the compliance obligations in Section 10. It applies where the required intimation is not given under Section 10(1), or where statements, information or particulars required under Section 10(2) are not furnished. The punishment is a fine that may extend to Rs. 5 lakh.
Section 27 - Cognizance of offences
Notwithstanding anything contained in section 4, no Designated Court shall take cognizance of an offence punishable under that section except upon a complaint made by the Regulator:
Provided that the provisions of section 4 and this section shall not apply in relation to a deposit taker which is a company.
Meaning of Section 27
Section 27 imposes a procedural condition for an offence punishable under Section 4: the Designated Court cannot take cognizance unless the complaint is made by the Regulator. The proviso states that Section 4 and Section 27 do not apply where the deposit taker is a company.
Official source and legal reference
The Banning of Unregulated Deposit Schemes Act, 2019 is Central Act No. 21 of 2019. It was enacted on 31 July 2019 and is administered by the Ministry of Finance, Department of Financial Services. For authoritative text and current legislative material, consult India Code and the Department of Financial Services.