Sections 7 and 8: Competent Authority and Designated Court under the BUDS Act, 2019
Sections 7 and 8 form part of Chapter III, "Authorities", of the Banning of Unregulated Deposit Schemes Act, 2019. Section 7 establishes the Competent Authority and gives it powers relating to provisional attachment, inquiry, evidence and records. Section 8 provides for constitution and jurisdiction of the Designated Court.
Updated: 14 September 2026
What is the Competent Authority under Section 7?
Section 2(3) of the Act defines "Competent Authority" as an authority appointed by the appropriate Government under Section 7. Under Section 7(1), the appropriate Government must appoint one or more officers, not below the rank of Secretary to that Government, as the Competent Authority. The Government may also appoint assisting officers under Section 7(2).
| Provision | What it deals with |
|---|---|
| Section 7(1)-(2) | Appointment of the Competent Authority and assisting officers. |
| Section 7(3) | Provisional attachment where there is recorded reason to believe that deposits are being solicited in contravention of Section 3. |
| Section 7(4)-(6) | Civil-court type powers for inquiry, attendance, production of records, affidavits and examination. |
| Section 7(7) | Proceedings under sub-sections (4) and (5) are treated as judicial proceedings for the statutory purposes stated in the Act. |
| Section 7(8) | Power of assisting officers to impound and retain records, subject to recorded reasons and approval requirements. |
| Section 8 | Constitution, exclusive jurisdiction and connected-offence trial power of the Designated Court. |
Section 7 - Competent Authority
(1) The appropriate Government shall, by notification, appoint one or more officers not below the rank of Secretary to that Government, as the Competent Authority for the purposes of this Act.
(2) The appropriate Government may, by notification, appoint such other officer or officers as it thinks fit, to assist the Competent Authority in discharging its functions under this Act.
(3) Where the Competent Authority or officers appointed under sub-section (2), for the purposes of this section, has reason to believe (the reason for such belief to be recorded in writing), on the basis of such information and particulars as may be prescribed, that any deposit taker is soliciting deposits in contravention of section 3, he may, by an order in writing, provisionally attach the deposits held by the deposit taker and the money or other property acquired either in the name of the deposit taker or in the name of any other person on behalf of the deposit taker from the date of the order, in such manner as may be prescribed.
(4) The Competent Authority shall, for the purposes of sub-section (3), have the same powers as vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908) while conducting investigation or inquiry in respect of the following matters, namely:-
(a) discovery and inspection;
(b) enforcing the attendance of any person, including any officer of a reporting entity and examining him on oath;
(c) compelling the production of records;
(d) receiving evidence on affidavits;
(e) issuing commissions for examination of witnesses and documents; and
(f) any other matter which may be prescribed.
(5) The Competent Authority shall have power to summon any person whose attendance he considers necessary whether to give evidence or to produce any records during the course of any investigation or proceeding under this section.
(6) All the persons so summoned shall be bound to attend in person or through authorised agents, as such officer may direct, and shall be bound to state the truth upon any subject respecting which they are examined or make statements, and produce such documents as may be required.
(7) Every proceeding under sub-sections (4) and (5) shall be deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the Indian Penal Code (45 of 1860).
(8) Subject to any rules made in this behalf by the Central Government, any officer referred to in sub-section (2) may impound and retain in his custody for such period, as he thinks fit, any records produced before him in any proceedings under this Act:
Provided that the officer or officers referred to in sub-section (2) shall not-
(a) impound any records without recording his reasons for so doing; or
(b) retain in his custody any such records for a period exceeding three months, without obtaining the previous approval of the Competent Authority.
Key effect of Section 7(3)
The provisional attachment power is linked to suspected solicitation of deposits in contravention of Section 3 of the BUDS Act. The provision expressly requires the reason for the authority's belief to be recorded in writing before the statutory attachment power is exercised.
Civil court powers under Section 7(4)
For the limited purposes specified in Section 7(4), the Competent Authority has powers corresponding to those of a civil court under the Code of Civil Procedure, 1908, including discovery and inspection, enforcing attendance, compelling production of records, receiving affidavit evidence and issuing commissions.
Section 8 - Designated Court
(1) The appropriate Government shall, with the concurrence of the Chief Justice of the concerned High Court, by notification, constitute one or more Courts known as the Designated Courts for such area or areas or such case or cases as may be specified in such notification, which shall be presided over by a Judge not below the rank of a District and Sessions Judge or Additional District and Sessions Judge.
(2) No Court other than the Designated Court shall have jurisdiction in respect of any matter to which the provisions of this Act apply.
(3) When trying an offence under this Act, the Designated Court may also try an offence, other than an offence under this Act, with which the accused may, under the Code of Criminal Procedure, 1973 (2 of 1974), be charged at the same trial.
What Section 8 means in practice
The Designated Court is a specially constituted court for matters governed by the Act. It must be constituted by notification of the appropriate Government with the concurrence of the Chief Justice of the concerned High Court, and it must be presided over by a judicial officer not below the rank specified in Section 8(1). Section 8(2) gives the Designated Court exclusive jurisdiction over matters to which the Act applies.
Related provisions
Sections 7 and 8 should be read with the Act's definition provisions and with the later provisions governing attachment, confirmation, realisation of assets, repayment to depositors, offences and penalties. The links in the sidebar provide the surrounding sections of the Act.