Section 13 of The Banning of Unregulated Deposit Schemes Act, 2019 in hindi
- (1)Save as otherwise provided in the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002) or the Insolvency and Bankruptcy Code, 2016 (31 of 2016), an order of provisional attachment passed by the Competent Authority, shall have precedence and priority, to the extent of the claims of the depositors, over any other attachment by any authority competent to attach property for repayment of any debts, revenues, taxes, cesses and other rates payable to the appropriate Government or the local authority.
- (2)Where an order of provisional attachment has been passed by the Competent Authority—
- (a)such attachment shall continue until an order is passed under sub-section (3) or sub-section (5) of section 15 by the Designated Court;
- (b)all the attached money or property of the deposit taker and the persons mentioned therein shall vest in the Competent Authority and shall remain so vested till further order of the Designated Court.
- (3)The Competent Authority shall open an account in a scheduled bank for the purpose of crediting and dealing with the money realised under this Act, which shall not be utilised except under the instructions of the Designated Court.
- (4)The Competent Authority shall not dispose of or alienate the property or money attached, except in accordance with the order of the Designated Court under sub-section (3) or sub-section (5) of section 15.
- (5)Notwithstanding anything contained in sub-section (4), the Competent Authority may, if it thinks it expedient, order the immediate sale of perishable items or assets, and the proceeds of the sale shall be utilised in the same manner as provided for other property.
Summary
- Orders to freeze property by the Competent Authority take priority over almost all other claims.
- This priority ensures that money is saved for depositors before being used for government taxes or other debts.
- Two specific laws, the SARFAESI Act, 2002 and the Insolvency and Bankruptcy Code, 2016, are the only exceptions to this priority rule.
- Frozen property stays under the control of the Competent Authority until a Designated Court makes a final decision.
- All money collected must be kept in a special bank account and can only be spent if the Court says so.
- Perishable items, like food or goods that rot quickly, can be sold immediately by the Competent Authority.
Practical examples
FAQ
1. What happens to the property once it is frozen?
It vests in the Competent Authority, meaning they take legal control of it until the Designated Court issues a further order.
2. Can the Competent Authority spend the money they seize?
No, they must put it in a scheduled bank account and can only use it according to instructions from the Designated Court.
3. Does this rule apply to every single debt?
It applies to most debts and taxes, but it does not override specific rules in the SARFAESI Act, 2002 or the Insolvency and Bankruptcy Code, 2016.
Test yourself
Q1.Under Section 13 of The Banning of Unregulated Deposit Schemes Act, 2019, which of these has the highest priority for payment from a deposit taker's seized property?
Q2.Under Section 13 of The Banning of Unregulated Deposit Schemes Act, 2019, an order of provisional attachment remains in effect until a decision is made under which other section?
Q3.Under Section 13 of The Banning of Unregulated Deposit Schemes Act, 2019, which laws can still take priority over the attachment of property for depositors?
Q4.Under Section 13 of The Banning of Unregulated Deposit Schemes Act, 2019, when is the Competent Authority allowed to sell property without a specific court order for sale?