Law to protect innocent depositors valid: SC

The Supreme Court has upheld a law passed by Pondicherry assembly to attach the property of a private firm for duping investors.

Last Updated: Oct 02, 2012, 19:38 PM IST

New Delhi: The Supreme Court has upheld a law passed by Pondicherry assembly to attach the property of a private firm for duping investors, observing that innocent public end up losing their hard earned money on account of unscrupulous financial companies.

A bench of justices Altamas Kabir and J Chelameshar also ruled that even if the state enacts a law which is in conflict with a legislation passed by Parliament, it would still have validy if the statute has obtained Presidential assent.

"We have to keep in mind the beneficial nature of the three legislations which is to protect the interests of small depositors who invest their life`s earnings and savings in schemes for making profit floated by unscrupulous individuals and companies, both incorporated and unincorporated.

"More often than not, the investors end up losing their entire deposits," Justice Kabir, writing the judgement, said.
The apex court passed the judgement while dismissing the appeal of M/s New Horizon Sugar Mills Ltd, challenging the Pondicherry Protection of Interests of Depositors in Financial Establishments Act, 2004 (Act 1 of 2005), ordering attachment of properties acquired by Pondicherry Nidhi Ltd said to be one of its own companies.

PTI