AMENDED CHIT FUND BILL TO BE INTRODUCED IN BENGAL ASSEMBLY ON 18 JUNE
By bappaditya paul
The West Bengal Protection of Interest of Depositors in Financial Establishments (Amendment) Bill, known as the chit fund bill in popular parlance, and scheduled to be introduced in the state Assembly on 18 June, proposes to give the state government the discretion on whether to prosecute a fraudulent financial institution / person.
The principal legislation, mooted in the aftermath of Saradha scam and which the Chief Minister Mamata Banerjee has been touting as the panacea to curb fraudulent financial institutions, was cleared by the state Assembly in 2013.
But its becoming a law has been hanging fire for want of a Presidential assent, which finally came this March on the condition that the clause in the legislation that empowered it to override all existing laws would have to be amended.
Conforming to the advice, the state government has drafted an amendment to Section 22 (1) and (2) making it clear that the legislation will be implemented “in addition to, and not in derogation of any other law for the time being in force.”
But in drafting the amended version of the legislation, the state government has inserted a sub-clause in Section 9 (2) that gives an officer appointed by the state government the discretion on whether to grant permission to law enforcing agencies to prosecute an accused individual or group.
The officer, in this case, is identified as the Competent Authority and will be designated as the Director of Economic Offices. The newly inserted sub-clause Section 9 (2) (aa) empowers him / her: “to grant or withhold previous sanction for prosecution of an offence under Section 3.”
Section 3 pertains to irregularities such as failing to re-pay deposits, bonus, profit etc that constitute an offence under the chit fund law.
Asked to comment on this, senior high court advocate Arunava Ghosh said over the phone this evening: “The sub-clause in effect means that the state government will have the discretion on whether to prosecute a fraudulent financial company or individual instead of the law enforcing agencies. Prima facie this appears to me to be against the spirit of the Constitution.”
Mr Ghosh added that the amended bill, if and when it is passed by the state Assembly, should again have to be sent to the President for assent.
More so because, the state government has not accepted a suggestion by the Centre’s Department of Financial Services pertaining to compounding of offences for prosecuting a fraudulent financial group or individual.
“The suggestion of inclusion of a provision for compounding of offences has however not been considered for amendment on the ground that it will severely dilute the stringent provision of the principal Act,” reads a point in the statement of objectives and reasons in the amended bill that was circulated among the MLAs earlier last week.
(This report first appeared in The Statesman, India on 15 June 2015.)