Unregulated Deposit Schemes Act | Kerala High Court Raps Competent Authority For 'Callous Inaction' In ₹2,000-Crore Popular Finance Scam

The Kerala High Court on Tuesday (November 11) pulled up Competent Authority under Banning of Unregulated Deposit Schemes Act, 2019 (BUDS Act) for its continued inaction and non-compliance with court directives in the proceedings related to the Popular Finance unregulated deposit scam, estimated to have defrauded around 30,000 investors of nearly ₹2,000 crore.The Division Bench comprising Justice Raja Vijayaraghavan V and Justice K.V. Jayakumar, while hearing a batch of writ appeals, expressed strong displeasure in the continued non-compliance of the orders issued by the Court.The Court noted that the matter has been pending since the year 2020 and went on to deal in detail various orders issued by the Court since early 2025. The Court observed that despite multiple directions, the Competent Authority under Section 7 of the BUDS Act, an officer of the rank of Additional Chief Secretary in the Home Department, had failed to file applications before the designated court within the statutory time limit to make provisional attachments of the company's assets absolute.“Substantial time and effort have been expended by this Court merely to ensure that the statutory authorities, upon whom onerous responsibilities have been conferred under the Act, act diligently and in strict compliance with its provisions.” the Court observed. The Court noted that the Competent Authority under BUDS Act has wide-ranging powers including the responsibility to share information under Section 11, to issue provisional orders of attachment, to open bank accounts for depositing the amount collected by the deposit taker, to order the sale of perishable items or assets, and to file applications for confirmation of attachment before the Designated Court.“It appears, however, that the Competent Authority has treated the directions issued by this Court in a casual and perfunctory manner, disregarding the onerous statutory obligations entrusted to it under the Act. Such indifference to compliance undermines both the statutory scheme and the authority of this Court.” the bench noted. The Court recorded that several provisional attachment orders against the movable and immovable assets of Popular Finance Pvt. Ltd. and its promoters, had lapsed due to non-filing of confirmation petitions within the statutory 30 to 60-day window.Even though the Court had repeatedly directed the Competent Authority to coordinate with District Collectors and file the necessary applications, the Government Pleader admitted that, as of the date of the order, compliance was incomplete in most districts.Reports had been received only from the Collectors of Thiruvananthapuram, Kollam, and Thrissur, while there were no instructions from other districts. “Even after this Court had issued repeated reminders months in advance, all that has been stated is that instructions were issued to the District Collectors, without any demonstrable follow-up or accountability to ensure compliance. The Competent Authority has also not chosen to apprise this Court that effective steps have been taken to implement the directions issued. Such callous inaction and blatant disobedience of the orders of this Court cannot be countenanced.” the bench remarked. The Bench thus directed the Competent Authority to appear virtually before the Court on November 19, 2025, at 10:15 a.m., to explain the reasons for continued non-compliance and to show cause why action should not be initiated for flouting court orders. Case Title: Sunil Kumar K and Anr v Union of India and Ors. and connected casesCase No: WA 453/ 2021 and connected casesCounsel for Appellants/ Petitioners: Jacob P Alex, Joseph P Alex, Manu Sankar PCounsel for Respondents: O M Shalina (DSGI), N Manoj Kumar (State Attorney), K R Ranjith, Sreelal Warrier, M Gopalakrishnan Nambiar K John Mathai, Joson Manavalan, Kuryan Thomas, Paulose C Abraham, Rajakannan, K M Jamaludheen, C S ManuClick Here To Read/ Download Interim Order

Unregulated Deposit Schemes Act | Kerala High Court Raps Competent Authority For 'Callous Inaction' In ₹2,000-Crore Popular Finance Scam

Anamika MJ

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