Questions raised over proposed law on chit funds in West Bengal

Can penal action be taken against those guilty of committing offences prior to setting up of CoI?

April 29, 2013 02:06 am | Updated November 16, 2021 08:21 pm IST - KOLKATA:

The Trinamool Congress government that is expected to pass a new legislation in the West Bengal Assembly on Tuesday for action against those operating fraudulent collective investment schemes will have to wait for the recommendations of the Commission of Inquiry that are to be submitted within six months if it wants to confiscate the property of the scam-tainted Saradha group.

Clause 22/2 of the West Bengal Protection of Interest of Depositors in Financial Establishments Bill, 2013 scheduled to be tabled in the House during a two-day special Assembly session beginning on Monday, states that attachment or confiscation of property will be based on the report of the Commission set up under the Commission of Inquiry Act, 1952.

The Commission was set up in the wake of widespread protests by investors who had deposited their money in the so-called “chit fund” company belonging to the Saradha group.

The moot question is whether, under the new legislation, penal action can be taken against those guilty of offences committed prior to it coming into force.

Though the State’s Parliamentary Affairs Minister Partha Chatterjee had said that the legislation would have “retrospective effect,” according to legal experts, one cannot be charged under the provisions of a legislation with retrospective effect.

The State government’s decision to withdraw the Bill passed during the regime of the previous Left Front government and bring in new legislation has also drawn severe criticism.

‘Protecting the culprits’

Chairperson of the State Left Front Committee Biman Bose described the process as “delaying tactics” and that the State government’s “intention is to protect the culprits” of the Saradha group scam.

A study of both the legislation — draft legislation to be tabled in the Assembly on Tuesday and the West Bengal Protection of Interest of Depositors in Financial Establishments Bill, 2009 — passed by the previous Left Front government shows three changes.

The new legislation proposes that financial irregularities committed before the passage of the Bill can be dealt with.

Through it, the State government has proposed the creation of the post of Director of Economic Offences who can enter any premises and search documents and will have powers to seize and confiscate property.

The proposed Bill also empowers the State government to set up courts where economic offences pertaining to the legislation can be tried.

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