Post-commencement default triggers depositor protection liability, and the Special Court may proceed without committal.

Section 5 of the Tamil Nadu Protection of Interest of Depositors in Financial Establishments Act, 1997 was held to apply where deposits were taken before commencement but the default in repayment or payment of interest occurred after commencement, because liability arises on the date of default rather than the date of receipt of deposits. The challenge under Article 20(1) failed since the penal consequence attached only to a post-commencement default. The Special Court was also held competent to take cognizance and try the case without committal, as section 13(1) expressly authorises cognizance without committal and displaces the objection based on Section 193 of the Code of Criminal Procedure.

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Issues: (i) whether section 5 of the Tamil Nadu Protection of Interest of Depositors in Financial Establishments Act, 1997 could be applied where the deposits were accepted before the Act came into force but the default in repayment and payment of interest occurred after its commencement; (ii) whether the Special Court could take cognizance and try the case without committal.

Issue (i): whether section 5 of the Tamil Nadu Protection of Interest of Depositors in Financial Establishments Act, 1997 could be applied where the deposits were accepted before the Act came into force but the default in repayment and payment of interest occurred after its commencement.

Analysis: The liability under section 5 arises not from the mere receipt of deposits, but from the default in returning the deposit or paying the interest on the due date. The relevant date for attracting the provision is the date of default, not the earlier date on which the deposits were collected. Since the matured amounts and interest in respect of the concerned depositors became due after the Act came into force and were not paid, the provision was held applicable. The plea based on Article 20(1) of the Constitution of India was rejected because the penal consequence was attached to a post-commencement default.

Conclusion: Section 5 was held applicable, and the challenge based on absence of retrospective operation failed.

Issue (ii): whether the Special Court could take cognizance and try the case without committal.

Analysis: Section 13(1) of the Act authorises the Special Court to take cognizance of offences without the accused being committed for trial and provides that the procedure for warrant cases by magistrates shall apply so far as may be. In view of that express statutory scheme, the objection founded on Section 193 of the Code of Criminal Procedure, 1973 was negatived.

Conclusion: The Special Court was held competent to take cognizance and conduct the trial without committal.

Final Conclusion: The revision was rejected because the statutory default after commencement attracted section 5 and the Special Court's procedure was upheld.

Ratio Decidendi: In proceedings under the Tamil Nadu Protection of Interest of Depositors in Financial Establishments Act, 1997, the offence under section 5 is attracted by the post-commencement default in repayment or payment of interest, and the Special Court may take cognizance without committal under section 13(1).

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