MPID Act applies to co-operative banks despite Banking Regulation Act coverage; prosecution for depositor protection may proceed.

A co-operative bank registered under the Maharashtra Co-operative Societies Act is not impliedly excluded from the Maharashtra Protection of Interest of Depositors (In Financial Establishments) Act, 1999 merely because the Banking Regulation Act, 1949 applies to it. Section 2(d) of the MPID Act expressly excludes only government-owned or government-controlled corporations or co-operative societies, and banking companies under section 5(c) of the Banking Regulation Act. Section 56 extends banking regulation to co-operative banks, but that regulatory coverage does not displace the MPID Act, which operates in a different sphere by creating penal consequences to protect depositors from fraudulent defaults and related misconduct. Prosecution under section 3 of the MPID Act can therefore proceed against a co-operative bank not owned or controlled by the State or Central Government.

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Issues: Whether a co-operative bank registered under the Maharashtra Co-operative Societies Act is excluded by implication from the ambit of the Maharashtra Protection of Interest of Depositors (In Financial Establishments) Act, 1999 because the Banking Regulation Act, 1949 applies to such banks.

Analysis: The definition of "Financial Establishment" under Section 2(d) of the MPID Act expressly excludes only a corporation or co-operative society owned or controlled by the State or Central Government and a banking company under Section 5(c) of the Banking Regulation Act, 1949. The fact that co-operative banks are brought within the regulatory sweep of the Banking Regulation Act by Section 56 does not, by itself, create an implied exclusion from the MPID Act. The two enactments operate in different spheres: the Banking Regulation Act provides regulatory control over banking institutions, whereas the MPID Act creates penal consequences to protect depositors against fraudulent defaults and related misconduct. The earlier understanding of co-operative banks under banking law did not answer the distinct question arising under the MPID Act.

Conclusion: A co-operative bank not owned or controlled by the State or Central Government is not excluded from the MPID Act by implication, and prosecution under Section 3 of the MPID Act can proceed.

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