TaxTMI 
TaxTMI 
2000 (8) TMI 988
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....ank of India Act, 1934 ('the Act') incorporated by section 9 of the Reserve Bank of India (Amendment) Act, 1997. 2. The petitioners in all the cases deal in the business relating to finance. They are mostly the firms and are in some cases individuals. Petitioner No. 1 in W.P. No. 17081 of 1997 is Nellore District Auto Financiers Welfare Association, while the rest of the petitioners are its members. In W.P. No. 29426 of 1997 the Krishna District Auto Financiers Association, Vijayawada, represented by its President is the petitioner. It leads on behalf of all its members, who deal in the business of finance, which includes hire purchase etc. 3. Section 45S was enacted to regulate the deposits made by the persons either an individual or a f....
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.... were allured by high interest rates and gifts offered by the greedy concerns and that there has been a gross abuse of the said provision resulting in shattering the lives and aspirations of several depositors. Then the Parliament has thought of amending the said provision making it compulsory for any concern accepting the deposits from public, to incorporate itself either under the Companies Act or a statute or a co-operative society and then to obtain licences by the said incorporated bodies from the RBI. After 1997 - amendment the provision 45S reads as hereunder : "45S. Deposits not to be accepted in certain cases : (1) No person, being an individual or a firm or an unincorporated association of individuals shall, accept any deposit- ....
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....tive of another if, and only if- (i)they are members of a Hindu undivided family; or (ii)they are husband and wife; or (iii)the one is related to the other in the manner indicated in the List of relates below. List of relatives 1. Father, 2. Mother (including step-mother), 3. Son (including step-son), 4. Son's wife, 5. Daughter (including step-daughter), 6. Father's father, 7. Father's mother, 8. Mother's mother, 9. Mother's father, 10. Son's son, 11. Son's son's wife, 12. Son's daughter, 13. Son's daughter's husband, 14. Daughter's husband, 15. Daughter's son, 16. Daughter's son's wife, 17. Daughter's daughter, 18. Daughter's daughter's husband, 19. Brother (including step-brother), 20. Brother's wife, 21. Sister (including step-siste....
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....ourt's decision in Papnasam Labour Union's case (1995 AIR SCW 1593) : AIR 1995 SC 2200 (supra) we find that the said section is no way illegal or bad in law. Section 45S no doubt prohibits the conduct of banking business by an unincorporated non-banking entity like a shroff, but this prohibition has come about, inter alia, in the interest of unwary depositors and borrowers (from Shroffs) and with a view to prevent them from committing financial suicide. Earlier attempts to adequately regulate the non-banking institutions not having achieved the desired result of protecting large number of depositors from unincorporated financial institutions which would suddenly mushroom overnight and then vanish without a trace, but taking with it deposito....