Application Of BUDS Act Prima Facie Doubtful Where Accused Is Not Deposit Taker: AP High Court

The Andhra Pradesh High Court has observed that the application of offences under Banning of Unregulated Deposit Schemes Act, 2019 is prima facie doubtful where the accused is not a deposit taker. In doing so the court granted anticipatory bail to a doctor booked for offence of Cheating under IPC and Section 21(1)(2)(3) BUDS Act which prescribes punishment for offences relating to the unlawful acceptance or solicitation of deposits. It states that any deposit taker who solicits deposits in contravention of Section 3 shall be punished with imprisonment not less than 1 year extendable to 5 years and with fine not less than Rs. 2 Lakh extendable to Rs. 10 Lakh. Section 3 bans Unregulated Deposit Schemes from the date of commencement of the Act and further prohibits deposit takers from directly or indirectly, promoting, operating, issuingany advertisement soliciting participation or enrolment in or accept deposits in pursuance of an Unregulated Deposit Scheme.Granting relief to the doctor who claimed to be himself a victim of the alleged cheating, Justice Maheswara Rao Kuncheam observed:“So far as allegations in respect of the BUDS Act, 2019 is concerned, as rightly contended by learned Senior Counsel for the petitioner, applicability of the said provisions are in question, more particularly, in view of the specific language enunciated under Section 3(b) of the said Act, i.e., the petitioner will not come under the purview of Deposit Taker.Another facet in the instant case is accepting the entire accusation, except the offence punishable under Section 21(1)(2)(3) of the BUDS Act, all the offences are punishable with imprisonment upto seven (07) years. Prima facie there is any amount of ambiguity as to whether Section 21(1)(2)(3) of the Banning of Unregulated Deposit Schemes Act, 2019 would attract to the subject crime or not. In view of the aforesaid facts and circumstances, this Court is inclined to grant pre-arrest bail to the petitioner herein/Accused No.1 on certain condition.” The petitioner, a final-year D.M. (Super Specialty) student in Nephrology at Andhra Medical College and resident doctor at King George Hospital, Visakhapatnam, was accused of cheating and offences relating to an unregulated deposit scheme, under Section 318(4) of the BNS and Sections 21(1)(2)(3) of the BUDS Act read with Section 3(5) of the BNS.According to the petitioner, Accused No.2, who was an attendant of a Chronic Kidney Disease patient, developed an interaction with him and advised him to invest money, claiming to be well acquainted with the financial institution and assuring him of good returns. Believing Accused No.2, the petitioner transferred Rs. 1.06 crore to him in different spells after borrowing the amount at high interest rates from various financial institutions.After realising that he had been cheated, the petitioner approached the police and, when his complaint was not registered, approached higher police authorities, following which an FIR was registered against Accused No. 2. He also filed a writ petition before the High Court alleging police harassment. While the petition was pending, the present FIR was registered against him at the same police station, which his counsel contended was a counter-blast. The petitioner further contended that he did not fall within the definition of a “Deposit Taker” under Section 3 of the BUDS Act and, therefore, the provisions of the special enactment could not be invoked against him.The State opposed the pre-arrest bail, submitting that there were many victims and that, as the case involved financial transactions among doctors, it required detailed investigation. It also submitted that Accused No.2 had already been arrested.The High Court noted that the petitioner was the de facto complainant in the earlier FIR against Accused No.2 and that his writ petition against the police was pending when the present FIR was registered against him. In view of Section 3(b) of the BUDS Act, the Court further noted that the petitioner would not come within the purview of a “Deposit Taker”.Considering these circumstances, the Court granted the petitioner pre-arrest bail subject to conditions. The plea was allowed.Case Title: Dr Rayagada Santosh Patnaik v. State of Andhra PradeshCase No.: Criminal Petition No. 4501 of 2026Counsel for the Petitioner/Accused: Kavitha GottipatiCounsel for the Respondent/Complainant: Public ProsecutorClick Here To Read/Download Order

Application Of BUDS Act Prima Facie Doubtful Where Accused Is Not Deposit Taker: AP High Court

Ritika Verma

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Ritika Verma

Application Of BUDS Act Prima Facie Doubtful Where Accused Is Not Deposit Taker: AP High Court

Ritika Verma

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Ritika Verma

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