Cuttack, July 31: Orissa High Court today issued notices to both the Centre and the state on a PIL seeking intervention to enforce the law that the Odisha Assembly passed more than two years ago to check cheating of small investors and protect their money.

Biswanath Biswal of Balasore along with five others, who had claimed to be victims of fraud financial companies, filed the PIL on May 13.

“The division bench of Chief Justice C. Nagappan and Justice Indrajit Mahanty issued notices to the Union ministry of law and justice, state’s chief secretary and secretaries of the state law department and the finance department,” petitioners’ counsel Subhransu Mohanty told The Telegraph.

“The court expected replies from the respondents within 15 days,” Mohanty said.

According to the petition, more than 200 non-banking unregistered fraud financial companies are functioning. Several of such companies have disappeared with crores of rupees from small investors.

The Odisha Protection of Interests of Depositors (in Financial Establishments) Bill was passed on December 17, 2011. The Bill aims to protect the interest of depositors in the non-banking financial companies (NBFCs) and deposit acceptance activities of unincorporated bodies.

Though the state government had submitted certain clarifications to the Centre in regards to the Bill in April 2012, it is still pending the President’s assent. “In the absence of the legislation, the state machinery is handicapped,” to curb illegal activities of the NBFCs and protect the interest of depositors, the PIL contends.

The Parliament had passed the legislation — the Prevention of Money Laundering Act, 2002 — to prevent money laundering and for confiscation of property derived from or involved in laundering. Due to inadequacy of penal provision, both punishment and confiscation, the fraud companies are escaping.

“In Odisha, no adjudicating authorities are functioning under the money laundering law. Due to this administrative flaw, the investors are not getting any speedy remedy,” the petition contends.

The state government is now limited to prosecute the offender NBFCs under the Prize Chits and Money Circulation (Banning) Act, 1978, and provisions of the Indian Penal Code which had a maximum punishment of three years, making the offences bailable.

But, the Odisha Protection of Interests of Depositors (in Financial Establishments) Act will enable the state government to take such NBFCs to task as the imprisonment period is 10 years.

With the enforcement of the act, there will be a designated court that can attach the properties of the NBFCs and order sale of the same to compensate the public for their losses. After investigation in the case is over, the court has to pass an order within 180 days for attaching and selling the property of the NBFC.

Under the act, every financial establishment, which commences or carries out its business in the state, has to submit a report to the district collector and superintendent of police. It has to mention the details about its authority, location, main office and address of every person responsible for the firm’s management within seven days of starting work.