Cuttack, May 18: At a time when the state is waiting for the President’s assent to a crucial Bill that seeks to protect investors from sham financial companies, a group of people hit by the default crisis wants judicial intervention to check cheating of small depositors.

The wait of the state government for presidential assent to the Bill and a public interest litigation (PIL) filed in Orissa High Court by the victims highlight the crying need for a legislation to save small investors from the clutches of fraud financial companies.

The move comes when economic offences wing of CID (crime branch) of the state police is carrying out its largest ever crackdown on sham deposit collection companies.

Claiming to be victims of sham deposit collection companies, Biswanath Biswal of Balasore and five others have filed a PIL seeking the court’s intervention for enforcement of the legislation that the Assembly had passed more than two years ago.

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

Though the government had submitted clarifications to the Centre regarding the Bill in April 2012, it is still pending President’s assent.

“In the absence of the legislation, the state machinery is handicapped” to curb illegal activities of NBFCs and protect the interest of depositors, the PIL contends. It alleges that more than 200 non-banking unregistered fraud financial companies are functioning in the state. Several such companies have disappeared with crores of rupees from small investors.

The Parliament had passed legislation — Prevention of Money Laundering Act, 2002 — to prevent money laundering and to confiscate property of those involved in it. But it is not being enforced and the frauds are escaping.

“In Odisha, no adjudicating authorities are enforcing the money laundering act. Due to this reason, the investors are not getting any speedy remedy,” the petition says.

Sources said at present, the state government could only prosecute NBFCs under 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) Bill proposes imprisonment of up to 10 years for such offences. When the Bill becomes an act, there will be a designated court that can attach the properties of the NBFCs and order their sale to compensate the public for their losses.

The Bill also makes it mandatory for the court to pass an order for attaching and selling properties of the NBFC within 180 days of completion of probe.

The Bill also proposes that every finance firm in the state has to submit a report to the district collector and police chief, mentioning the details of its authority, location of the main office and address of all those responsible for the firm’s management within seven days of starting business.