Plea Filed in Supreme Court Against Kerala HC Verdict on BUDS and KPID Acts

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New Delhi (June 3):
An appeal has been filed in the Supreme Court challenging the Kerala High Court’s April 2024 ruling, which dismissed a petition questioning the validity of certain provisions of:

  • The Banning of Unregulated Deposit Schemes (BUDS) Act, 2019, and
  • The Kerala Protection of Interests of Depositors in Financial Establishments (KPID) Act, 2013.

The BUDS Act is a central legislation that aims to ban unregulated deposit schemes and protect depositors from fraudulent financial activities.
The KPID Act, a state law, specifically seeks to protect depositors’ interests in financial establishments within Kerala.

The petitioners argue that some provisions of these Acts are unconstitutional and sought to have them struck down, but the High Court had rejected their plea—prompting the current appeal to the Supreme Court.

🏛️ Supreme Court Appeal: Core Grounds

  1. Retrospective Application of BUDS Act
    • Section 1(3) of the BUDS Act declares the Act effective from February 21, 2019, though it was passed in July 2019.
    • The Kerala High Court upheld this retrospective effect, but the petitioners argue it violates Article 20(1) of the Constitution by applying penal consequences to actions that were not offences when committed.
  2. Constitutional Violations
    • The appeal contends that Sections 1(3) and 25(3) impair key fundamental rights—Article 14 (equality), Article 19 (free profession), and Article 21 (life and liberty).
  3. Conflict Between BUDS and KPID Acts
    • The petitioners assert that Section 5 of the Kerala Protection of Interests of Depositors in Financial Establishments (KPID) Act is repugnant to the BUDS Act.
    • They argue deposit regulation is a Union subject, and the Kerala Act encroaches upon central legislative authority.

🧑‍⚖️ Background in the Kerala High Court (April 2024)

  • Who’s behind the appeal?
    • A Kerala-based woman, who is one of the accused in a deposit-collection case involving allegedly deceptive promise of 20 % monthly interest on June 17, 2019.
  • What did the High Court decide?
    • It dismissed her constitutional challenge, upholding the retrospective clause and rejecting her argument that the KPID Act conflicts with the Union’s BUDS Act.

⚖️ Legal Issues at Play

  • Ex post facto penal law (BUDS’s retrospective date).
  • Fundamental rights, especially Article 20(1)—protection against retrospective criminal laws.
  • Federalism/Legislative competence—whether Kerala can enact deposits-related laws overlapping with central legislation under the Union List.
  • Equality and fair trial protections under Articles 14 and 21.

📌 What’s Next?

  • The Supreme Court will review the Kerala HC’s reasoning.
  • Key questions:
    1. Is the retrospective application legally valid?
    2. Do the Acts infringe upon fundamental rights?
    3. Is the KPID Act unconstitutional due to federal overreach?

🔍 Broader Implications

  • For deposit takers and financial businesses—a ruling may define whether they can be prosecuted for schemes pre-dating the formal enactment of the BUDS Act.
  • For legislative authority—a decision may clarify the divide between central and state powers in deposit regulation.
  • For accused litigants—outcomes could impact how far retrospective laws can reach in criminal prosecutions.