The Maharashtra Legislative Assembly on Wednesday, 1 July passed a Bill to amend the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999, bringing cryptocurrency and other virtual digital assets within the law's ambit for the first time and imposing strict limits on court adjournments to speed up relief for cheated investors. The Bill was piloted by Minister of State for Home Yogesh Kadam.

Why the Amendment Was Needed

Under Section 2(c) of the original MPID Act, virtual digital assets were not classified as 'deposits', creating a regulatory blind spot that fraudsters routinely exploited to run cryptocurrency-based Ponzi and unauthorised deposit schemes. The government noted a sharp rise in such scams, with recovery of an estimated ₹38,000 crore linked to financial frauds remaining pending.

Because blockchain-based instruments fell outside the Act's definition, law enforcement agencies faced significant hurdles in prosecuting perpetrators and attaching their assets. The amendment closes this gap by formally including all virtual digital assets within the definition of a deposit.

Key Changes to Court Proceedings

To tackle deliberate delays in legal proceedings, the Bill amends Section 7 of the Act in alignment with the Bharatiya Nagarik Suraksha Sanhita, 2023. The Designated Court will now be restricted to granting a maximum of two adjournments, with only one additional adjournment permissible under exceptional circumstances.

Separately, the Designated Court is required to decide on making a property attachment 'absolute' within 180 days of the initial application — addressing the long-standing problem of properties remaining 'attached on paper' but legally unsaleable. Once an order is made absolute, the government is empowered to initiate the auction process immediately, and proceeds can be distributed to investors even while the accused is still on trial.

Curbing Appeals Used as Delay Tactics

The Bill also amends Section 11 to address a common stalling tactic: fraudulent financial establishments filing appeals against court orders solely to delay the return of depositors' money. Under the new provision, no appeal by a financial establishment will be admitted unless it deposits 50 per cent of its total liability with the Competent Authority upfront.

This pre-deposit condition is expected to deter frivolous appeals and accelerate the recovery pipeline for duped investors.

Government's Position

Minister Kadam said the Bill aims to reinforce consumer safety in Maharashtra's financial sector, particularly given the scale of pending fraud recoveries. Chief Minister Devendra Fadnavis, who had announced the amendments during the Winter Session of the state Legislature, framed the adjournment cap in direct terms: 'To stop the practice of date-seeking by defence lawyers, the proposed amendment will now strictly limit adjournments to just two. Justice for depositors cannot wait for the convenience of the accused.'

The passage of the Bill marks a significant step in Maharashtra's effort to modernise its depositor-protection framework for the era of digital finance, with implementation details and court notifications expected to follow in due course.