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09. In reply, learned Adv., for the petitioner submitted that offence under Section 3 of the Act of 1999 is not made out, as the offence can be said to be committed when the Financial Establishment fraudulently defaults in repayment of deposit on maturity along with any benefit, and, in the present case, the prosecution has not pointed out that the Financial Establishment failed to repay any deposit of depositor on its maturity along with any benefit till the time the wp413.18 petitioner was a co-opted Director of the Financial Establishment. It is further argued by Shri Arun Agrawal, Adv., for the petitioner, that the Act of 1999 has come into force from 21 st January, 2000, giving it retrospective effect from 29th April, 1999. According to the petitioner, the last transaction, in which the petitioner was involved, as reflected from the charge-sheet, is dated 30th March, 1999, and at that time, the Act of 1999 was not promulgated.

Section 3 of the Act of 1999 reads as follows :-

3. Fraudulent default by Financial Establishment Any Financial Establishment, which fraudulently defaults any repayment of deposit on maturity along with any benefit in the form of interest, bonus, profit or in any other form as promised or fraudulently fails to render service as wp413.18 assured against the deposit, every person including the promoter, partner, director, manager or any other person or an employee responsible for the management of or conducting of the business or affairs of such Financial Establishment shall, on conviction, be punished with imprisonment for a term which may extend to six years and with fine which may extend to one lac of rupees and such Financial Establishment also shall liable for a fine which may extend to one lac of rupees."
"Explanation. - For the purpose of this section, a Financial Establishment, which commits default in repayment of such deposit with such benefits in the form of interest, bonus, profit or in any other form as promised or fails to render any specified service promised against such deposit, or fails to render any specific service agreed against the deposit with an intention of causing wrongful gain to one person or wrongful loss to another person or commits such default due to its inability arising out of impracticable or commercially not viable promises made while accepting such deposit or arising out of deployment of money or assets acquired out of the deposits in such a manner as it involves inherent risk in recovering the same when needed shall, be deemed to have committed a default or failed to render the specific service, fraudulently."

Undisputedly, the Financial Establishment, of which the petitioner was Director, had been conducting the business of advancing loans and cash credit facility, since long. Mere grant of loan or Cash Credit Facility in violation of guidelines issued by the Reserve Bank of India will not by itself amount to an offence under Section 3 of wp413.18 the Act of 1999. Offence under Section 3 of the Act of 1999 can be said to be committed when the Financial Establishment fraudulently defaults in the payment of deposit on maturity along with any benefit as referred in Section 3 of the Act of 1999. There is nothing on record to show that Samata Sahakari Co-operative Bank, i.e., the Financial Establishment committed any "fraudulent default" in repayment of any deposit on maturity along with any benefit till 31 st March, 2000. According the respondent, the imposition of moratorium by the Reserve Bank of India on 3 rd August, 2006 resulted in depriving the depositors/customers of the Bank from withdrawing their amounts. Accepting this submission, offence under Section 3 of the Act of 1999, if at all committed, it would be much after the petitioner ceased to be a Director of the Financial Establishment from 1st April, 2000. The respondent-State has not been able to show that moratorium was imposed by Reserve Bank of India on 3rd August, 2006 because of the alleged illegal activities which were committed during the period when the petitioner was the co-opted Director of the Financial Establishment. Hence, we hold that in the present case, offences under Section 3 of the Act of 1999 and under Section 4 of the Act of 1999 cannot be applied to the petitioner.