Madras HC Closes Contempt Over TNPID Lapses | Appreciates TN Move To List Economic Offenders Under Goondas Act
Isabella Mariam
The High Court of Madras at Madurai, Single Bench of Justice B. Pugalendhi closed a contempt petition after recording compliance with judicial directives previously issued concerning systemic lapses under the Tamil Nadu Protection of Interests of Depositors (in Financial Establishments) Act, 1997. The Court acknowledged that the Government had responded with structural and policy measures that constitute a serious and substantive step towards reforming the implementation framework under the Act.
The Court had previously issued directions for remedial action following widespread delays in attachment proceedings, absence of preventive mechanisms, and ineffective coordination among departments. In the current proceedings, the Government submitted evidence of substantial measures, including issuance of a Standard Operating Procedure, adoption of digital governance tools, institutional restructuring, and appointment of new authorities. The Court found these actions to be a constructive and sincere response to the judiciary’s concerns. Consequently, the contempt petition was closed, with the Court cautioning that any deviation from the Standard Operating Procedure or delay beyond the stipulated time for issuing Government Orders may be brought to its notice for appropriate action.
The contempt petition was filed under Section 11 of the Contempt of Courts Act, 1971, seeking punitive action against public officials for alleged non-compliance with the order passed on 26.02.2024 in WP(MD)No.4378 of 2016. The primary grievance pertained to administrative inaction and delay in the execution of directions aimed at ensuring timely refund to depositors affected by fraudulent financial establishments.
The petitioner alleged that the directives issued by the Court in its previous order had not been implemented by the respondents. The earlier judgment had identified several structural inefficiencies in the execution of the Tamil Nadu Protection of Interests of Depositors (in Financial Establishments) Act, 1997, commonly referred to as the TNPID Act. Specifically, delays in issuing Government Orders for ad-interim attachments under Section 3, inaction by Competent Authorities under Section 4, and prolonged disbursal processes were stated as major concerns.
During the pendency of the contempt proceedings, the Government presented its compliance measures. A high-level meeting chaired by the Chief Secretary on 27.06.2025 resulted in the formulation and issuance of a Standard Operating Procedure (SOP) on 09.07.2025, vide G.O.(2D). No.205, Home Department. The SOP aimed to bring all concerned departments under a common procedural umbrella with structured and time-bound workflows.
Further, the Government Order was perused by the Court, which noted that the SOP established coordinated timelines for functions across the Economic Offences Wing, Revenue Department, Registration Department, and the Home Department. This measure was introduced to eliminate fragmented approaches and avoid indefinite delays that had plagued the administration of the Act.
One of the principal criticisms in the earlier order was the lack of clear timelines at every stage under the TNPID framework. According to the Court, the process from the registration of complaints to the final disbursal of auction proceeds had remained inordinately slow, depriving depositors of timely redress. In response, the SOP set forth defined periods for each procedural step.
Significantly, the Government also incorporated digital tools into the SOP. Instructions and communications were to be issued through email, while revenue and registration documents could be retrieved online. The SOP allowed for digital downloads of case files and property records and integrated them with the state’s e-governance platform, thereby shifting from reliance on physical documentation to a digital workflow. The Court noted this as a progressive step that would enhance transparency and reduce delays.
In addressing another judicial concern, the Government submitted evidence of preventive measures. The Economic Offences Wing, as informed to the Court, had conducted 725 awareness campaigns in 2023, 1,870 in 2024, and 784 up to May 2025. These included outreach to closed groups, FM radio messaging, cultural programs, and sensitisation campaigns. Additionally, Investigating Officers were trained to use the TNeGA (Tamil Nadu e-Governance Agency) platforms for access to property records.
The Court also recorded the legislative action undertaken by the Government, wherein vide G.O.Ms.No.68, Home Department dated 08.07.2025, the term "economic offender" was added to the list of categories under the Tamil Nadu Act 14 of 1982 (Goondas Act). This empowered authorities to invoke preventive detention measures against repeat offenders involved in financial frauds.
Another point raised in the earlier order was the need for more robust enforcement leadership. Although the Court had suggested the appointment of a retired High Court Judge or a senior IAS officer, the Government responded by proposing zonal-level officers to act as additional Competent Authorities. This move intended to decentralize authority and expedite the refund process.
Further, the formation of Valuation Committees under the chairmanship of District Revenue Officers was introduced. These committees, comprising officials from the Registration Department, Public Works Department, and Regional Transport Offices, were tasked with assessing the market value of attached properties before auction, ensuring uniformity and procedural integrity.
To address administrative ambiguity, the Government designated the Commissioner of the Social Security Scheme, under the Commissioner of Revenue Administration, as the Head of Department under the TNPID Act. This officer was now responsible for budgetary, supervisory, and reconciliation functions, thereby filling a long-standing structural vacuum.
“The purpose of the earlier order was not only to remedy the case at hand, but to prompt systemic reform and restore public faith in the process.”
“These failures had reduced the efficacy of the Act, leaving thousands of poor and middle-class depositors in prolonged distress.”
“The newly issued SOP now attempts to rectify this structural inaction by prescribing specific and structured timelines for every level of coordination among the Economic Offences Wing, Home Department, Revenue Department, Registration Department, etc.”
“Such a forward-looking approach will not only reduce avoidable delay but will also enhance transparency, traceability, and accountability.”
“While this Court cannot immediately verify the depth or impact of these measures, the submission indicates a conscious attempt to move from a reactive to a preventive framework.”
“This is a significant policy shift which strengthens the Government's arsenal to combat economic offences that affect public order and investor confidence.”
“The administrative architecture necessary for achieving the object of the TNPID Act has now been laid down, subject to consistent implementation.”
“Given that the Government Order is based only on prima facie administrative satisfaction, and is subject to confirmation by the Special Court concerned... this Court... fixes 12 days from the receipt of proposal by the ADGP, EOW, as the maximum permissible period for issuing such Government Orders.”
“These measures are not mere symbolic gestures, but constitute substantive institutional responses that demonstrate the Government’s constructive engagement with the judiciary’s observations.”
“Such responsiveness not only reinforces the rule of law but also helps restore the faith of the common public in the efficacy of the system.”
“What began as a matter of judicial concern has now evolved into a framework that promises tangible relief to affected depositors.”
The Court noted that the Government had acted in the spirit of judicial observations made in the earlier proceedings and accepted that compliance had been shown. Consequently, it ordered as follows:
“In view of the above, and with the assurance that the system is now on a course correction with a strong framework in place, this Contempt Petition is closed, recording the compliance shown.”
Nonetheless, the Court issued a cautionary clarification: “It is clarified that any breach or deviation of the SOP, or of the timeline now fixed for issuance of Government Order, may be brought to the notice of this Court for appropriate action.”
Further, the Court mandated a fixed timeframe for issuing Government Orders under Section 3 of the TNPID Act: “This Court... fixes 12 days from the receipt of proposal by the ADGP, EOW, as the maximum permissible period for issuing such Government Orders.”
The Court acknowledged the contributions of State Law Officers: “This Court also places on record its appreciation for Mr. Hasan Mohamed Jinnah, learned State Public Prosecutor and Mr. T. Senthil Kumar, learned Additional Public Prosecutor... Their contribution reflects the important role that Law Officers play in bridging the judicial and executive institutions in matters of public interest.”
Advocates Representing the Parties:
For the Petitioner: Mr. M. Jerin Mathew, Advocate
For the Respondents: Mr. Ajmal Khan, Additional Advocate General assisted by Mr. T. Senthil Kumar, Additional Public Prosecutor
Case Title: T. Prabhakar v. Mr. Dheeraj Kumar and Others
Case Number: Cont.P(MD)No.1157 of 2025
Bench: Justice B. Pugalendhi
