The Supreme Court has held that merely calling a transaction a “loan” does not take it outside the scope of the Maharashtra Protection of Interest of Depositors (MPID) Act if the money was accepted with a promise of repayment and returns.
A Bench of Justice Manoj Misra and Justice N.V. Anjaria allowed an appeal filed by Alka Agrawal and others against a Bombay High Court judgment that had refused to permit proceedings under the MPID Act against certain private individuals and companies accused of defaulting on repayment of ₹2.51 crore.
The Court said the definition of “deposit” under Section 2(c) of the MPID Act is intentionally broad and covers receipt of money to be returned with or without interest and applies to transactions accepted ‘in any other manner.’
Background of the Case
According to the appellants, the respondents induced them in 2016 to invest in a proposed resort project at Tadoba in Maharashtra, promising 24% annual interest payable quarterly. The investors transferred around ₹2.51 crore through banking channels.
The investors alleged that despite repeated assurances, neither the principal amount nor the promised interest was repaid. They initiated multiple proceedings, including civil recovery suits, cheque dishonour proceedings under the Negotiable Instruments Act, and applications seeking registration of FIRs under the IPC.
However, earlier attempts to invoke criminal provisions under cheating and breach of trust provisions failed, with courts treating the dispute as civil in nature.
What Happened During the Hearing
Before the Supreme Court, the appellants argued that the transaction squarely fell within the definition of “deposit” under the MPID Act and that the respondents qualified as a “financial establishment.”
The respondents countered that the dispute was purely civil and related to friendly loans. They also argued that criminal proceedings were being misused to recover money.
The Supreme Court examined the scheme of the MPID Act and referred extensively to its earlier ruling in State of Maharashtra v. 63 Moons Technologies Ltd. while interpreting the expressions “deposit” and “financial establishment.”
Court’s Key Observation
The Court observed that the nomenclature of a transaction is irrelevant while determining whether it amounts to a “deposit” under the MPID Act.
The Bench stated:
“Even if the transaction is named as ‘loan’, it would not take it out of the scope of the term ‘deposit’ as defined.”
The Court further clarified that the MPID Act operates independently from criminal proceedings under the IPC.
It held that failure to establish offences such as cheating or criminal breach of trust does not bar proceedings under the MPID Act.
The judgment also emphasized that the statute was enacted to protect depositors from fraudulent financial schemes and therefore its definitions must receive a broad interpretation.
Court’s Decision / Final Order
Setting aside the Bombay High Court’s 2025 judgment, the Supreme Court held that the appellants were entitled to invoke Section 3 of the MPID Act against the respondents.
The Court concluded that the respondents, having accepted money with a promise of repayment and returns, fell within the definition of ‘financial establishment’ under Section 2(d) of the MPID Act. The appeal was accordingly allowed.
Case Details
Case Title: Alka Agrawal and Others v. State of Maharashtra and Others
Case Number: Criminal Appeal No. 2537 of 2026 (Arising out of SLP (Crl.) No. 19305 of 2025)
Court: Supreme Court of India
Judge: Justice N.V. Anjaria, Justice Manoj Misra
Date: May 15, 2026
