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Alka Agrawal and Others v. State of Maharashtra and Others

Criminal Appeal · 2026 INSC 489Decided 15 May 2026
Crl.A. No.-002537-002537 - 2026 (Arising out of SLP (Crl.) No. 19305 of 2025)
Justice Manoj Misra · Justice N.V. Anjaria · Justice Prashant Kumar Mishra

Background

The appellants, a family and two of their companies, invested a total of Rs.2.51 crore with the respondents between 2016 onward for setting up a resort at Tadoba, Maharashtra, on a promise of 24% annual interest paid quarterly. The respondents neither paid interest nor returned the principal by the promised date, and admitted in writing to having received the money while denying any obligation to pay interest or repay by a fixed date. After police refused to register an FIR and courts held the dispute was civil/a "loan" transaction outside the criminal law, the appellants also filed a complaint under the MPID Act, which the Bombay High Court (Nagpur Bench) rejected, holding the transaction was a loan and not a "deposit" under the Act.

Decision Breakdown

The Supreme Court held that the High Court's view was wholly erroneous in law. It ruled that the definition of "deposit" under Section 2(c) of the MPID Act is wide, covering any receipt of money to be returned after a specified period, with or without interest, regardless of what label (such as "loan") is given to the transaction: the true test is the substance of the ingredients, not the nomenclature. It further held that private individuals who accept such deposits and default fraudulently fall within the definition of "Financial Establishment" under Section 2(d) of the Act. The Court also clarified that failure to establish IPC offences (like cheating or criminal breach of trust) does not bar recourse under the separate, independent statutory scheme of the MPID Act, since the two operate in distinct legal fields. The High Court's order was set aside and the appellants were held entitled to proceed under Section 3 of the MPID Act.

Lesson Learnt

Calling a money transaction a "loan" does not automatically place it outside the protection of depositor-protection laws like the MPID Act. Courts will look at the real nature of the transaction, not its label. Failure of a criminal complaint (e.g., under IPC) does not by itself defeat a separate remedy available under a special statute like the MPID Act.

Official source (sci.gov.in)View Judgment (PDF)

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