Supreme Court Explains “Deposit” Under MPID Act: Money Accepted for Return With Interest Remains a Deposit Even if Called a Loan

Case Name: Alka Agrawal and Others v. State of Maharashtra and Others

Citation: 2026 INSC 489

Date of Judgment/Order: 15 May 2026

Bench: Justice Manoj Misra and Justice N.V. Anjaria

Held: The Supreme Court held that the expression “deposit” under Section 2(c) of the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999 is wide and includes any receipt of money required to be returned after a specified period, with or without interest, irrespective of the nomenclature given to the transaction. The Court ruled that even if the transaction is described as a “loan”, it may still fall within the statutory meaning of “deposit” if the essential ingredients of Section 2(c) are satisfied. The Court further held that any person accepting such deposits may fall within the definition of “financial establishment” under Section 2(d), and that failure to establish IPC offences in earlier proceedings does not bar independent recourse under Section 3 of the MPID Act.

Summary: The appellants advanced a total amount of INR 2.51 crore to Respondent Nos. 2 to 6 for setting up a resort at Tadoba, Maharashtra, allegedly on the assurance that the money would be repaid with interest at 24% per annum payable quarterly. When the respondents failed to repay the principal and interest, the appellants initiated multiple proceedings, including civil recovery suits, proceedings under the Negotiable Instruments Act, and applications seeking criminal action under the IPC. After their IPC-based proceedings did not succeed, the appellants invoked the MPID Act and sought registration of an FIR under Section 3. The High Court dismissed their revision, holding that the transaction was merely a loan transaction of civil nature, that the respondents were not a financial establishment, and that earlier failure to establish IPC offences weighed against the MPID complaint. The Supreme Court disagreed, holding that the MPID Act is a self-contained statutory regime intended to protect depositors and that its definitions of “deposit” and “financial establishment” are deliberately broad. The Court emphasized that the substance of the transaction, and not its label as loan or deposit, determines whether the MPID Act applies.

Decision: The Supreme Court allowed the appeal and set aside the judgment and order dated 14.08.2025 passed by the Bombay High Court, Nagpur Bench, in Criminal Revision Application No. 64 of 2024. The Court held that the amounts advanced by the appellants to Respondent Nos. 2 to 6 were “deposits” within the meaning of Section 2(c) of the MPID Act and that the recipients assumed the character of a “financial establishment” under Section 2(d). The appellants were held entitled to invoke Section 3 and pursue remedies under the MPID Act for redressal of their grievance. Pending interlocutory applications were disposed of as not surviving in view of the disposal of the main appeal.