Madras High Court Appreciates TN Govt's Move To Include 'Economic Offender' Under TN Goondas Act

“This Court also notes with appreciation that, vide G.O.Ms.No.68, Home Department, dated 08.07.2025, the category of “economic offender” has now been included as one of the categories under the Tamil Nadu Act 14 of 1982 (Goondas Act). This legislative inclusion empowers the authorities to invoke preventive detention against habitual offenders operating fraudulent financial establishments. This is a significant policy shift which strengthens the Government's arsenal to combat economic offences that affect public order and investor confidence, and hence, it deserves particular commendation,” the court said.

Justice B Pugalendhi also noted that the state issued a Standard Operating Procedure, bringing in various departments to ensure that offences under the Tamil Nadu Protection of Interests of Depositors (in Financial Establishments) Act, 1997 is dealt with in a time-bound manner.

The court also appreciated the state for taking criticism in a positive manner and for taking steps to effectively implement the TNPID Act and ensure that the interest of the investors are protected. The court added that such responsiveness reinforces rule of law and helps restore the faith of common public in the efficacy of the system.

“Rather than viewing judicial criticism defensively, the State has approached it as an opportunity for institutional improvement. The issuance of a detailed SOP, adoption of digital mechanisms, initiation of preventive awareness campaigns, the structural steps such as the inclusion of “economic offender” under the Goondas Act, appointment of zonal-level Competent Authorities, creation of Valuation Committees, and designation of a dedicated Head of Department — all indicate that the Government has taken the spirit of the Court's order seriously. 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,” the court said.

The court was hearing a contempt petition filed by T Prabhakar against the non-compliance of an earlier order in which the court had directed the Monitoring committee to take steps to refund depositors and had highlighted serious lapses in the implementation of the TNPID Act. The court had also issued several directions to streamline the functioning of the system.

The court noted that the State had taken the court's criticism in a positive manner and had shown meaningful response and structural progress. The court noted that the newly issued SOP had set specific and structured timelines for every level of coordination among the Economic Offences Wing, Home Department, Revenue Department, Registration Department, etc. The court noted that the move was in the right direction and aimed at transforming a fragmented response into a time-bound and accountable framework.

The court also noted that the new SOP had included digital communication and e-governance tools allowing instructions to be issued by email, and revenue and registration records could be retrieved online. The court noted that in the digital age, such forward-looking approach would reduce avoidable delay and ensure transparency, traceability, and accountability.

The court also noted that the State had constituted a Valuation Committee, under the chairmanship of the District Revenue Officers and constituting of representatives from the Registration Department, Public Works Department, and Regional Transport Offices, to assess and approve the value of attached assets before auction, as per TNPID Court's sale orders. The court noted that the approach would streamline valuation, reduce dispute, and accelerate the auction process.

The court, however, noted that instead of fixing an outer time limit, the SOP had only stated “expeditiously. To prevent avoidable delay, the court fixed 12 days as the maximum permissible time limit for issuing necessary government orders. The court added that the time limit did not curtail the discretion of the Government and ultimately it was the Special Court which would examine the matter and arrive at its own subjective satisfaction.

Counsel for Petitioner: Mr.M.Jerin Mathew

Counsel for 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

Citation: 2025 LiveLaw (Mad) 253

Case No: Cont. P (MD)No.1157 of 2025