(1) The penalty imposed on the defaulter by the Reserve Bank under section 30 may be recovered by issuing a notice to any person from whom any amount is due to the defaulter, by requiring such person to deduct from the amount payable by him to the defaulter, the amount payable to the Reserve Bank by way of penalty and pay to the Reserve Bank.
(2) Save as otherwise provided in this section, every person to whom a notice is issued under this sub-section shall be bound to comply with such notice, and, in particular, where such notice is issued to a post office, bank or an insurer, it shall not be necessary for any passbook, deposit receipt, policy or any other document to be produced for the purpose of any entry, endorsement or the like being made before payment is made notwithstanding that any rule, practice or requirement to the contrary.
(3) Any claim respecting any property in relation to which a notice under this sub-section has been issued arising after the date of the notice shall be void as against any demand contained in the notice.
(4) Where a person to whom the notice under this sub-section is sent objects to it by a statement on oath that the sum demanded or any part thereof is not due to the defaulter or that he does not hold any money for or on account of the defaulter, then, nothing contained in this sub-section shall be deemed to require such person to pay any such sum or part thereof, as the case may be, but if it is discovered that such statement was false in any material particular, such person shall be personally liable to the Reserve Bank to the extent of his own liability to the defaulter on the date of the notice, or to the extent of the penalty imposed on the defaulter by the Reserve Bank, whichever is less.
(5) The Reserve Bank may at any time or from time to time, amend or revoke any notice issued under this section or extend the time for making the payment in pursuance of such notice.
(6) The Reserve Bank shall grant a receipt for any amount paid to it in compliance with a notice issued under this section and the person so paying shall be fully discharged from his liability to the defaulter to the extent of the amount so paid.
(7) Any person discharging any liability to the defaulter after the receipt of a notice under this section shall be personally liable to the Reserve Bank to the extent of his own liability to the defaulter so discharged or to the extent of the penalty imposed on the defaulter by the Reserve Bank, whichever is less.
(8) If the person to whom the notice under this section is sent fails to make payment in pursuance thereof to the Reserve Bank, he shall be deemed to be the defaulter in respect of the amount specified in the notice and further proceedings may be taken against him for the realisation of the amount as if it were an arrear due from him in the manner provided in this section.
Explanation.–For the purposes of this section, “defaulter” means any person or system provider or system participant on whom the Reserve Bank has imposed a penalty under section 30.
Simplified Explanation
Section 33 of the Payment and Settlement Systems Act, 2007 outlines the procedure for the recovery of penalties imposed by the Reserve Bank under Section 30.
Key Provisions:
- Notice for Recovery:
- The Reserve Bank may issue a notice to any person who owes money to the defaulter, instructing them to deduct the penalty amount from the sum payable to the defaulter and pay that amount to the Reserve Bank.
- Binding Obligation:
- The person receiving the notice is bound to comply. If the notice is issued to a post office, bank, or insurer, no documents or passbooks need to be produced before making the payment, which facilitates a swift recovery process.
- Void Claims:
- Any claims regarding property after the notice has been issued will be void against the penalty demand, protecting the Reserve Bank’s right to recover the penalty.
- Objections to the Notice:
- If the person receiving the notice objects to the penalty demand, they may file a statement under oath claiming that the sum is not due. However, if it is later discovered that this statement was false, the person will be personally liable for the penalty or their liability to the defaulter, whichever is less.
- Amendment or Revocation of Notice:
- The Reserve Bank may amend or revoke the notice at any time or extend the time for payment.
- Receipt for Payment:
- The Reserve Bank will provide a receipt for any payments made, which will discharge the payer’s liability to the defaulter to the extent of the amount paid.
- Liability after Discharge:
- Any person who discharges a liability to the defaulter after receiving the notice is personally liable to the Reserve Bank to the extent of the penalty amount or their own liability to the defaulter, whichever is less.
- Failure to Pay:
- If the person to whom the notice is issued fails to comply, they will be considered a defaulter, and the Reserve Bank may initiate further proceedings to recover the penalty as if it were an arrear due from the person.
Practical Implications:
- Recovery Process: This section provides an efficient mechanism for the Reserve Bank to recover penalties imposed on defaulters by using a third party (such as a bank or insurer) to deduct and pay the penalty amount directly to the Reserve Bank.
- Protection of the Reserve Bank’s Interests: By making claims void against the penalty and ensuring that individuals who make false statements are held liable, this section ensures the integrity of the recovery process.
- Personal Liability: The provision makes it clear that individuals or entities who fail to comply or make false statements could face personal liability, reinforcing compliance with the penalty recovery process.
Conclusion:
Section 33 provides a detailed framework for the recovery of penalties, making it a key provision for ensuring that the Reserve Bank’s penalties are enforced efficiently, protecting the interests of the Reserve Bank and promoting compliance with the law.
