The Tamil Nadu Protection of Interest of Depositors (in Financial Establishments) Act, 1997 empowers the Economic Offences Wing to investigate and proceed criminally against financial establishments in Tamil Nadu which are found guilty of defrauding investors.
Consequent to Helios and Matheson not repaying fixed deposit holders, few investors filed complaints with the EOW, Chennai.
EOW, Chennai commenced investigations against Helios and Matheson and arrested key officials of Helios and Matheson in April 2015.
In the Winding Up Petition which is covered here, Helios and Matheson managed to get an interim order (temporary order) freeing its officials. However since the order was temporary, Helios and Matheson needed something concrete to remove the threat of police action.
Helios and Matheson therefore filed a Writ Petition in Madras High Court challenging the applicability of the TNPID Act, 1997 alleging that they are not a financial establishment and secondly that the EOW investigation and arrests made pursuant thereto are illegal. The Writ Petition was filed against the Government of Tamil Nadu and the Deputy Superintendent of Police, EOW.
The Madras High Court on 06/08/2015 dismissed the Writ Petition and found that Helios and Matheson was a financial establishment within the meaning of the TNPID Act, 1997 and that the EOW investigation and arrests made pursuant thereto were valid and constitutional.
Helios and Matheson appealed before the Division Bench (2 judges) of the Madras High Court. The Division Bench by its judgment dated 28/08/2015 also dismissed the appeal and ruled against Helios and Matheson.
Helios and Matheson then appealed before the Supreme Court of India which is covered here.