Recovery of deposit
Aditya Dev
(Querist) 01 August 2017
This query is : Resolved
This is urgent so please i would appreciate speedy replies.
I am an intern - 5th Year
A deposited 1 cr. 3 Lakhs in a company in 2012. Now the company did not issue shares to A in reciprocation. The director of the company also accepted and acknowledged the receipt of the said amount. Now there was correspondence between during the years and till 2015 the director kept on assuring A that he will issue him shares for the said amount.
Now in 2017, after 6 months of silence from the company in response to A's letters, A will be filing a suit against them. Now this is where I and my associate tend to differ.
My associate thinks that the matter will be filed under Section 73 (4) of the Companies Act, 2013 where as I think that section 74 is the correct one.
For Convenience I have mentioned both the sectons -
73. Prohibition on acceptance of deposits from public.—(1) On and after the commencement of
this Act, no company shall invite, accept or renew deposits under this Act from the public except in a
manner provided under this Chapter:
Provided that nothing in this sub-section shall apply to a banking company and nonbanking financial
company as defined in the Reserve Bank of India Act, 1934 (2 of 1934) and to such other company as the
Central Government may, after consultation with the Reserve Bank of India, specify in this behalf.
(2) A company may, subject to the passing of a resolution in general meeting and subject to such rules
as may be prescribed in consultation with the Reserve Bank of India, accept deposits from its members on
such terms and conditions, including the provision of security, if any, or for the repayment of such
deposits with interest, as may be agreed upon between the company and its members, subject to the
fulfilment of the following conditions, namely:—
(a) issuance of a circular to its members including therein a statement showing the financial
position of the company, the credit rating obtained, the total number of depositors and the amount due
towards deposits in respect of any previous deposits accepted by the company and such other
particulars in such form and in such manner as may be prescribed;
(b) filing a copy of the circular along with such statement with the Registrar within thirty days
before the date of issue of the circular;
(c) depositing such sum which shall not be less than fifteen per cent. of the amount of its deposits
maturing during a financial year and the financial year next following, and kept in a scheduled bank
in a separate bank account to be called as deposit repayment reserve account;
(d) providing such deposit insurance in such manner and to such extent as may be prescribed;
(e) certifying that the company has not committed any default in the repayment of deposits
accepted either before or after the commencement of this Act or payment of interest on such deposits;
and
(f) providing security, if any for the due repayment of the amount of deposit or the interest
thereon including the creation of such charge on the property or assets of the company:
Provided that in case where a company does not secure the deposits or secures such deposits
partially, then, the deposits shall be termed as ‗‗unsecured deposits‘‘ and shall be so quoted in every
circular, form, advertisement or in any document related to invitation or acceptance of deposits.
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(3) Every deposit accepted by a company under sub-section (2) shall be repaid with interest in
accordance with the terms and conditions of the agreement referred to in that sub-section.
(4) Where a company fails to repay the deposit or part thereof or any interest thereon under subsection
(3), the depositor concerned may apply to the Tribunal for an order directing the company to pay
the sum due or for any loss or damage incurred by him as a result of such non-payment and for such other
orders as the Tribunal may deem fit.
(5) The deposit repayment reserve account referred to in clause (c) of sub-section (2) shall not be used
by the company for any purpose other than repayment of deposits.
Section 74
74. Repayment of deposits, etc., accepted before commencement of this Act.—(1) Where in
respect of any deposit accepted by a company before the commencement of this Act, the amount of such
deposit or part thereof or any interest due thereon remains unpaid on such commencement or becomes
due at any time thereafter, the company shall—
(a) file, within a period of three months from such commencement or from the date on which
such payments, are due, with the Registrar a statement of all the deposits accepted by the company
and sums remaining unpaid on such amount with the interest payable thereon along with the
arrangements made for such repayment, notwithstanding anything contained in any other law for the
time being in force or under the terms and conditions subject to which the deposit was accepted or
any scheme framed under any law; and
(b) repay within one year from such commencement or from the date on which such payments are
due, whichever is earlier.
(2) The Tribunal may on an application made by the company, after considering the financial
condition of the company, the amount of deposit or part thereof and the interest payable thereon and such
other matters, allow further time as considered reasonable to the company to repay the deposit.
(3) If a company fails to repay the deposit or part thereof or any interest thereon within the time
specified in sub-section (1) or such further time as may be allowed by the Tribunal under sub-section (2),
the company shall, in addition to the payment of the amount of deposit or part thereof and the interest
due, be punishable with fine which shall not be less than one crore rupees but which may extend to ten
crore rupees and every officer of the company who is in default shall be punishable with imprisonment
which may extend to seven years or with fine which shall not be less than twenty-five lakh rupees but
which may extend to two crore rupees, or with both.
Now i think that clearly section 73 deals with post commencement deposit and provides the pre - requisites for the same. Hence in my opinion, because A deposited money in 2012, therefore 74 is applicable as the title of this section is "Repayment of deposits, etc., accepted before commencement of this Act".
Now please tell me two things:
1 - Whether I am right or not to say that section 74 is the correct choice as it deals with pre-commencement deposit??
2- And if i am right, then what remedy is available with the depositor as section 74 says that the "Company" shall approach the registrar??
Because in our case the company has not allotted the shares in the last 5 years and neither has returned the amount that A deposited. Therefore if a company does not go to the registrar as per section 74(1)(a), then what remedy a depositor has??
I know this is a long post, but please read it carefully and do reply soon.
Awaiting replies.
Thanks
P. Venu
(Expert) 02 August 2017
Please post simple facts.
Aditya Dev
(Querist) 02 August 2017
read the first two paragraphs. they are simple facts as told to me by my associate
Aditya Dev
(Querist) 02 August 2017
i think the facts are enough
Dr J C Vashista
(Expert) 04 August 2017
Discuss and consult your tutor/senior.
It is not a dispute to be opined and advised by experts on this platform, it is abuse of this site and LCI admin should have removed such academic question, I do not know why this question have been posted?
krishna mohan
(Expert) 04 August 2017
Sec 74 remedy for default of deposits. You can go through again. It doesn't talk about allotment of shares. Better you put in more efforts to get the right answer and by approaching your own tutor.
