Company Law Board empowered to direct company to make repayment ‑ Failure to comply with order is punishable with imprison­ment and fine - Companies Law - Letter : No. 1/6/88‑CL‑V,

Letter : No. 1/6/88 CL V, dated 8 3 1990. Public Deposits - Repayment Non payment of deposits on maturity Company Law Board empowered to direct company to make repayment Failure to comply with order is punishable with imprison ment and fine A number of complaints have been received from the members of the public regarding default by companies in the repayment of deposits (and interest thereon) collected by them. In order to protect the interests of the depositors, section 58A of the Companies Act, 1956, has been amended by the Companies (Amendment) Act, 1988. The provisions of sub section (9) of this section empower the Company Law Board to direct a company to make repayment of deposits within such time and subject to such conditions, as may be specified in the order, after giving a reasonable opportunity of hearing to the company and the other persons interested in the matter. Non compliance of the order of the Company Law Board has now been made a punishable offence attracting penalty by way of imprisonment up to three years and fine of not less than Rs. 50 for every day till such non compliance continues. The amended provisions have come into force with effect from September 1, 1989. The aggrieved depositors, whose deposits had matured before or after September 1, 1989, and who have not been repaid, may make an application (in triplicate) to the Company Law Board Bench (located at Delhi, Calcutta, Bombay and Madras depending upon the registered office of the company) in the prescribed Form No. 11, along with an application fee of Rs. 50 by bank draft in favour of the Pay and Accounts Officer, Department of Company Affairs. The application can either be filed with the concerned Bench office personally or sent by post. 2. It may be clarified that, in the following circumstances, application under section 58A(9) of the Act will not lie : (i) Deposit made for booking/purchase of scooter, car, etc., is not a deposit for purposes of section 58A of the Act. (ii) Deposits accepted by financial companies like hire purchase finance company, a housing finance company, an investment company, a loan/mutual benefit financial company, an equip ment leasing company, a chit fund company or a company which receives deposits under any scheme or arrangement by way of contributions/subscriptions or by sale of units/certi ficates. (iii) Deposits accepted by a sick industrial company covered by the Sick Industrial Companies (Special Provisions) Act, 1985, in respect of which the Board for Industrial and Financial Re construction (BIFR) has specifically, by order, suspended the operation of any contract, agreement, settlement, etc., under section 22(3) of the said Act. (iv) Deposits accepted by relief undertakings, which are notified as such under the various State laws. Proceedings under section 58A(9) of the Companies Act, 1956, shall remain stayed during the notified period. 3. In addition to the relief available under the Companies Act, 1956, the depositors can also take action against the defaulting companies under the normal civil law of the country.