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TMI Blog2021 (3) TMI 396X X X X Extracts X X X X X X X X Extracts X X X X ..... for Rs. 2,45,000 was made by the Petitioner on 23/05/2012 vide Cheque No. 118356 drawn on State Bank of Travancore, Tripunithura Branch, Ernakulam District along with a letter dated 23rd May, 2012. The Petitioner further stated that instead of allotting shares the Respondents issued a receipt signed by the Managing Director of the Respondent-Company treating the same unilaterally as Deposit/Loan with an assurance that the shares would be issued soon to the Petitioner. 3. The learned counsel for the Petitioner submitted that the petitioner was neither issued any shares against the said payment of Rs. 2,45,000/- nor did the Respondent pay any interest accrued. The petitioner by notice dated 01.03.2017 demanded for return of the deposit with the 12% interest, quarterly compounded from the date of receipt of money within a period of 15 days. However, the Respondent Company did not respond to the said notice. Therefore, this Company Petition has been filed for refund of the deposit received by the company due to the negligence of the Board of the Respondent- Company either in making the payment or giving any reply at all to the demand of the Petitioner. 4. The learned counsel further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cular will be available only to those private companies which were treating it as deposits and the return of such deposits have been filed by the Company before the Registrar of Companies on or before 30th June, 2014 as per Section 74(1)(a) of the Companies Act, 2013. 7. The Petitioner further stated that the Respondent Company is bound to maintain the register of deposits of all the amounts received upon such amounts attaining the status of 'deemed deposit' under the Companies Act, 1956 read with Rule 10 of the Companies (Acceptance of Deposits) Rules, 1975. Every Company is bound to file as per the said rule a return in the prescribed form regarding the deposits received on or before 30th June of every year before the Registrar of Companies. Only such Companies which filed Return of Deposits as per Rule 10 prior to 01.04.2014 can avail the benefit of the Circular. The Respondent -Company wrongly treated the deposits collected from the Petitioner as unsecured loan from the very beginning even though the amount received assume the character of deemed deposit as per the Companies (Acceptance of Deposits) Rules, 1975. The Respondent -Company has no case that it obtained the requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same as unsecured loan from the Petitioner and other shareholders and, therefore, applying the Circular, the Petition is liable to be dismissed with costs. 11. Even after issuing notice, Respondent No.2 -Registrar of Companies appealed nor file any counter in the matter. Hence, it is presumed that the RoC has no comments to offer. Findings: 12. Both the sides have been heard at length in the light of the facts, circumstances and provisions of the Companies Act along with the Companies (Acceptance of Deposits) Rules, 2014. Deposits can be accepted by the Companies under Section 73 to Section 76 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014 as amended time to time. For invoking the jurisdiction of the Tribunal as per Section 74(2) under the Companies Act, 2013, even a partial failure by the Company to repay the deposit was sufficient. In fact, Section 2 (31) of the Companies Act speaks of the meaning of deposit. The Tribunal is having vide discretionary powers regarding the repayment of 'Deposit'(s) but it must exercise its discretion objectively taking into consideration all the relevant aspects in a conspectus judicial manner. In reality, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m 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." 14. This Tribunal finds that this provision grants one year's time from the date of commencement of the Act or date when the repayment is due, whichever is earlier. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow any sums of money for and on behalf of the Company from the members or other persons, companies or banks or they may themselves advance money to the Company on such terms and conditions as may be approved by the Directors". 16. The Board of directors of the Respondent-Company further failed to act in the manner provided under Clause 51 of the Articles of Association, which reads:- "The Board of Directors may, from time to time, secure the repayment of such money in such manner and upon such terms and conditions in all respects as they think fit and in particular by issue of debentures or bonds of the Company or by mortgage or charge of all or any part of the property of the Company and of its uncalled capital of the time being". 17. When such collection of money is attempted to be regularised by including in the financial statement of the Respondent-Company, all members of the Board of the Respondent-Company are equally liable. 18. In the present case, this Tribunal could not find any evidence the Company filed application before the Registrar of Companies regarding any statement of the deposits accepted by the company and sums remaining unpaid on such amount with the inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iguity in deciding this issue in favour of the Depositor. The only question, therefore, yet to be answered is about the granting of appropriate rate of Interest for the delayed period. 22. Further, a corollary can be drawn from a Section in Companies Act, 2013 i.e. Section 42(6) which is in respect of "Private Placement" that if a Company is making an offer should allot its Securities within 60 days from the date of Application money and if not allotted, shall repay Application Money to the subscribers with 12% annual Interest. Meaning thereby, the Legislature is very much convinced of the fact that if the Share Application money is used by the Company without allotment of Shares of Securities, then such Share Application money shall be treated as if it is a "deposit" with the Company on which 12% Interest can be earned. The present case also falls within the same category, which is in favour of the Depositor. If this principle is followed, then it is judicially correct to order the grant of Interest @ 12% per annum for the delayed period. 23. Considering the above-mentioned provisions of the Companies Act, 2013, the Companies (Acceptance of Deposits) Rules, 2014 and clauses of A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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