TMI Blog2022 (1) TMI 722X X X X Extracts X X X X X X X X Extracts X X X X ..... development of the lay outs etc., the 1st petitioner company had offered to sell the land in its possession and for this purpose entered into written agreement/arrangement. By virtue of proviso to Rule 2 (1) (c) (xii) (b) of the Companies (Acceptance of Deposits) Rules, 2014, the advances received by the 1st petitioner for sale of immovable property are exempted from the purview of the deposits - in view of the proviso to Rule 2 (1) (c) (xii) (b) of the Companies (Acceptance of Deposits) Rules, 2014, the continuation of proceedings against the petitioners/A-1 to A-5 would amount to abuse of process of the Court. Petition allowed. - Criminal Petition No. 1771 of 2021 - - - Dated:- 9-12-2021 - Honourable Justice G Sri Devi For the Petitioner : Kailash Nath P S S For the Respondent : Central Government Standing Counsel K L N Raghavendra Reddy ORDER: The present Criminal Petition is filed by the petitioners/A-1 to A-5, under Section 482 of Cr.P.C., seeking to quash the proceedings in C.C.No.12 of 2020 on the file of the Special Judge for Economic Offences at Hyderabad. The 1st respondent filed a complaint under Section 76-A of the Companies Act, 2013 (for sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to fully satisfy himself as to the real progress of the layout and its surrounding areas within the time opted by him and if so satisfied, to pay the remaining 20% and complete the transaction by executing a sale deed. To opt for this scheme of payment, the applicant is required to purchase a minimum of five square yards of land (and in multiples thereof) with a put option with advance notice for discharging his part of the obligation for paying the balance 20% of the total land cost or seek refund of the advance paid by him, if not satisfied with the actual development. Since the advance paid by the applicant/buyer (for the purchase of undivided share in land) would be utilized by the 1st petitioner for its business activities, till the date of registration of the sale deed in favour of the applicant, the 1st petitioner has offered to pay interest as per the agreed terms between the Company and the applicant. The 1st petitioner has offered such small plots of land for the reason that the applicants could get together at a future point of time for jointly building an apartment/high rise structure and earn high returns through small investments. The 1st petitioner had to refund th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies and is a gross abuse of process of law. He further submits that the allegations against the petitioners under Section 73 of the Act are not maintainable inasmuch as the amounts accepted by the 1st petitioner do not come under the purview of deposits as they are purely in the nature of an immovable property transaction. He further submits that a perusal of the provisions of Rule 2 (1) (c) (xii) (b) of the Companies (Acceptance of Deposits) Rules, 2014, makes it very clear that the Rules exclude the advances received towards sale consideration of immovable property, pursuant to an agreement or arrangement from the purview of deposit , provided that such an advance is adjusted against such property in accordance with the terms of agreement or arrangement. The 1st petitioner has entered into agreements/M.O.Us upon receipt of such advances from customers. Further, the 1st petitioner has refunded the advance sale consideration received by it, only to those persons, who have not paid the entire sale consideration, or in other words, the 1st petitioner had to refund the advance sale consideration received by it with interest, to only those persons, who have failed to pay the balance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er intended to adjust such collected money for the sale of immovable property, which is evident from the Balance Sheets of the 1st petitioner company showing the opening balance, amount accepted during the year, amount refunded during the year, balance lying at the end of the year and interest paid to the applicants during the year. Thus, the petitioners have committed the offence punishable under Section 76-A of the Act by violating Section 73 of the Act. A perusal of the material on record would show that basing on the complaints lodged by one Guruzala Venkateswara Rao on various dates alleging that the 1st petitioner company has been collecting deposits through various schemes and has defaulted in refund of matured amounts to the depositors, the 1st respondent ordered inspection of the 1st petitioner Company. The record also reveals that Guruzala Venkateswara Rao filed W.P.No.15333 of 2017 before this Court. By an order dated 11.09.2017, a Division Bench of this Court observed as under:- 1. This is perhaps the 106th case filed by the petitioner against the private respondents, seeking a Writ of Mandamus to declare the action of the respondents 1 to 5 in failing to conduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther, the said Guruzala Venkateswara Rao is neither allottee nor he is in any way directly involved or linked with the business transactions of the petitioners. At this stage, the short point that arises for consideration is whether the amounts collected by the petitioners for sale of immovable property as advance would come under the purview of deposits or would exempt from the purview of deposits by virtue of Rule 2(1) (c) (xii) (b) of the Companies (Acceptance of Deposits) Rules, 2014 ? Before proceeding further, it would be appropriate to refer to Rule 2 (1) (c) (xii) (b) of the Companies (Acceptance of Deposits) Rules, 2014, which reads as under:- (c) deposit includes any receipt of money by way of deposit or loan or in any other form, by a company, but does not include (xii) any amount received in the course of, or for the purposes of, the business of the company,- (a) Xxxx (b) as advance, accounted for in any manner whatsoever, received in connection with consideration for property under an agreement or arrangement , provided that such advance is adjusted against the property in accordance with the terms of agreement or arrangement; Provided th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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