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 CHAPTER V

ACCEPTANCE OF DEPOSITS BY COMPANIES
 
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 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.
(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 sub-section (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.
 
 
 
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.
 
 
 
75.Damages for fraud.
 
(1) Where a company fails to repay the deposit or part thereof or any interest
thereon referred to in section 74 within the time specified in sub-section (1) of that section
or such further time as may be allowed by the Tribunal under sub-section (2) of that section,
and it is proved that the deposits had been accepted with intent to defraud the depositors or
for any fraudulent purpose, every officer of the company who was responsible for the
acceptance of such deposit shall, without prejudice to the provisions contained in subsection
(3) of that section and liability under section 447, be personally responsible, without
any limitation of liability, for all or any of the losses or damages that may have been incurred
by the depositors.
(2) Any suit, proceedings or other action may be taken by any person, group of
persons or any association of persons who had incurred any loss as a result of the failure of
the company to repay the deposits or part thereof or any interest thereon.
 
 
 
76.Acceptance of deposits from public by certain companies.
 
 
(1) Notwithstanding anything contained in section 73, a public company, having
such net worth or turnover as may be prescribed, may accept deposits from persons other
than its members subject to compliance with the requirements provided in sub-section (2) of
section 73 and subject to such rules as the Central Government may, in consultation with the
Reserve Bank of India, prescribe:
Provided that such a company shall be required to obtain the rating (including its
networth, liquidity and ability to pay its deposits on due date) from a recognised credit rating
agency for informing the public the rating given to the company at the time of invitation of
deposits from the public which ensures adequate safety and the rating shall be obtained for
every year during the tenure of deposits:
Provided further that every company accepting secured deposits from the public shall
within thirty days of such acceptance, create a charge on its assets of an amount not less
than the amount of deposits accepted in favour of the deposit holders in accordance with
such rules as may be prescribed.
(2) The provisions of this Chapter shall, mutatis mutandis, apply to the acceptance of
deposits from public under this section.
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