Page 186 - DCOM404_CORPORATE_LEGAL_FRAMEWORK

Unit 9: Prospectus

10. Penalties for contravention. Any deposit received in contravention of the provisions of the Notes
Act/Rules must be paid back within 30 days from the date of acceptance of such deposit.
The period of 30 days may be extended by the Central Government by another period but
not exceeding 30 days.

In case of default, the company shall be subjected to fine which shall not be less than twice

the amount not repaid and ½ of the fine shall be paid to the depositor. In addition, every

officer of the company, who is in default, shall be punishable with imprisonment for a term
which may extend upto 5 years [s.58A (5)].
Penalty for acceptance of deposit. Where the contravention relates to acceptance of deposit,
the company may be subjected to fine which shall not be less than the amount of deposit so

accepted.
Penalty for invitation of any deposit. Where contravention relates to the invitation of any

deposit, the company shall be punishable with fine which may extend to ` 10 lakh but shall
not be less than ` 50,000.
In both these cases of acceptance or invitation of deposit in contravention, every offi cer of
the company who is in default shall be punishable with imprisonment for a term which
may extend upto 5 years and shall also be liable to fi ne [H.H. Marthanda Varma & H.H.
Bhupendra Narain Singh v. Registrar of Companies (1988) Comp. Cas. 125].
11. Register of deposits. According to Rule 7 every company accepting deposits shall keep at
its registered office one or more registers in which there shall be entered separately in the

case of each depositor the following particulars, namely:
(a) name and address of the depositor;

(b) date and amount of each deposit;
(c) duration of the deposit and the date on which each deposit is repayable;
(d) rate of interest;
(e) date or dates on which repayment of interest will be made;

(f) any other particulars relating to the deposit.
The register of deposit shall be kept for a minimum period of 8 years from the fi nancial
year in which the latest entry is made in the register.
12. Where a company has failed to repay any deposit or part thereof in accordance with the
terms and conditions of such deposit, the Company Law Board may, if it is satisfi ed, either
on its own motion or on the application of the depositor, that it is necessary to do so to
safeguard the interests of the company, the depositors or the public, by order direct the
company to make repayment of such deposit or part thereof forthwith or within such time

and subject to such conditions as may be specified in the Order – sub-s.(9).
However in the following circumstances, application under s.58A(9) of the Act will NOT
lie: (vide Dept. of Company Affairs Notificated dt. 8.3.1990).

(i) Deposit made for booking/purchase of scooter, car, etc.

(ii) Deposits accepted by financial companies like hire-purchase, finance company, a

housing finance company, an investment company, a loan/mutual benefi t fi nancial

company, an equipment leasing company, a chit fund company or a company,
which receives deposits under any scheme or arrangement by way of contribution/
subscription or by sale of units/certifi cates.
(iii) Deposits accepted by a sick industrial company covered by the Sick Industrial
Companies (Special Provisions) Act, 1985, in respect of which Board for Industrial &

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