Companies Act Section 74 — Repayment of deposits, etc., accepted before commencement of this Act
CHAPTER V ACCEPTANCE OF DEPOSITS BY COMPANIES
Commercial / Corporate
Summary
Sub-section (1) deals with deposits a company accepted before this Act came into force. If any part of such a deposit, or the interest due on it, was still unpaid when the Act commenced, or becomes due after that date, the company must do two things. First, under clause (a), within three months from the Act's commencement or from the date the payment becomes due, the company must file with the Registrar a statement listing all such deposits, the amounts still unpaid, the interest payable on them, and the arrangements made for repayment. This filing must happen regardless of what any other law, the original terms of the deposit, or any scheme under any law might say.
Under clause (b) of sub-section (1), the company must repay the deposit within three years from the Act's commencement, or by the end of the period for which the deposit was originally accepted, whichever comes first. However, if the company renews any such deposit, that renewal must follow the provisions of Chapter V and the rules made under it.
Sub-section (2) allows the company to apply to the Tribunal for more time to repay the deposit. The Tribunal, after looking at the company's financial condition, the amount of the deposit and interest due, and other relevant matters, may grant additional time as it considers reasonable.
Sub-section (3) sets out the consequences if the company fails to repay the deposit, any part of it, or the interest within the time given under sub-section (1) or any extra time allowed by the Tribunal under sub-section (2). In such a case, the company must pay the amount due plus interest, and also faces a fine of not less than one crore rupees, which can go up to ten crore rupees. Additionally, every officer of the company who is in default can be punished with imprisonment of up to seven years, or a fine of not less than twenty-five lakh rupees but up to two crore rupees, or both.
Official Text
(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 4[
(b) repay within three years from such commencement or on or before expiry of the period for which the deposits were accepted, whichever is earlier:
Provided that renewal of any such deposits shall be done in accordance with the provisions of Chapter V and the rules made thereunder.]
(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.