Companies Act Section 76A — Punishment for contravention of section 73 or section 76
CHAPTER V ACCEPTANCE OF DEPOSITS BY COMPANIES
Commercial / Corporate
Summary
This section deals with penalties when a company violates the deposit rules under section 73 or section 76 of the Act, or the rules made under those sections. It also applies when a company fails to repay a deposit, part of it, or the interest due on it within the time specified under those sections, or within any extra time allowed by the Tribunal.
Under clause (a), the company itself will face a fine. This fine is in addition to having to pay back the deposit amount and the interest due. The fine must be at least one crore rupees or twice the amount of the deposit accepted by the company, whichever is lower, and it can go up to ten crore rupees.
Under clause (b), every officer of the company who is in default will face punishment. This punishment includes imprisonment that can extend to seven years, along with a fine. The fine must be at least twenty-five lakh rupees and can go up to two crore rupees.
The proviso states that if it is proved that the officer in default acted knowingly or wilfully with the intention to deceive the company, its shareholders, depositors, creditors, or tax authorities, then that officer will be liable for action under section 447 of the Act.
Official Text
Where a company accepts or invites or allows or causes any other person to accept or invite on its behalf any deposit in contravention of the manner or the conditions prescribed under section 73 or section 76 or rules made thereunder or if a company fails to repay the deposit or part thereof or any interest due thereon within the time specified under section 73 or section 76 or rules made thereunder or such further time as may be allowed by the Tribunal under section73,—
(a) 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 2[one crore rupees or twice the amount of deposit accepted by the company, whichever is lower] but which may extend to ten crore rupees; and
(b) every officer of the company who is in default shall be punishable with imprisonment which may extend to 3[seven years and with fine] which shall not be less than twenty-five lakh rupees but which may extend to two crore rupees, 4***:
Provided that if it is proved that the officer of the company who is in default, has contravened such provisions knowingly or wilfully with the intention to deceive the company or its shareholders or depositors or creditors or tax authorities, he shall be liable for action under section 447.]