[aurangabad_ca] Contravention of Rules contained in Companies (Acceptance of Deposits) Rules, 1975 [1 Attachment]
Dear All,
The query is in relation to acceptance of public deposit, under section 58A of companies Act, 1956, by an unlisted public limited company.
This company invites and accepts deposit under its various Deposit schemes and has also issued advertisements in the news papers as required under Companies (Acceptance of Deposits) Rules, 1975.
The company accepts deposit through its Fixed Deposit Application Forms. However, the F. D. Application forms do not contain any of the particulars as specified in sub-rule (2) of Rule 4 of Companies (Acceptance of Deposits) Rules, 1975. Thus, deposit is accepted by the company from public without furnishing "Statutory Information" in the Fixed Deposit Application Form .
Before I put my specific query before the learned members , I wish to share with them my understanding on the issue.
MY UNDERSTANDING :
In section 58A , different penalties have been prescribed for different type of contraventions. The contravention may be in relation to Invitation of deposit , in relation to Acceptance of deposit,in relation to Repayment of deposit or any combination of these three.
The F. D. Application Form , under the Indian Contract Act , 1872 , is an invitation by the company to public to make an offer of deposit to company . On receiving such an offer (i.e. filled in F. D. Application Form along with cheque / bank draft) from prospective depositor the company may or may not accept it. It means the company may or may not accept deposit from the applicant.
In view of above, non-compliance of any of the provisions pertaining to the format / content of F. D. Application Form should be construed as contravention of the provisions pertaining to invitation of deposit. Therefore, company and its officers shall be liable to be penalised / prosecuted in accordance with the provisions of Section 58A (6) of the Companies Act , 1956.
The relevant penalty is fine which may extend to ten lakh rupees but shall not be less than fifty thousand rupees.[ Section 58A (6) (a) (ii)]. Moreover, every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to five years and shall also be liable to fine. [Section 58 A (6) (b)].
However, if the above contravention of non-inclusion of "Statutory Particulars" in the F. D. Application Form is such that no penalty has been prescribed for the same in Section 58A , then the penalty as contained in Rule 11 of the Companies (Acceptance of Deposits) Rules ,1975 shall apply to it. Rule 11 is reproduced here under. ____________
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