DRAFT RULES UNDER THE COMPANIES ACT, 2013
CHAPTER V
ACCEPTANCE OF DEPOSITS BY COMPANIES
G.S.R -- In exercise of the powers conferred by sub-section (31) of
section 2, sections 73 and 76, read with sub-sections (1) and (2) of
section 469 of the Companies Act, 2013(.... of 2013), the Central
Government, in consultation with the Reserve Bank of India, hereby
makes the following rules, namely: -
Short title and commencement.
1.(1) These rules may be called the Companies (Acceptance of
Deposits) Rules, 2013.
(2) They shall come into force on the date of their publication in the
Official Gazette.
(3) These rules shall apply to a company other than
(i) a banking company and
(ii) a non-banking financial company (as defined in the Reserve
Bank of India Act, 1934) registered with the Reserve Bank of
India.
Definitions.
2. (1) In these rules, unless the context otherwise requires, ___
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(a) "Act" means the Companies Act, 2013;
(b) "Deposit" includes any receipt of money by way of deposit or
loan or in any other form, by a company, but does not
include-
(i) any amount received from the Central
Government or a State Government, or any
amount received from any other source whose
repayment is guaranteed by the Central
Government or a State Government;
(ii) any amount received from foreign Governments,
foreign/international banks, multilateral financial
institutions (including, but not limited to,
International Finance Corporation, Asian
Development Bank, Commonwealth Development
Corporation and International Bank for Industrial
and Financial Reconstruction), foreign
government owned development financial
institutions, foreign export credit agencies,
foreign collaborators, foreign bodies corporate
and foreign citizens subject to the provisions of
Foreign Exchange Management Act, 1999 and
rules and regulations made there under;
(iii) any amount received as a loan or facility from
any banking company or from the State Bank of
India or any of its subsidiary banks or from a
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banking institution notified by the Central
Government under section 51 of the Banking
Regulation Act, 1949 (10 of 1949), or a
corresponding new bank as defined in clause (d)
of section 2 of the Banking Companies
(Acquisition and Transfer of Undertakings) Act,
1970 (5 of 1970), or from a co-operative bank as
defined in clause (b-ii) of section 2 of the Reserve
Bank of India Act, 1934 (2 of 1934) ;
(iv) any amount received as a loan or financial
assistance from Public Financial Institutions
notified by the Central Government in this behalf
in consultation with the Reserve Bank of India,
regional financial institutions, Insurance
Companies, Scheduled Banks and Mutual Funds
registered with SEBI .
(v) any amount received against issue of commercial
paper or any other instrument issued in
accordance with the guidelines or notification
issued by the Reserve Bank of India;
(vi) any amount received by a company from any
other company;
(vii) any amount received and held pursuant to an
offer made in accordance with the provisions of
the Act towards subscription to any securities,
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including share application money or advance
towards allotment of securities pending allotment,
so long as such amount is appropriated only
against the amount due on allotment of the
securities applied for;
Explanation
If the securities for which application money or
advance for such securities was received cannot be
allotted within 60 days from the date of receipt of
the application money or advance for such
securities and such application money or advance
is not refunded to the subscribers within 15 days
from the date of completion of sixty days, such
amount shall be treated as a deposit under these
rules.
For the purpose of this rule any adjustment of the
amount for any other purpose will not be treated
as refund.
(viii) any amount received by a private company from a
person who, at the time of the receipt of the
amount, was a director of the company or any
amount received from its shareholders:
Provided that the director or shareholder, as the
case may be, from whom money is received,
furnishes to the company at the time of giving the
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money, a declaration in writing to the effect that
the amount is not being given out of funds
acquired by him by borrowing or accepting loans
or deposits from others:
Provided further that in case of joint shareholders
of a private company, monies received from any
one or more or all of the joint shareholders
whose name/s is/are recorded in the register of
members of the company shall be eligible to be
treated as monies received from a shareholder of
the company;
(ix) any amount raised by the issue of bonds or
debentures secured by a first charge or a charge
ranking pari passu with the first charge on any
assets referred to in Schedule III of the Act
excluding intangible assets of the company or
bonds / debentures compulsorily convertible into
shares of the company within five years
Provided that if such bonds or debentures are
secured by the charge of any assets referred to
in Schedule III of the Act excluding intangible
assets, the amount of such bonds or debentures
shall not exceed the market value of such assets
as assessed by a registered valuer.
(x) any amount received from an employee not
exceeding his annual salary, under a contract of
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employment with the company in the nature of
non-interest bearing security deposit;
(xi) any non-interest bearing amount received or held
in trust;
(xii) any amount received in the course of or for the
purposes of the business of the company:
(a) as an advance for the supply of goods
or provision of services provided that
such advance is appropriated against
supply of goods or provision of services
within a period of one hundred and
eighty days from acceptance of such
advance.
(b) as advance received under an
agreement for sale of property provided
that such agreement is duly registered
under the applicable Registration
Act(s).
(c) as security deposit for the performance
of the contract for supply of goods or
provision of services.
(d) As advance received under long term
projects or for supply of capital goods.
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Provided that if the amount received under
(a) to (d) above becomes refundable (with
or without interest) because the company
accepting the money does not have
necessary permission or approval to deal in
the goods or properties or services for
which the money is taken, the amount
received shall be deemed to be a Deposit
under these rules.
(xiii) any amount brought in by the promoters of the
company by way of unsecured loan in pursuance
of the stipulation of any lending financial
institution or a bank subject to fulfillment of the
following conditions:-
(a) the loan is brought in pursuance
of the stipulation imposed by
the lending institutions on the
promoters to contribute such
finance; and
(b) the loan is provided by the
promoters themselves and/or by
their relatives.
Explanation: Any amount received from a person with promise or
offer to give returns in cash or in kind on completion of the period
defined in the promise or offer or during the period of payment of
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instalments over and above the amount actually paid shall be treated
as deposit.
(c) `Depositor' means-
(i) any member of the company who has made a deposit
with the company in accordance with sub-section (2) of
section 73 of the Act, or
(ii) any person who has made a deposit with a public
company in accordance with section 76 of the Act.
(d) "Eligible company" means a public company as referred to in sub-
section (1) of section 76, having a net worth of not less than one
hundred crore rupees or a turnover of not less than five hundred crore
rupees and which has obtained the prior consent of the company in
general meeting by means of a special resolution and also filed the
said resolution with the Registrar of Companies and where applicable,
with the Reserve Bank of India before making any invitation to the
Public for acceptance of Deposits;
(e) "Trustee" means the Trustee as defined in section 3 of the Indian
Trusts Act, 1882.
Acceptance of deposits by companies.
3. On and from the commencement of these rules,--
(1) no company under sub-section (2) of section 73 and no Eligible
company shall accept or renew any deposit, whether secured or
unsecured, which is repayable on demand or upon receiving a notice
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within a period of less than six months or more than thirty-six months
from the date of acceptance or renewal of such deposit:
Provided that a company may, for the purpose of meeting any of its
short-term requirements of funds, accept or renew such deposits for
repayment earlier than six months from the date of deposit or
renewal, as the case may be, subject to the condition that-
(a) such deposits shall not exceed ten per cent of the aggregate
of the paid up share capital and free reserves of the company,
and
(b) such deposits are repayable not earlier than three months
from the date of such deposit or renewal thereof.
(2) Where depositors so desire, deposits may be accepted in joint
names not exceeding three, with or without any of the clauses,
namely, "Jointly", "Either or Survivor", "First named or Survivor",
"Anyone or Survivor".
4. (i) No company under sub-section (2) of section 73 shall accept or
renew any deposits if the amount of such deposits together with the
amount of other deposits outstanding as on the date of acceptance or
renewal of such deposits exceeds 25 per cent of the aggregate of the
paid-up share capital and free reserves of the company.
(ii) No Eligible company shall accept or renew:
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(a) any deposit from its members, if the amount of such deposit
together with the amount of deposits outstanding as on the date of
acceptance or renewal of such deposits from members exceeds ten per
cent of the aggregate of the paid-up share capital and free reserves of
the company;
(b) any other deposit, if the amount of such deposit other than the
deposit referred to in (a) above, together with the amount of deposits
outstanding on the date of acceptance or renewal exceeds twenty-five
per cent of aggregate of the paid-up share capital and free reserves of
the company.
5. No Government company eligible to accept deposits under section
76 shall accept or renew any deposit, if the amount of such deposits
together with the amount of other deposits outstanding as on the date
of acceptance or renewal exceeds thirty five per cent of the aggregate
of its paid up share capital and free reserves.
Rate of interest of deposits.
6. No company under sub-section (2) of section 73 or any Eligible
company shall invite or accept or renew any deposits in any form,
carrying a rate of interest or pay brokerage thereon at a rate
exceeding the maximum rate of interest or brokerage prescribed by
the Reserve Bank of India for acceptance of deposits by non-banking
financial companies.
Explanation: Only the person who is authorized, in writing, by a
company to solicit deposits on its behalf and through whom deposits
are actually procured will be entitled to the brokerage and payment of
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brokerage to any other person for procuring deposits shall be deemed
to be in violation of these Rules.
Form and particulars of advertisements/circulars.
7. For the purposes of clause (a) of sub-section (2) of section 73,
every company under sub-section (2) of section 73 intending to invite
deposit from its members shall issue a circular to all its members by
registered post with acknowledgement due or speed post or by
electronic mode or publish the circular in the form of an advertisement
in Form No. 1.
Provided that such circular shall also be published at least
once in English language in a leading English newspaper and in
vernacular language in one vernacular newspaper having wide
circulation in the State in which the registered office of the company is
situated.
8. Every Eligible company intending to invite deposits shall issue an
advertisement in Form No. 1 for the purpose at least once in English
language in a leading English newspaper and in vernacular language in
one vernacular newspaper having wide circulation in the State in which
the registered office of the company is situated.
9. Every company inviting deposits from the public shall upload a copy
of the circular on its website, if any.
10. No company shall issue or allow any other person to issue or
cause to be issued on its behalf, any circular or a circular in the form
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of advertisement inviting deposits, unless such circular or circular in
the form of advertisement is issued on the authority and in the name
of the Board of directors of the company.
11. No circular or a circular in the form of advertisement shall be
issued by or on behalf of a company unless, not less than thirty days
before the date of such issue, there has been delivered to the Registrar
for registration a copy thereof signed by a majority of the directors of
the company as constituted at the time the Board approved the circular
or circular in the form of advertisement, or their agents, duly authorized
by them in writing.
12. A circular or circular in the form of advertisement issued in
accordance with sub-section (2) of section 73 or section 76 shall be
valid until the expiry of six months from the date of closure of the
financial year in which it is issued or until the date on which the
financial statement is laid before the company in general meeting or,
where the annual general meeting for any year has not been held, the
latest day on which that meeting should have been held in accordance
with the provisions of the Act, whichever is earlier, and a fresh circular
or circular in the form of advertisement shall be issued, in each
succeeding financial year, for inviting deposits during that financial year.
Explanation: For the purpose of this rule, the date of the issue of the
newspaper in which the advertisement appears shall be taken as the
date of issue of the advertisement and the effective date of issue of
circular shall be the date of dispatch of the circular.
Deposit insurance.
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13. (1) Every company under sub-section (2) of section 73 and every
other Eligible company inviting deposits shall enter into a contract
providing for deposit insurance at least thirty days before the issue of
circular or advertisement as the case may be as specified in clause (d)
of sub-section (2) of section 73 of the Act.
(2) The deposit insurance contract shall specifically provide that in
case the company defaults in repayment of principal amount and
interest thereon, the depositor shall be entitled to the repayment of
principal amount of deposits and the interest thereon by the insurer up
to the aggregate monetary ceiling as specified in the contract;
Provided that in the case of any deposit not exceeding twenty
thousand rupees, the deposit insurance contract shall provide for
payment of the full amount of the deposit and in the case of any
deposit in excess of twenty thousand rupees, the deposit insurance
contract shall provide for payment of an amount not less than twenty
thousand rupees for each depositor.
Explanation- The amount as specified in the deposit insurance
contract shall be deemed to be in respect of both principal amount and
interest due thereon.
(3) The amount of insurance premium paid on the insurance of such
deposits shall be borne by the company itself and shall not be
recovered from the depositors by deducting the same from the
principal amount or interest payable thereon.
(4) If any default is made by the company in complying with the terms
and conditions of the deposit insurance contract which makes the
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insurance cover ineffective, the company shall either rectify the default
immediately or enter into a fresh contract within 30 days. In case of
non-compliance, the amount of deposits covered under the deposit
insurance contract shall be repaid within the next fifteen days. If such
a company does not repay the amount of deposits within fifteen days it
shall pay fifteen per cent interest per annum for the period of delay
and shall be treated having defaulted and liable to be punished in
accordance with the Act.
Creation of security.
14. (1) For the purposes of clause (f) of sub-section (2) of section 73
and second proviso of sub-section (1) of section 76, every company
under sub-section (2) of section 73 and every Eligible company inviting
secured deposits shall provide for security by way of a charge on its
assets as referred to in Schedule III of the Act excluding intangible
assets of the company for the due repayment of the amount of deposit
and interest thereon for an amount which shall not be less than the
amount remaining unsecured by the deposit insurance as provided in
pursuance of clause (d) of sub-section (2) of section 73.
Provided that in the case of deposits which are secured by the
charge on the assets referred to in Schedule III of the Act excluding
intangible assets, the amount of such deposits and the interest
payable thereon shall not exceed the market value of such assets as
assessed by a registered valuer.
Explanation- The company shall ensure that the total value of the
security either by way of deposit insurance and/ or by way of charge
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on company's assets shall not be less than the amount of deposits
accepted and the interest payable thereon.
(2) The security (not being in the nature of a pledge) for deposits shall
be created in favor of a trustee for the deposit holders on:
a. specific movable property of the company, or
b. specific immovable property of the company
wherever situate, or any interest therein.
Appointment of deposit trustees.
15. (1) No company under sub-section (2) of section 73 or any
Eligible company shall issue a circular or advertisement inviting
secured deposits unless the company has appointed one or more
deposit trustees for creating security for the deposits:
Provided that a written consent shall be obtained from the deposit
trustee(s) before their appointment and a statement shall appear in
the circular or circular in the form of advertisement with reasonable
prominence to the effect that the deposit trustee(s) have given their
consent to the company to be so appointed.
(2) The company shall execute a deposit trust deed in Form No. 2 at
least 7 days before issuing the circular or circular in the form of
advertisement.
(3) No person including a company that is in the business of
providing trusteeship services shall be appointed as a trustee for the
deposit holders, if the proposed trustee -
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(a) is a director, key managerial personnel or any other
officer or an employee of the company or of its holding,
subsidiary or associate company or a depositor in the
company;
(b) is indebted to the company, or its subsidiary or its
holding or associate company or a subsidiary of such
holding company;
(c) has any material pecuniary relationship with the
company;
(d) has entered into any guarantee arrangement in respect
of principal debts secured by the deposits or interest
thereon;
(e) is related to any person specified in clause (a) above.
(4) No deposit trustee may be removed from office after the issue of
circular or advertisement and before the expiry of his term except with
the consent of all the directors present at a meeting of the board.
Provided that in case the company is required to appoint
independent directors, at least one independent director shall be
present in such meeting of the Board
Duties of deposit trustees.
16. It shall be the duty of every deposit trustee to-
(1) ensure that the assets of the company on which charge is
created together with the amount of deposit insurance are
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sufficient to cover the repayment of the principal amount
of secured deposits outstanding and interest accrued
thereon;
(2) satisfy himself that the circular or advertisement inviting
deposits does not contain any information which is
inconsistent with the terms of the deposit scheme or with
the trust deed and is in compliance with the rules and
provisions of the Act;
(3) ensure that the company does not commit any breach of
covenants and provisions of the trust deed;
(4) take such reasonable steps as may be necessary to
procure a remedy for any breach of covenants of the trust
deed or the terms of invitation of deposits;
(5) take steps to call a meeting of the holders of depositors as
and when such meeting is required to be held;
(6) supervise the implementation of the conditions regarding
creation of security for deposits and the terms of deposit
insurance;
(7) do such acts as are necessary in the event the security
becomes enforceable;
(8) carry out such acts as are necessary for the protection of
the interest of depositors and to resolve their grievances.
17. The meeting of all the depositors shall be called by the deposit
trustee on-
(1) requisition in writing signed by at least one-tenth of the
depositors in value for the time being outstanding;
(2) the happening of any event, which constitutes a default or
which in the opinion of the deposit trustee affects the
interest of the depositors.
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Form of application for deposits.
18.(i) On and from the commencement of these rules, no company
shall accept, or renew any deposit, whether secured or unsecured,
unless an application, in the form prescribed by the company, is
submitted by the intending depositor for the acceptance of such
deposit.
(ii) The application referred to in rule 18(i) shall contain a declaration
by the intending depositor to the effect that the deposit is not being
made out of any money borrowed by him from any other person.
19. A depositor may, at any time, make a nomination and the
provisions of section 72 shall, as far as may be, apply to the
nomination made under this sub-rule.
Furnishing of deposit receipts to depositors.
20. Every company shall, on the acceptance or renewal of a deposit,
furnish to the depositor or his agent a deposit receipt for the amount
received by the company, within a period of two weeks from the date
of receipt of money or realization of cheques.
21. The deposit receipt referred to in rule 20 shall be signed by an
officer of the company duly authorized by the Board in this behalf and
shall state the date of deposit, the name and address of the depositor,
the amount received by the company as deposit, the rate and
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periodicity of interest payable thereon and the date on which the
deposit is repayable.
Maintenance of liquid assets and creation of Deposit
Repayment Reserve Account.
22. Every company under sub-section (2) of section 73 and every
Eligible company shall on or before the 30th day of April of each year
deposit a sum which shall not be less than fifteen per cent of the
amount of the deposits, whether secured or unsecured, maturing
during the current financial year and next financial year in a deposit
repayment reserve account, with any scheduled bank which shall be
kept free from charge or lien.
23. The amount deposited in deposit repayment reserve account
under rule 22 shall not be utilized for any purpose other than for the
repayment of deposits:
Provided that the amount remaining deposited, as the case may
be, shall not at any time fall below fifteen per cent of the amount of
deposits maturing until the current financial year and the next financial
year.
Alteration of any terms or conditions.
24. (1) The company shall not reserve to itself either directly or
indirectly a right to alter, to the prejudice or disadvantage of the
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depositor, any of the terms and conditions of the deposit after
advertisement/circular is issued and deposits are accepted.
(2) No term or condition of the deposit (whether secured or
unsecured), trust deed or deposit insurance contract shall be altered or
modified after they have been issued.
Registers of deposits.
25. (1) Every company accepting deposits shall, from the date of such
acceptance, keep at its registered office one or more separate registers
for deposits accepted/renewed, in which there shall be entered separately
in the case of each depositor the following particulars, namely:
(a) Name, address and PAN of the depositor/s;
(b) Particulars of guardian, in case of a minor;
(c) Particulars of the nominee;
(d) Deposit receipt number;
(e) Date and amount of each deposit;
(f) Duration of the deposit and the date on which each
deposit is repayable;
(g) Rate of interest;
(h) Due date(s) for payment of interest;
(i) Mandate and instructions for payment of interest and
for non-deduction of tax at source, if any;
(j) Date or dates on which payment of interest will be
made;
(k) Details of deposit insurance including extent of
deposit insurance;
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(l) Particulars of other security/ charge created;
(m) Any other particulars relating to the deposit;
(2) Entries in the register shall be made within seven days from the
date of issuance of the deposit receipt and such entries shall be
authenticated by a director or secretary of the company or by any
other officer authorized by the Board for this purpose.
(3) The register or registers referred to in sub-rule (1) shall be
preserved in good order for a period of not less than eight years from
the financial year in which the latest entry is made in the register.
General provisions regarding premature repayment of
deposits.
26. Where a company, which has accepted deposits under these
Rules and the Act, on the request of the depositor makes any
repayment of a deposit after the expiry of a period of six months from
the date of such deposit but before the expiry of the period for which
such deposit was accepted by the company, the rate of interest
payable by the company on such deposit shall be reduced by one per
cent from the rate which the company would have paid had the
deposit been accepted for the period for which such deposit had
actually run or the contracted rate, whichever is lower and the
company shall not pay interest at any rate higher than the rate so
reduced :
Provided that nothing contained in this rule shall apply to the
repayment of any deposit before the expiry of the period for which
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such deposit was accepted by the company, if such repayment is made
solely for the purpose of:--
(a) complying with the provisions of the Non-Banking Non-
financial Companies (Reserve Bank) Directions, 1966;
or
(b) complying with the provisions of rule 3 ; or
(c) providing war risk or other related benefits to the
personnel of the naval, military or air forces or to their
families, on an application made by the associations or
societies formed by such personnel, during the period of
emergency declared under article 352 of the
Constitution :
Provided further that where a company under sub-section (2) of
section 73 or any Eligible company permits a depositor to renew his
deposit, before the expiry of the period for which such deposit was
accepted by the company, for availing of a higher rate of interest, the
company shall pay interest to such depositor at the higher rate if such
deposit is renewed in accordance with the other provisions of these
rules and for a period longer than the unexpired period of the deposit.
Explanation: For the purposes of this rule, where the period for which
the deposit had run is part of a year, then, if such part is less than six
months, it shall be excluded and if such part is six months or more, it
shall be reckoned as one year.
Return of deposits to be filed with the Registrar.
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27. Every company to which these rules apply, shall on or before
the 30th day of June, of every year, file with the Registrar, a return in
Form No. 3 along with the fee as provided in Annexure `B ` and furnish
the information contained therein as on the 31st day of March of that
year duly audited by the auditor of the company who shall give his
report as per Form.
Provided that a copy of the return shall also be simultaneously
furnished to the Reserve Bank of India, wherever applicable:
Penal rate of interest.
28. A penal rate of interest of eighteen per cent per annum shall be
payable for the overdue period in case of deposits, whether secured or
unsecured, matured and claimed but remaining unpaid.
Power of Central Government to decide certain questions.
29. If any question arises as to whether these Rules are or are not
applicable to a particular company, such question shall be decided by
the Central Government in consultation with the Reserve Bank of
India.
Applicability of sections 73, 74 and 75 to eligible companies
30. Pursuant to provisions of sub-section (2) of section 76 of the Act,
the provisions of sections 73, 74 and 75 shall, mutatis mutandis, apply
to acceptance of deposits from public by eligible companies.
Explanation.- It is hereby clarified that
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(i) In case of an eligible company which had accepted or invited public
deposits under the relevant provisions of the Companies Act, 1956 and
rules made under that Act (hereinafter known as "Earlier Deposits")
and has been repaying such deposits and interest thereon in
accordance with such provisions, the provisions of section 74(1)(b) of
the Act shall be deemed to have been be complied with if the company
continues to repay such deposits and interest due thereon timely for
the remaining period of such deposit in accordance with the terms and
conditions and period of such Earlier Deposits;
Provided that in case the company fails to repay such Earlier
deposits or interest due thereon timely as above, the company shall
immediately comply with the provisions of section 74(2) failing which
action as provided under section 74(3) and 75 of the Act shall be
initiated;
Provided further that the fresh deposits by every eligible company
shall have to be in accordance with the provisions of chapter V of the
Act and these rules;
(ii) Without prejudice to (i) above, in case of deposits accepted by an
eligible company under section 76 of the Act, the provisions of sub-
section (3) and (4) of section 73, provisions of sub-sections (2) and
(3) of section 74 and provisions of section 75 shall be applicable
irrespective of the fact that such deposits were not accepted by the
company before the commencement of this Act.
Punishment for contravention
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31. If any company under section 73 or any Eligible company inviting
deposits or any other person contravenes any provision of these Rules
for which no punishment is provided in the Act, the company and
every officer of the company who is in default or such other person
shall be punishable with fine which may extend to ten thousand rupees
and where the contravention is a continuing one, with a further fine
which may extend to one thousand rupees for every day after the first
day during which the contravention continues.
32. If the Registrar is satisfied on the basis of information available to
him or any document filed with him under these rules or on a
representation made to him by any person that the deposits are being
or have been accepted by a company for a fraudulent or unlawful
purpose or are not in compliance with the provisions of the Act, the
Registrar may initiate action against the company and its officers
under sub-section (4) of section 206 of the Act.
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