Section 74 of Companies Act, 2013 – Repayment of Deposits, etc., accepted before Commencement of this Act

SECTION 74. REPAYMENT OF DEPOSITS, ETC., ACCEPTED BEFORE COMMENCEMENT OF THIS ACT

[Sub-section (1) of Section 74 is effective from 1st April, 2014]

(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][1]

[(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.][2]

Applicable Rules

Companies (Acceptance of Deposits) Rules, 2014

[Effective from 1st April, 2014]

Rule 20. Statement regarding deposits existing as on the date of commencement of the Act.—For the purposes of clause (a) of sub-section (1) of section 74, the statement shall be in [3][Form DPT-4].

Applicable Circulars

Clarification regarding filing of Form DPT4 under Companies Act, 2013

Circular No. 27/2014 dated 30-06-2014

This Ministry has received reference regarding filing of Form DPT4 under the provisions of the Companies Act, 2013. As per section 74(1)(a) of the Companies Act, 2013 and the companies (Acceptance of Deposits) Rules, 2014 made there under, companies are required to file a statement regarding deposits existing as on date of commencement of the Act within a period of 3 months from such commencement. The time for filing of said statement is expiring on 30-06-2014.

2. After considering the reference, it has been decided to grant extension of time for the period of 2 months i.e. up to 31-08-2014 without any additional fee in terms of section 403 of the Act to enable the companies for filing of statement under Form DPT4 with the Registrar.

Amounts received by private companies from their members, directors or their relatives before lst April, 2014 –

Clarification regarding applicability of Companies (Acceptance of Deposits) Rules, 2014

Circular No. 05/2015 dated 30-03-2015

Stakeholders have sought clarifications as to whether amounts received by private companies from their members, directors or their relatives prior to 1st April, 2014 shall be considered as deposits under the Companies Act, 2013 as such amounts were not treated as ‘deposits’ under section 58A of the Companies Act, 1956 and rules made thereunder.

2. The matter has been examined in consultation with RBI and it is clarified that such amounts received by private companies prior to 16th April, 2014 shall not be treated as ‘deposits’ under the Companies Act, 2013 and Companies (Acceptance of Deposits) Rules, 2014 subject to the condition that relevant private company shall disclose, in the notes to its financial statement for the financial year commencing on or after 1st April, 2014 the figure of such amounts and the accounting head in which such amounts have been shown in the financial statement.

3. Any renewal or acceptance of fresh deposits on or after 1st April, 2014 shall, however, be in accordance with the provisions of Companies Act, 2013 and rules made thereunder.

Clarification on repayment of deposits accepted by the companies before the commencement of the Companies Act, 2013 under Section 74 of the said Act

Circular No. 09/2015 dated 18-06-2015

This Ministry has received representations seeking clarification regarding processing of the deposits related complaints received from investors under section 74 of the Companies Act, 2013 (the said Act) in respect of defaults made by companies in repayment of deposits accepted by them before the commencement of the said Act i.e. before 1st April, 2014 and filing of prosecutions against defaulting companies by the Registrars of Companies/Regional Directors.

2. The matter has been examined in the Ministry and it is clarified that vide Removal of Difficulties (Second) Order [S.O. 1428(E)] dated 2nd June, 2014 are Removal of Difficulties (Fourth) Order S.O. 146O(E)l dated 6th June, 2014, the Company Law Board has been empowered to exercise the powers of National Company law Tribunal under sub-section (4) of section 73 and subsection (2) of section 74 of the said Act, till the latter’s constitution.

Thus, a depositor is free to file an application under section 73(4) of the said Act, with the Company Law Board if the company fails to make repayment of deposits accepted by it. Further the company may also file application under section 74(2) of the said Act with the Company Law Board seeking extension of time in making the repayment of deposits accepted by it before the commencement of the provisions of the said Act.

Applicable Orders

Jurisdiction, powers, authority and functions of Company Law Board

Companies (Removal of Difficulties) Fourth Order, 2014, vide S.O. 1460(E) dated 6th June 2014

S.O. 1460(E). – In exercise of the powers conferred by sub-section (1) of Section 470 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following Order, namely:—

1. (1) This Order may be called the Companies (Removal of Difficulties) Fourth Order, 2014.

(2) It shall come into force from the date of notification in the Official Gazette.

2. Jurisdiction, powers, authority and functions of Company Law Board.- Until a date is notified by the Central Government under sub-section (1) of Section 434 of the Companies Act, 2013 (18 of 2013), the Company Law Board constituted in pursuance of sub-section (1) of Section 10E of the Companies Act, 1956 (1 of 1956) shall exercise the jurisdiction, powers, authority and functions of the Tribunal under sub-section (2) of Section 74 of the said Act. 

Applicable Notifications

As per Company Law Board (Fees on Applications and Petitions) Amendment Rules, 2014 vide G.S.R. 772(E) dated 3rd November, 2014, fee of Rs. 5,000 shall be applicable for application under Section 74(2) to Company Law Board for allowing further time as considered reasonable to the Company to repay the deposit.

[1] Effective w.e.f. 6th June 2014 vide Notification No. S.O. 1459(E) dated 6.6.2014.

[2] Not yet Notified

[3] Form DPT-4 has been introduced as e-form w.e.f. 6th October, 2014.

[4] Substituted by the Companies (Amendment) Act 2017 vide Notification No. File No. 1/1/2018-CL.I-Part  dated 5^th July, 2018 effective from 15^th August, 2018. Prior to the substitution it read as under:

“(b) repay within one year from such commencement or from the date on which such payments are due, whichever is earlier.”