# Repayment of Pre-Commencement Deposits + Penalties

## Part A — Repayment of Deposits Accepted Before 01-04-2014

### 1. Filing Statement & Repayment

For deposits accepted before 1-4-2014 that remained unpaid as of that date or became due thereafter:

File a statement of deposits with the ROC within 3 months.
Repay deposits within 3 years from 1-4-2014, OR earlier as per original terms.

> Note: If deposits and interest are repaid on due date without default, the above point (b) is deemed complied with. Renewal of such deposits must conform to Chapter V provisions.

### 2. Tribunal's Power to Extend Time

A company may apply to the NCLT for an extension by considering:

Financial condition of the company.
Amount of deposit and interest payable.
Any other relevant factors.

### 3. Punishment for Non-Repayment within Time

Person	Punishment
Company	Fine: Minimum ₹1 crore — Maximum ₹10 crore
Officer-in-default	Imprisonment up to 7 years + Fine ₹25 lakh – ₹2 crore, or both

### 4. CG's Resolution Power

If any question arises about applicability of these rules, the Central Government, in consultation with the RBI, shall decide.

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## Part B — Punishment under Sec. 73 to Sec. 76 (Sec. 76A)

### 1. Punishment for the Company

Applies where the company contravenes Sec. 73 or Sec. 76 by:

Accepting/inviting deposits in violation of prescribed conditions, OR
Failing to repay deposits or interest within specified time.

Penalty on Company	Amount
Minimum	₹1 crore OR 2 × deposit amount, whichever is LOWER
Maximum	₹10 crore

### 2. Punishment for Officer-in-Default

Imprisonment: Up to 7 years.
Fine: Minimum ₹25 lakh — Up to ₹2 crore.

### 3. Wilful Default — Sec. 447

Where an officer-in-default knowingly / wilfully contravenes the provisions with intent to deceive the company, shareholders, depositors, creditors, or tax authorities — they are punishable under Sec. 447 (Fraud), which carries higher imprisonment (6 months to 10 years) and very steep fines.

## Memory Hook

Trigger	Provision
Default by Company (non-fraud)	Fine: ₹1 cr (or 2×deposit, lower) → ₹10 cr
Default by Officer (non-fraud)	Imp. ≤ 7 yrs + Fine ₹25 L – ₹2 cr
Default by Officer (with intent to deceive)	Sec. 447 (Fraud)

Worked example

### Example 1

Example — Lower-of Penalty Test:

ABC Ltd. accepted ₹40 lakh as deposits in violation of Sec. 73. What is the minimum fine on the company?

Analysis:

₹1 crore = ₹100 lakh.
2 × deposit amount = 2 × ₹40 lakh = ₹80 lakh.
Lower of the two = ₹80 lakh → This is the minimum fine.

Maximum fine = ₹10 crore.

### Example 2

Example — Pre-Commencement Repayment:

XYZ Ltd. accepted ₹5 crore as deposits in January 2014. The deposits were due in December 2016. The company seeks more time.

Analysis: Since deposits were accepted before 1-4-2014 and become due thereafter, the company should have filed the statement with ROC within 3 months of 1-4-2014 and repaid by 31-3-2017 (3 years from 1-4-2014). For extension, an application to the NCLT must be filed citing financial condition, deposit amount, etc. The NCLT may grant additional time.

### Example 3

Example — Wilful Default & Sec. 447:

Mr. Director of PQR Ltd. siphons off depositor funds knowing repayment is due, intending to defraud depositors.

Analysis: This is wilful default with intent to deceive → punishment under Sec. 447 (Fraud) — much harsher than ordinary Sec. 76A default.

⚠️ Common exam mistakes

Computing minimum penalty under Sec. 76A as 'higher of' — it is 'LOWER of' ₹1 crore and 2 × deposit.
Confusing Sec. 76A (Default) with Sec. 447 (Fraud) — Sec. 447 requires intent to deceive.
Forgetting that Tribunal extension is available for pre-2014 deposits but not for routine Sec. 73/76 defaults.
Mistakenly believing both imprisonment AND fine are mandatory together for officers — the section says 'imprisonment ... and fine ... or both'.
Overlooking the company's continuing obligation to repay deposit + interest in addition to the fine.

Bare-Act text Sections 74 and 76A · Companies Act, 2013 · click to expand

Section 76A — 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, 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 or twice the amount of deposit accepted by the company, whichever is lower, 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 and with fine which shall not be less than twenty-five lakh rupees but which may extend to two crore rupees, or with both.

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Repayment of Pre-Commencement Deposits & Punishment under Sec. 73-76

Worked example

⚠️ Common exam mistakes