Think of Section 74 as a transition rule — a bridge between the old deposit regime and the new Companies Act 2013. Before this Act came into force, many companies had already accepted deposits under the old rules (Companies Act 1956 or other schemes). Section 74 says: fine, those old deposits are valid, but now you have to clean them up properly and quickly.
Here's what the company must do: First, within 3 months of the Act's commencement (or 3 months from when repayment became due), the company must file a statement with the Registrar of Companies (ROC). This statement lists all old deposits still outstanding — principal + interest — along with the repayment plan. No shortcuts here; this filing is mandatory regardless of any older agreement or scheme. Second, the company must actually repay those deposits within 3 years from commencement OR on the original maturity date of the deposit — whichever is earlier. So if a deposit was supposed to mature in 6 months, you repay in 6 months, not 3 years. If it matures in 5 years, you still repay within 3 years.
Renewal of old deposits is allowed, but only if it follows the new Chapter V rules — you can't just roll them over under old terms.
Can the company get more time? Yes — under sub-section (2), the company can approach the National Company Law Tribunal (NCLT) for an extension. The NCLT looks at the company's financial health, the deposit amount, and interest payable before granting extra time. This is a discretionary relief — not automatic.
Penalties for default (sub-section 3) are severe and exam-favourite numbers to memorise: The company faces a fine of ₹1 crore to ₹10 crore. Every officer in default faces imprisonment up to 7 years OR a fine of ₹25 lakh to ₹2 crore, or both. These penalties apply in addition to repaying the deposit itself. This is asked frequently as a 4-mark or 5-mark question in CA Inter Law paper.
📊 Worked example
Example 1 — Repayment Deadline
Rajesh & Co. Pvt. Ltd. accepted a fixed deposit of ₹50,00,000 (₹50 lakhs) from a public investor in January 2012 under the old Companies Act 1956. The deposit was for 5 years, so it was due to mature in January 2017. The Companies Act 2013 commenced on 1 April 2014.
Working:
- 3 years from commencement = 1 April 2017
- Original maturity date = January 2017
- Repayment deadline = whichever is earlier = January 2017
The company must also file the ROC statement within 3 months of 1 April 2014, i.e., by 30 June 2014.
Final Answer: Repayment by January 2017; ROC filing by 30 June 2014.
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Example 2 — Penalty Calculation
Ms. Iyer's company failed to repay an old deposit of ₹80,00,000 (₹80 lakhs) with accrued interest of ₹12,00,000 (₹12 lakhs) within the stipulated time. The NCLT did not grant any extension. Calculate the minimum penalty exposure.
Working:
- Repayment due = ₹80,00,000 + ₹12,00,000 = ₹92,00,000
- Minimum fine on company = ₹1,00,00,000 (₹1 crore)
- Minimum fine on each defaulting officer = ₹25,00,000 (₹25 lakhs)
- If there are 2 officers in default: 2 × ₹25,00,000 = ₹50,00,000
Final Answer: Company must repay ₹92 lakhs + pay minimum fine of ₹1 crore. Each officer faces minimum ₹25 lakh fine and/or up to 7 years imprisonment.
⚠️ Common exam mistakes
- Students confuse the 3-month and 3-year deadlines. The 3-month deadline is for filing with the ROC (paperwork). The 3-year deadline is for actual repayment. These are two separate obligations — don't mix them up in answers.
- Students pick the later date for repayment. The rule says repay within 3 years OR original maturity — whichever is EARLIER. If the deposit matures in 1 year, you can't wait 3 years. Always pick the earlier date.
- Students forget that renewal is allowed but only under new rules. Don't say renewal is prohibited — it's permitted, but must comply with Chapter V of the Companies Act 2013, not the old terms.
- Students understate penalties. The fine on the company starts at ₹1 crore (minimum), not a token amount. Officers face imprisonment up to 7 years AND/OR fine up to ₹2 crore. Memorise both sets of figures separately — they are different for the company vs. officers.
- Students overlook the NCLT relief option. If the question mentions financial difficulty, don't ignore sub-section (2). The company can apply to the NCLT for extended time — this is a valid legal route and could be the crux of a problem-based question.
📖 Bare Act text — Section 74, Companies Act 2013
(click to expand)
(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 (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 (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.
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