58A. Deposits not
to be invited without issuing an advertisement.—
(1) The Central Government may, in consultation with the Reserve
Bank of India, prescribe the limits up to which, the manner
in which and the conditions subject to which deposits may
be invited or accepted by a company either from the public
or from its members.
(2) No company shall invite, of allow any other person to
invite or cause to be invited on its behalf, any deposit unless—
(a) such deposit is invited or is caused to be invited in
accordance with the rules made under sub-section (1), (b)
an advertisement, including therein a statement showing the
financial position of the company, has been issued by the
company in such form and in such manner as may be prescribed,
and(c) the company is not in default in the payment of any
deposit or part thereof and any interest thereupon in accordance
with the terms and conditions of such deposit.
(3) (a) Every deposit accepted by a company at any time before
the commencement of the Companies (Amendment) Act, 1974, in
accordance with the directions made by the Reserve Bank of
India under Chapter IIIB of the Reserve Bank of India Act,
1934 (2 of 1934), shall, unless renewed in accordance with
clause (b), be repaid in accordance with the terms and conditions
of such deposit.
(b) No deposit referred to in clause (a) shall be renewed
by the company after the expiry of the term thereof unless
the deposit is such that it could have been accepted if the
rules made under sub-section (1) were in force at the time
when the deposit was initially accepted by the company.
(c) Where, before the commencement of the Companies (Amendment)
Act, 1974, any deposit was received by a company in contravention
of any direction made under Chapter IIIB of the Reserve Bank
of India Act, 1934 (2 of 1934), repayment of such deposit
shall be made in full on or before the 1st day of April, 1975,
and such repayment shall be without prejudice to any action
that may be taken under the Reserve Bank of India Act, 1934
for the acceptance of such deposit in contravention of such
direction.
(3A) Every deposit accepted by a company after the commencement
of the Companies (Amendment) Act, 1998, shall, unless renewed
in accordance with the rules made under sub-section (1), be
repaid in accordance with the terms and conditions of such
deposit.
(4) Where any deposit is accepted by a company after the
commencement of the Companies (Amendment) Act, 1974, in contravention
of the rules made under sub-section (1), repayment of such
deposit shall be made by the company within thirty days from
the date of acceptance of such deposit or within such further
time, not exceeding thirty days, as the Central Government
may, on sufficient cause being shown by the company, allow.
(5) Where a company omits or fails to make repayment of a
deposit in accordance with the provisions of clause (c) of
sub-section (3), or in the case of a deposit referred to in
sub-section (4), within the time specified in that sub-section,—
(a) the company shall be punishable with fine which shall
not be less than twice the amount in relation to which the
repayment of the deposit has not been made, and out of the
fine, if realised, an amount equal to the amount in relation
to which the repayment of deposit has not been made, shall
be paid by the Court, trying the offence, to the person to
whom repayment of the deposit was to be made, and on such
payment, the liability of the company to make repayment of
the deposit shall to the extent of the amount paid by the
Court, stand discharged;
(b) 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.
(6) Where a company accepts or invites, or allows or causes
any other person to accept or invite on its behalf, any deposit
in excess of the limits prescribed under sub-section (1) or
in contravention of the manner or condition prescribed under
that sub-section or in contravention of the provisions of
sub-section (2), as the case may be,—
(a) the company shall be punishable,—
(i) where such contravention relates to the acceptance of
any deposit, with fine which shall not be less than an amount
equal to the amount of the deposit so accepted;
(ii) where such contravention relates to the invitation of
any deposit, with fine which may extend to ten lakh rupees
but shall not be less than fifty thousand rupees;
(b) 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.
(7) (a) Nothing contained in this section shall apply to,—
(i) a banking company, or (ii) such other company as the
Central Government may, after consultation with the Reserve
Bank of India, specify in this behalf.
(b) Except the provisions relating to advertisement contained
in clause (b) of sub-section (2), nothing in this section
shall apply to such classes of financial companies as the
Central Government may, after consultation with the Reserve
Bank of India, specify in this behalf.
(8) The Central Government may, if it considers it necessary
for avoiding any hardship or for any other just and sufficient
reason, by order, issued either prospectively or retrospectively
from a date not earlier than the commencement of the Companies
(Amendment) Act, 1974, grant extension of time to a company
or class of companies to comply with, or exempt any company
or class of companies from, all or any of the provisions of
this section either generally or for any specified period
subject to such conditions as may be specified in the order:
Provided that no order under this sub-section shall be issued
in relation to a class of companies except after consultation
with the Reserve Bank of India.
(9) Where a company has failed to repay any deposit or part
thereof in accordance with the terms and conditions of such
deposit the Tribunal may, if it is satisfied, either on its
own motion or on the application of the depositor, that it
is necessary so to do to safeguard the interests of the company,
the depositors or in the public interest direct, by order,
the company to make repayment of such deposit or part thereof
forthwith or within such time and subject to such conditions
as may be specified in the order:
Provided that the Tribunal may before making any order under
this sub-section give a reasonable opportunity of being heard
to the company and the other persons interested in the matter.
(10) Whoever fails to comply with any order made by the Tribunal
under sub-section (9) shall be punishable with imprisonment
which may extend to three years and shall also be liable to
a fine of not less than rupees five hundred for every day
during which such non-compliance continues.
(11) A depositor may, at any time, make a nomination and
the provisions of sections 109A and 109B shall, as far as
may be, apply to the nomination made under this sub-section.
Explanation.—For the purposes of this section “deposit”
means any deposit of money with, and includes any amount borrowed
by, a company but shall not include such categories of amount
as may be prescribed in consultation with the Reserve Bank
of India.
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