Companies acceptance of deposit

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jnj fincon (Querist)
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08 May 2015 Respected,

If any Pvt Ltd company accepts amount from public in monthly installments and in return promises to give some piece of land property.
1. Whether this type of acceptance comes under purview of acceptance of deposit?
2. If company doesn't own any Land and still accepting advances from public. What will be the consequences?

Company is accepting advances as consideration for property from last 5 years but have not at all given any property to the said depositors.

Please advice and is possible mail on jnjfincon@yahoo.in

Thanks in advance..

Pratik Shah

Pratik Shah (Expert)
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09 May 2015 If the Company's ordinary course of business is Dealing in properties, then amount taken as advance as a consideration of such property then, it will not be termed as Deposit.

You can refer deposit rules, Definition of Deposit point xii(b). The Rule has specifically exempted advance received against property (But, it should be the ordinary course of business)

jnj fincon

jnj fincon (Querist)
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09 May 2015 Pratik Shah

If such company has no such property in their name, even if it deals with property business, then what?

FYR
point 12) Specify the following:

Any amount received in the course of or the purpose of the business for the following :-

a. As advance for the supply of goods or provision of services provided such advance is appropriated against supply of goods or provision of service within 365 days from the receipt of such amount,

b. As advance received in connection with consideration for property under an agreement or arrangement,

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 for supply of capital goods.

If any amount received under clause (a),(b) and (d) becomes refundable due to the reasons that the company accepting money does not have necessary permission or approval to deal with the goods or services then the amount received shall be deemed to be a deposit after the expiry of 15 days from the date they become due for refund.

Pratik Shah

Pratik Shah (Expert)
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09 May 2015 The answer to your this question is debatable. Because in this rule, it is not written that it should be the property of company.

As per rule, mainly two conditions should be satisfied.
1. It should be in the ordinary course of business.
2. The advance should be received in connection with consideration for the property under an Agreement, provided such advance is adjusted against the property.

I think if above conditions are satisfied in your case, then deposit rules wont be attracted in your case.

jnj fincon

jnj fincon (Querist)
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09 May 2015 if company has accepted advances in connection with consideration for the property then company has to give that property within 365 days otherwise same will be deemed as deposit, i believe

plz confirm

Pratik Shah

Pratik Shah (Expert)
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09 May 2015 No, in case of property, 365 days does not applicable here. There is no time limit for advance in connection with consideration for the property.

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