Regarding public deposit by private company

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SONIKA (Querist)
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30 March 2012 sir i want to know if a Private Company accept Public deposit then what the penal provision. its controversial for section 3 (1)(111) or section 58A(public deposit rules)

CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
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30 March 2012 The definition of private company itself prohibits it from accepting the public deposit as specified in section 58A

SONIKA

SONIKA (Querist)
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31 March 2012 yes, definition of private company itself prohibits it but if a company accept it then what the consequences of it.

CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
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31 March 2012 Section 43 of companies act says that privileges and exemptions under the act shall not be given to such company and all the provisions under the act shall apply as if it is a public company.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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31 March 2012 Continuing Amit Ji
CLB has power to grant relief if the failure to comply with the conditions of section 3(1)(iii(d)was accidental or due to inadvertence or some other sufficient cause.
If relief is granted by CLB, punishment of violation of section 58A becomes debatable.
However, my understanding is 3(1)(iii)(d) supersedes section 58A meaning thereby the following punishment for violation of 58A sustains.

(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.

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