Transfer of Security Deposit Received as Liability

Save Share

This query is : Resolved

Quick Summary

A PVC pipe manufacturer received refundable security deposits from small dealers. They now want to transfer these deposits to a newly appointed master dealer who will supply the small dealers. While transferring the amount is possible, the original deposit receiver remains responsible for its refund. It's crucial to obtain a tripartite agreement or the explicit consent of the small dealers before shifting this responsibility to the master dealer.

Tanuj Kumar Gupta

Tanuj Kumar Gupta (Querist)

05 July 2022 Dear Expert,

let suppose I am Manufacturer of PVC Pipe. I appointed small dealers for sale of my product for that i kept Rs 20000 as refundable security deposit when they start work with me. Now i had opened a Master dealer in their area & i will bill to him & he will distribute the stock to small dealers.
Can i transfer the security deposit of Rs 20000 to Master dealer which is standing as liability in my books?
Please guide solution & process if yes..

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

06 July 2022 Yes, you can transfer the amount no problem.

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

08 July 2022 Here, it is the responsibility of the deposit receiver to refund the amount when the contract between them gets over. So, unless there is any tri-party agreement or the consent obtained from the small dealer, you should not hand over the responsibility to your master dealer.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now