Damages for fraud
📚 Law Minded summary
If a company fails to repay a deposit and it turns out the deposits were accepted with intent to defraud depositors, the protection of the company's separate personality falls away.
Every officer responsible becomes personally liable, without any limit, for the losses depositors suffered — on top of the fraud punishment under section 447.
The claim can be brought by any depositor affected.
(1) Where a company fails to repay the deposit or part thereof or any interest thereon referred to in section 74 within the time specified in sub-section (1) of that section or such further time as may be allowed by the Tribunal under sub -section (2) of that section, and it is proved that the deposits had been accepted with intent to defraud the depositors or for any fraudulent purpose, every officer of the company who was responsible for the acceptance of such deposit shall, without prejudice to the provisions contained in sub -section ( 3) of that section and liability under sec tion 447, be personally responsible, without any limitation of liability, for all or any of the losses or damages that may have been incurred by the depositors.
(2) Any suit, proceedings or other action may be taken by any person, group of persons or any association of persons who had incurred any loss as a result of the failure of the company to repay the deposits or part thereof or any interest thereon.
All sections in Chapter V — Acceptance of Deposits by Companies