Punishment for contravention of section 73 or section 76
📚 Law Minded summary
The penalty section for deposit-taking gone wrong, and it is deliberately severe.
A company that accepts deposits in breach of the rules repays the deposit with interest and pays a penalty of at least one crore rupees or twice the deposit, whichever is lower, up to ten crore.
Every officer in default can face imprisonment of up to seven years plus a fine. Where the default was knowingly done to defraud, it is also fraud under section 447.
Where a company accepts or invites or allows or causes any other person to accept or invite on its behalf any deposit in contravention of the manner or the conditions prescribed under section 73 or section 76 or rules made thereunder or if a company fails to repay the deposit or part thereof or any interest due thereon within the time specified under section 73 or section 76 or rules made thereunder or such further time as may be allowed by the Tribunal under section73,—
(a) the company shall, in addition to the payment of the amount of deposit or part thereof and the interest due, be punishable with fine which shall not be less than 2[one crore rupees or twice the amount of deposit accepted by the company, whichever is lower] but which may extend to ten crore rupees; and (b) every officer of th e company who is in default shall be punishable with imprisonment which may extend to 3[seven years and with fine] which shall not be less than twenty -five lakh rupees but which may extend to two crore rupees, 4***: Provided that if it is proved that the o fficer of the company who is in default, has contravened such provisions knowingly or wilfully with the intention to deceive the company or its shareholders or depositors or creditors or tax authorities, he shall be liable for action under section 447.] CHAPTER VI REGISTRATION OF CHARGES
All sections in Chapter V — Acceptance of Deposits by Companies