Report No. 143
It is recommended that the relevant provisions of the Companies Act and the Companies (Acceptance of Deposits) Rules, 1975 (Rules be amended)-
(1) by defining small depositors as depositors, whose individual deposits do not exceed Rs. 11,000 (rule 2 of the rules may be amended in this behalf).
(2) and making it obligatory on a company accepting deposits from small depositors to notify to the CLB the factum of default in repayment of the amount of deposits with accrued interest thereon in the event of failure to repay the aforesaid amounts within 60 days of the due date for repayment alongwith names and addresses of such depositors mentioning the sum involved in respect of each of such depositors.
Note.- This can be achieved by suitably amending rule 10 of the Companies (Acceptance of Deposits) Rules, 1975.
(3) and making it obligatory on the CLB to exercise the power under section 58A(9) suo mote upon being apprised of such defaults by the company. The CLB shall dispense with the presence of the depositor at the hearing and pass an appropriate orders within 30 days of the receipt of the intimation from the concerned company provided, however, that no order granting 'more than 30 days time from the date of order for repayment shall be passed without hearing the depositors concerned.
Note.- This can be achieved by suitably amending section 58A(9) of the Companies Act.
It should be provided that no company shall accept further deposits from small depositors as long as depositors whose deposits have matured (unless their deposits have been willingly renewed) I have not been repaid the deposited sums alongwith interest accrued thereon till the date of repayment.
[This will not apply where a depositor has died or there is a stay order from any Court against repayment to the depositor or his heirs].
[This can be achieved by amending rule 3 of the Companies (Acceptance of Deposits) Rules, 1975].
It should be made obligatory on such companies which have defaulted in repayment to small depositors on any occasion, to State in all of their future advertisements inviting deposits, the fact of such deposits mentioning the total amount involved in such defaults.
[This can be done by amending rule 4 of the Companies (Acceptance of Deposits) Rules, 1975.]
It should be made obligatory to mention in the Advertisement under rule 4 of the Companies (Acceptance of Deposits) Rules, 1975, that some depositors had waived accrued interest in the past (By amending rule 4 of the Rules).
It may be made obligatory to utilise the funds obtained by taking loans from Nationalised Banks in the repayment of the small depositors before applying them to any other use.
This can be done by adding an appropriate rule in the Companies (Acceptance of Deposits) Rules, 1975.]
The application form required to be obtained from depositors should contain a statement to the effect that the applicant had been apprised of (1) past defaults in repayments, and (2) about waiver of interest by some depositors when companies guilty in the past accept deposits in future (rule 5 may be amended to serve this purpose).
Violation of any of the aforesaid provisions by a company should be made a cognizable offence and its directors liable to be sentenced to suffer minimum imprisonment of 15 days.
[Rules 11 of the Companies (Acceptance of Deposits) Rules, 1975 may be amended in this behalf.]
Note.- A draft of the suggested amendments is annexed for the sake of convenience.
The Commission feels that if the law is amended in the aforesaid manner, the companies accepting public deposits from small depositors will be deterred from exploiting them, and the unwary and helpless small depositors will be adequately protected.
We recommend accordingly,
Dated: 28th August, 1991.