Corporate and Other Laws · Acceptance of Deposits by Companies

Powers of Tribunal and Penalties for Default in Company Deposits

Updated 4 October 2026 · Fact-checked

If a company fails to repay a deposit under Section 73, the depositor can apply to the Tribunal under Section 73(4). For pre-2013 deposits, the company can seek more time under Section 74(2). Sections 74(3) and 76A fine the company; officers face imprisonment or fine or both (74(3)) or imprisonment and fine (76A).

Understand Powers of Tribunal and Penalties for Default

A company can take deposits only in the manner the Companies Act allows. Section 73(1) says no company shall invite, accept or renew deposits from the public except as provided in the Chapter. Banking companies and NBFCs, and companies the Central Government specifies, are outside this bar. Section 76 lets certain public companies (with the prescribed net worth or turnover) take deposits from persons other than members, subject to conditions such as a credit rating.

This topic asks one question: what happens when things go wrong? There are three kinds of default. First, the company accepts or invites deposits in breach of Section 73 or 76 or the rules. Second, it fails to repay a deposit or interest under Section 73 or 76. Third, it fails to repay an old deposit (accepted before the 2013 Act commenced) under Section 74.

Section 74 is a transitional provision for pre-2013 deposits. The periods in Section 74(1) ran from commencement or the due date, so they expired long ago. Section 74(2) relief is therefore largely of historical relevance, but the exam can still test it, so learn it.

The Tribunal appears in two different roles. Under Section 73(4), the depositor can apply to the Tribunal for an order directing the company to pay the sum due, or for loss or damage caused by non-payment, and for other orders the Tribunal thinks fit. Under Section 74(2), the company can apply to the Tribunal for further time to repay old deposits. The Tribunal considers the company's financial condition, the deposit amount and the interest payable. Do not mix up who applies in each case.

Penalties come in layers. Section 74(3) punishes failure to repay old deposits within the time allowed. Section 76A punishes breach of Section 73 or 76 (wrongful acceptance or failure to repay). Section 75 adds personal liability of officers, but only where the company fails to repay deposits referred to in Section 74 and those deposits were accepted with intent to defraud. Where an officer acted knowingly or wilfully to deceive, Section 76A refers to action under Section 447 (fraud).

Key rules to remember

Section 73(1): general bar: No invite / accept / renew of deposits from the public, except as the Chapter provides; Banking companies, NBFCs and companies specified by the Central Government (after consulting RBI) are exempt from this sub-section.
Depositor's remedy, Section 73(4): Company fails to repay under 73(3) → depositor applies to Tribunal; Tribunal may order payment of the sum due, compensation for loss or damage, and other orders it thinks fit.
Old deposits, Section 74(1): File statement with Registrar within 3 months; repay within 1 year from commencement or due date, whichever is earlier; Applies to deposits accepted before the Act commenced. Section 74 is a transitional provision and these periods have long expired. Renewal must follow Chapter V and the rules.
Company's relief, Section 74(2): Company applies → Tribunal may allow further time as reasonable; Tribunal looks at financial condition, deposit amount, interest payable and other matters. Largely of historical relevance now, since the Section 74(1) periods have expired.
Penalty, Section 74(3): Company: fine ₹1 crore to ₹10 crore. Officer in default: imprisonment up to 7 years, or fine ₹25 lakh to ₹2 crore, or both; The company also pays the deposit and interest due. Officer's punishment is 'or ... or both' here.
Penalty, Section 76A(a): company: Fine not less than the LOWER of (₹1 crore, twice the deposit accepted); maximum ₹10 crore; Also pays the deposit and interest due. Applies to contravention of Section 73 or 76, or failure to repay in time.
Penalty, Section 76A(b): officer in default: Imprisonment up to 7 years AND fine of ₹25 lakh to ₹2 crore; The text says 'and fine', so both apply. Do not write 'or both' here.
Fraud proviso, Section 76A: Officer acted knowingly or wilfully, with intent to deceive the company, shareholders, depositors, creditors or tax authorities → action under Section 447; Separate from the ordinary Section 76A punishment.
Damages for fraud, Section 75: Company fails to repay deposits referred to in Section 74 + deposits accepted with intent to defraud or for a fraudulent purpose → every officer responsible for the acceptance is personally liable without limit for depositors' losses; Section 75 applies only to failure to repay deposits referred to in Section 74, not to Section 73 or 76 deposits. Any person, group or association who suffered loss can take action. This is in addition to Section 74(3) and Section 447.
Deposit repayment reserve account, Section 73(5): The account may be used only to repay deposits; Section 73(2)(c): by 30 April each year, deposit at least 20% of deposits maturing in the next financial year in a separate account with a scheduled bank.

How to solve Powers of Tribunal and Penalties for Default questions

Use this order for any question on deposit default. It keeps your answer in provision-facts-conclusion form.

1Identify the deposit: was it accepted before the 2013 Act commenced (Section 74), or under Section 73 or 76 (Section 76A applies)?
2Identify the default: wrongful invitation or acceptance, or failure to repay the deposit or interest in time.
3State who can approach the Tribunal. The depositor applies under Section 73(4). The company applies for more time under Section 74(2).
4Apply the punishment to the company: the correct fine range, plus repayment of the deposit and interest due.
5Apply the punishment to the officer in default: imprisonment and fine as the section states. Check 'or' versus 'and'.
6Check for fraud: if the officer acted knowingly or wilfully to deceive, add Section 447. Add Section 75 (personal liability of officers responsible) only if the default is in repaying deposits referred to in Section 74 and they were accepted with intent to defraud. Do not apply Section 75 to Section 73 or 76 deposits.
7If the Section 76A fine is asked, compute the lower of ₹1 crore and twice the deposit accepted.
8Write a one-line conclusion naming the section, the consequence and the amounts.

Quickest way: Section-person-penalty grid

When to use it: Use for MCQs and for short written answers where you have under five minutes.

MCQ: look at the key words. 'Depositor applies' means Section 73(4). 'Company seeks time' means Section 74(2). 'Old deposit' means Section 74. 'Contravention of 73 or 76' means Section 76A.
MCQ: for fines, remember ₹1 crore to ₹10 crore for the company and ₹25 lakh to ₹2 crore for the officer. Check the wording on imprisonment (7 years).
MCQ on the 76A minimum fine: compute twice the deposit, then take the lower of that and ₹1 crore.
Written: write the heading 'Provision', then 'Facts', then 'Conclusion'. Quote the section number and sub-section accurately.
Written: always mention that the company must still pay the deposit and interest in addition to the fine.
Written: if fraud is hinted, add a line on Section 447. Add Section 75 only for old deposits under Section 74.

Common mistakes in Powers of Tribunal and Penalties for Default

Saying the depositor applies to the Tribunal for more time under Section 74.
Both Section 73(4) and Section 74(2) mention the Tribunal, so students merge them.
Fix: Section 74(2): the company applies for more time. Section 73(4): the depositor applies for payment or compensation.
Writing that officers in default under Section 76A face imprisonment 'or' fine.
Section 74(3) says 'or with fine ... or with both', which students carry over to Section 76A.
Fix: Section 76A(b) says imprisonment up to seven years and fine of ₹25 lakh to ₹2 crore. Learn both sections separately.
Using a flat minimum fine of ₹1 crore under Section 76A.
Students remember the old wording and ignore the 'lower of' rule.
Fix: The minimum is the lower of ₹1 crore and twice the deposit accepted. For small deposits, the minimum is less than ₹1 crore.
Forgetting that the company must still repay the deposit and interest.
Students focus on the fine and treat it as a replacement for repayment.
Fix: Both Sections 74(3) and 76A say the penalty is 'in addition to' payment of the deposit and interest due.
Applying Section 74 to every deposit default.
The heading 'Repayment of deposits' looks general.
Fix: Section 74 is a transitional provision covering deposits accepted before the Act commenced, and its periods have long expired. For deposits under Section 73 or 76, use Section 73(3), 73(4) and 76A.
Ignoring Section 447 and Section 75 when fraud is in the facts.
Students stop after the basic fine.
Fix: If the officer acted knowingly or wilfully to deceive, add Section 447 action. Add Section 75 personal liability only where the default is in repaying deposits referred to in Section 74 and they were accepted with intent to defraud, not for Section 73 or 76 deposits.

Worked examples

Example 1

Alpha Ltd., a public company, invited and accepted deposits of ₹40,00,000 from the public in breach of the conditions in Section 73. State the minimum and maximum fine on the company and the punishment of the officer in default.

Show the solution

Provision: Section 76A applies where a company accepts or invites deposits in contravention of the manner or conditions under Section 73 or 76 or the rules.
Company's fine: not less than the lower of ₹1 crore or twice the deposit accepted. Twice ₹40,00,000 = ₹80,00,000.
Compare: ₹80,00,000 is lower than ₹1,00,00,000, so the minimum fine is ₹80,00,000.
Maximum fine: ₹10 crore.
The company must also repay the deposit and interest due, in addition to the fine.
Officer in default: imprisonment up to seven years and fine of not less than ₹25 lakh but up to ₹2 crore.
If the officer acted knowingly or wilfully to deceive depositors or others, he is liable for action under Section 447.

Answer: Minimum fine on the company is ₹80,00,000 and maximum ₹10 crore, plus repayment of the deposit and interest. Each officer in default faces imprisonment up to 7 years and fine of ₹25 lakh to ₹2 crore.

Example 2

Beta Ltd. holds old deposits accepted before the 2013 Act commenced. It cannot repay them within the period in Section 74(1). What can the company do, and what is the position if it still fails to repay? (Section 74 is a transitional provision and these periods have long expired, so treat this as a provision-based exercise.)

Show the solution

Provision: Section 74(1) requires the company to file a statement of the deposits and unpaid sums with the Registrar within three months from commencement or from the due date. It must repay within one year from commencement or the due date, whichever is earlier.
Relief: under Section 74(2), the company may apply to the Tribunal. The Tribunal considers the company's financial condition, the deposit amount, the interest payable and other matters, and may allow further time it considers reasonable.
Default: if the company fails to repay within the time in Section 74(1) or any further time the Tribunal allows, Section 74(3) applies.
Company: it pays the deposit and interest due, and is also punishable with fine of not less than ₹1 crore and up to ₹10 crore.
Officer in default: imprisonment up to seven years, or fine of ₹25 lakh to ₹2 crore, or both.
Fraud: if the deposits were accepted with intent to defraud, officers responsible for the acceptance are personally liable without limit for depositors' losses under Section 75, and Section 447 may apply. Section 75 applies here because the deposits are those referred to in Section 74.

Answer: Beta Ltd. should apply to the Tribunal under Section 74(2) for more time. If it still defaults, it faces a fine of ₹1 crore to ₹10 crore along with repayment, and officers in default face up to 7 years' imprisonment or fine of ₹25 lakh to ₹2 crore, or both.

Exam tips

Learn the fine and imprisonment figures as a small table in your notes: company ₹1 crore to ₹10 crore; officer ₹25 lakh to ₹2 crore; 7 years.
In MCQs, 'who applies to the Tribunal' is a favourite trap. Match Section 73(4) with the depositor and Section 74(2) with the company.
For case-study questions, write section number, facts, conclusion. Add the line 'in addition to repayment of deposit and interest'.
Practise the 'lower of' calculation under Section 76A with both a small and a large deposit amount.
Remember that Section 74 and Section 75 deal with old deposits. Do not use Section 75 for Section 73 or 76 deposits.
Revise this topic with eligibility conditions and the deposit repayment reserve, since questions often combine them.

Practice questions from Acceptance of Deposits by Companies

Powers of Tribunal and Penalties for Default in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

CMA FinalPowers and Orders of the Tribunal

Powers of Tribunal and Penalties for Default: frequently asked questions

Can a depositor go to the Tribunal if a company does not repay a deposit?

Yes. Under Section 73(4), if a company fails to repay a deposit or interest, the depositor can apply to the Tribunal. The Tribunal may direct payment of the sum due, or compensation for loss or damage, and pass other orders it thinks fit.

What is the penalty under Section 76A?

The company pays the deposit and interest and is fined not less than the lower of ₹1 crore or twice the deposit accepted, up to ₹10 crore. Every officer in default faces imprisonment up to seven years and a fine of ₹25 lakh to ₹2 crore. If the officer acted knowingly or wilfully to deceive, action under Section 447 follows.

What is the difference between Section 74 and Section 76A?

Section 74 is a transitional provision for deposits accepted before the 2013 Act commenced, and its repayment periods have long expired. Section 76A punishes contravention of Section 73 or 76, including wrongful acceptance and failure to repay within time under those sections. Their penalty wording also differs for officers.

Can a company get extra time to repay deposits?

Under Section 74(2), a company with old deposits can apply to the Tribunal for further time. The Tribunal considers the company's financial condition, the deposit amount and the interest payable before deciding. Since the Section 74(1) periods expired long ago, this relief is largely of historical relevance.