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CA Intermediate · Corporate and Other Laws · Acceptance of Deposits by Companies

Gautam Steels Ltd, a public company, accepted deposits and has now defaulted in repayment on maturity. A depositor, Ms Lata, wants to know what remedy is available. Which of the following correctly states the legal position under the Companies Act, 2013?

Ms Lata can apply to the National Company Law Tribunal, which can direct repayment of the deposit and impose penalties on the company and its officers in default. The Registrar cannot order repayment and civil courts lack jurisdiction, and unsecured status does not bar a depositor.

  1. AShe may file an application before the National Company Law Tribunal for relief, and the Tribunal may order repayment and impose penalties on the company and officers in defaultCorrect
  2. BShe may only approach the civil court, because the Tribunal has no jurisdiction over deposit defaults
  3. CShe may only complain to the Registrar, who alone can order repayment of the deposit
  4. DShe has no remedy, because deposits are unsecured and only secured creditors may approach the Tribunal

Explanation

If a company fails to repay a deposit or interest on due date, the depositor may approach the Tribunal, which can direct repayment and penalise the company and officers in default. Civil courts do not have jurisdiction over matters the Tribunal is empowered to decide. The Registrar cannot order repayment, and unsecured status does not remove the remedy.

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