Advance for immovable property sale excluded from deposit definition where adjusted under agreement and permissions were obtained.

Amounts received as advance for sale of immovable property under a written agreement were treated as outside the definition of "deposit" under the Companies (Acceptance of Deposits) Rules, 2014, because they were received in the course of business and were to be adjusted against the property in accordance with the arrangement. The proviso would apply only if the amount became refundable due to lack of required permission or approval to deal in the property, which was not shown on the facts. As the company had obtained conversion and development permissions and entered into sale arrangements, prosecution under Section 73 read with Section 76-A of the Companies Act, 2013 was held unsustainable.

---

---

Issues: Whether amounts received by the company as advance for sale of immovable property under an agreement or arrangement, and adjusted in accordance with the terms of such arrangement, fall within the definition of "deposit" so as to attract prosecution under Section 73 read with Section 76-A of the Companies Act, 2013.

Analysis: Rule 2(1)(c)(xii)(b) of the Companies (Acceptance of Deposits) Rules, 2014 excludes from the definition of deposit amounts received in the course of business as advance for consideration for property under an agreement or arrangement, provided the advance is adjusted against the property in accordance with the terms of the agreement. The proviso deems such amount to be a deposit only when it becomes refundable because the company lacks the necessary permission or approval required to deal in the goods or property for which the money was taken. On the facts, the company had purchased land, obtained conversion and development permissions, and entered into written arrangements for sale of immovable property. The materials did not show that the advances were outside the exempted category.

Conclusion: The advances received for sale of immovable property were held to be exempt from the definition of deposit, and the prosecution was held to be unsustainable.

---