Advances for sale of immovable property fall outside deposits, and vexatious criminal proceedings can be quashed under Section 482.
Advances received under agreements for sale of immovable property did not constitute deposits under the Companies (Acceptance of Deposits) Rules, 2014 because they fell within the statutory exclusion for sums received as advance consideration and were linked to adjustment against the property transaction. Where such advances are payable back only if required permissions are lacking, they may be treated as deposits; that condition was not established here. The HC also held that criminal proceedings could be quashed under Section 482 CrPC because the complaint was found to be mala fide, vexatious, and an abuse of process under the Bhajan Lal principles.
Issues: (i) Whether the advances received by the companies towards sale of immovable property fell within the definition of deposits under the Companies (Acceptance of Deposits) Rules, 2014. (ii) Whether the criminal proceedings were liable to be quashed in exercise of inherent powers under Section 482 of the Code of Criminal Procedure, 1973.
Issue (i): Whether the advances received by the companies towards sale of immovable property fell within the definition of deposits under the Companies (Acceptance of Deposits) Rules, 2014.
Analysis: Rule 2(1)(c)(xii)(b) excludes from the definition of deposit any amount received as advance in connection with consideration for property under an agreement or arrangement, provided the advance is adjusted against the property in accordance with the terms of the agreement or arrangement. The proviso deems such amounts to be deposits only where they become refundable because the company lacks the necessary permission or approval to deal in the property. On the material before it, the advances were received pursuant to agreements for sale of immovable property and were linked to adjustment against the property transaction.
Conclusion: The advances were held not to be deposits within the meaning of the Rules, and the petitioners succeeded on this issue.
Issue (ii): Whether the criminal proceedings were liable to be quashed in exercise of inherent powers under Section 482 of the Code of Criminal Procedure, 1973.
Analysis: The inherent power under Section 482 is to be exercised sparingly to prevent abuse of process and secure the ends of justice. Applying the principles stated in the Bhajan Lal guidelines, the proceedings were found to be attended with mala fide and an ulterior motive, since the complainant was not directly connected with the transactions and the complaint was treated as part of repeated and vexatious litigation. Continuation of the prosecution was considered an abuse of process.
Conclusion: The proceedings were liable to be quashed, and the petitioners succeeded on this issue.
Final Conclusion: The common order terminated the criminal prosecutions in both cases, holding that the alleged advances were excluded from deposits and that the continuance of the proceedings amounted to abuse of process.
Ratio Decidendi: Advances received towards sale of immovable property under an agreement or arrangement do not constitute deposits when they are covered by the statutory exclusion in the acceptance of deposits rules, and criminal proceedings based on such allegations may be quashed under Section 482 where they are malicious or constitute abuse of process.
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