Employee deposit account requirement: mandated special-bank custody applies and knowing continuation of noncompliance attracts penal liability.

Section 282B requires that moneys or securities deposited by employees pursuant to their contract of service be kept in a special account in a scheduled bank; sums characterised in appointment letters and correspondence as deposits or security for recoupment fall within this obligation. Officers or committee members who, with knowledge, continue a departmental policy of retaining such employee deposits outside the mandated special bank account incur penal liability; access to departmental balance sheets and continuation of the policy permits an inference of knowledge. The court affirmed convictions where these conditions were shown.

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Issues: (i) Whether the amounts deposited by the employee constituted moneys deposited in pursuance of his contract of service and thus fell within the obligation under Section 282B of the Indian Companies Act, 1913; (ii) Whether the petitioners, being ex officio members of the executive committee, knowingly contravened Section 282B(1) so as to attract penal liability under Section 282B(5), thereby validating their conviction.

Issue (i): Whether the amounts deposited by the employee were moneys deposited in pursuance of his contract of service and therefore subject to the requirements of Section 282B of the Indian Companies Act, 1913.

Analysis: The appointment letter and the society's subsequent correspondence treated the sum as a deposit tied to employment, included a provision for recoupment of losses, and the society itself treated the amount as a security deposit. The statutory language of Section 282B(1) refers to "all moneys or securities deposited with the company by its employees in pursuance of their contract of service" and is not limited to amounts expressly labelled "security"; the mandatory obligation to keep such moneys/securities in a special account and the separate prohibition on utilisation indicate distinct duties.

Conclusion: The deposited amount was a money deposited in pursuance of the contract of service and fell within the scope of Section 282B(1).

Issue (ii): Whether the petitioners knowingly contravened Section 282B(1) so as to incur penal liability under Section 282B(5).

Analysis: The society followed a long standing policy of retaining employee deposits within the Rasayansala Department rather than in a special account of a scheduled bank. The petitioners were ex officio members of the executive committee that continued this policy and had access to relevant facts such as departmental balance sheets; these facts permitted an inference that the petitioners knew of the non compliance. The absence of specific questions under section 342 did not demonstrate prejudice where the evidence supported the inference of knowledge.

Conclusion: The petitioners knowingly contravened Section 282B(1) and their conviction under the penal provision was warranted.

Final Conclusion: The convictions and sentences are affirmed and the petition seeking to quash them is dismissed; the statutory protection requiring employee deposits to be kept in a special account of a scheduled bank is enforceable against officers who knowingly continue a policy of non compliance.

Ratio Decidendi: Section 282B(1) of the Indian Companies Act, 1913 mandates that all moneys or securities deposited by employees in pursuance of their contract of service must be maintained in a special account of a scheduled bank and officers or members who knowingly continue a policy of retaining such deposits otherwise are liable under the penal consequences of the statute.

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