Renewal of matured deposits as fresh acceptance triggers Companies Act liability and avoids CrPC limitation bar.
Renewal of matured deposits by retaining the amounts and issuing fresh deposit receipts was treated as fresh acceptance of deposits, so liability under section 58A of the Companies Act, 1956 was attracted. Because the alleged offence under section 58A(4) read with section 58A(5) was punishable with imprisonment exceeding three years and fine, the limitation bar under section 468(c) of the Code of Criminal Procedure, 1973 did not apply. A request to adjourn or postpone the quashing petition pending possible exemption under section 58A(8) was rejected, as no certainty existed that exemption would be granted. The quashing petition failed and the criminal proceedings were directed to continue and be expedited.
Issues: (i) Whether renewal of existing deposits in excess of the prescribed limits amounted to receiving fresh deposits so as to attract liability under section 58A of the Companies Act, 1956. (ii) Whether the prosecution was barred by limitation under section 468(c) of the Code of Criminal Procedure, 1973. (iii) Whether the petitioners were entitled to adjournment or postponement of the quashing petition pending consideration of exemption under section 58A(8) of the Companies Act, 1956.
Issue (i): Whether renewal of existing deposits in excess of the prescribed limits amounted to receiving fresh deposits so as to attract liability under section 58A of the Companies Act, 1956.
Analysis: The deposits had matured and ought to have been repaid. Instead, the amounts were retained and fresh deposit receipts were issued. On that basis, the renewal was treated as a fresh receipt of deposits within the meaning of section 58A. The statutory scheme governing acceptance and renewal of deposits under the relevant rules was applied to hold that the company had acted in contravention of the prescribed limits.
Conclusion: Renewal of the deposits amounted to receiving fresh deposits and liability under section 58A was attracted, against the petitioners.
Issue (ii): Whether the prosecution was barred by limitation under section 468(c) of the Code of Criminal Procedure, 1973.
Analysis: The alleged offence was punishable under section 58A(4) read with section 58A(5) of the Companies Act, 1956 with imprisonment exceeding three years and also fine. On that footing, the limitation bar under section 468(c) was held inapplicable.
Conclusion: The prosecution was not barred by limitation, against the petitioners.
Issue (iii): Whether the petitioners were entitled to adjournment or postponement of the quashing petition pending consideration of exemption under section 58A(8) of the Companies Act, 1956.
Analysis: No certainty existed that any exemption would be granted, and the petitioners could not seek to delay the criminal proceedings on that basis. The request was rejected as an attempt to protract the trial.
Conclusion: No adjournment or postponement was warranted, against the petitioners.
Final Conclusion: The quashing petition failed, the criminal proceedings were left to continue before the trial court, and the trial was directed to be expedited.
Ratio Decidendi: Renewal of matured deposits in violation of statutory deposit limits is treated as fresh acceptance of deposits, and where the offence is punishable with imprisonment exceeding three years and fine, the limitation provision in section 468(c) does not apply.
TaxTMI 
AI Drafter ✕
TaxTMI 
