1985 (9) TMI 282

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....e taken for contravention by the company of section 370 of the Companies Act, 1956. In the said notice, it has been, inter alia, stated as follows : "Whereas the company has deposited Rs. 25.80 lakhs with various companies. Whereas section 370 provides that no company shall make loans to all bodies corporate exceeding 20% or 30%, as the case may be, and if it exceeds, then the company is required to obtain prior approval of the Central Government. Whereas the total of subscribed capital and reserves, i.e., Rs. 12,00,000 and Rs. 11,93,028, respectively, amounting to Rs. 23,93,028 and 30% of this come to Rs. 7,17,908 whereas the company has deposited in other companies amounting to Rs. 20.80 lakhs. Prima facie it has exceeded the limit pre....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....nsaction is squarely a "loan" within the meaning of section 370 of the Companies Act. Then again, rule 2 of the Companies (Acceptance of Deposits) Rules, 1975, provides as follows : "2. Definitions.-In these rules, unless the context otherwise requires,-...... (b)'deposit' means any deposit of money with, and includes any amount borrowed by, a company, but does not include -...... (iv)any amount received by a company from any other company;" If this be so, then, in the present case, since there is no dispute that the moneys given by the company are to another company, the same cannot be considered as a "deposit", but would in fact be a "loan". In the circumstances, the petitioners would be entitled to no relief whatsoever on this petiti....