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TMI Blog2022 (7) TMI 722X X X X Extracts X X X X X X X X Extracts X X X X ..... 00,000/- (hereinafter referred to as the "amount in question") to the Directors of Respondent No. 3 Company for issuance of shares in the said company on 27th December 2010 by depositing the share application money in A/C No. 5582000100022401 maintained with Karnataka Bank Limited, Karol Bagh. c. The Respondent No.3 Company failed to allot the shares as promised to the Petitioner and returned the money on 9th February 2018 through RTGS. It is alleged that however, the said Company failed to repay the interest accrued on the amount in question as per Companies (Acceptance of Deposits) Rules, 2014 and Rule 17 of the Companies (Acceptance of Deposits) Rules, 2014. d. The Petitioner approached the Registrar of Companies (Respondent No.2) by filing an online complaint on 11th December 2018 for non-compliance of the Companies (Acceptance of Deposit) Rules, 2014 by Respondent No.3 Company and for the recovery of the Interest Amount. The Deputy Registrar of Companies, Delhi issued a Show Cause Notice dated 14th May 2019 to the Respondent No.3 Company. e. Despite the issuance of Show Cause Notice, it is alleged that no action was taken by the Respondent Company on the complaint filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llegal conduct of Respondent No. 3 Company in accepting the deposits in contravention of provisions of Companies Act, 2013 and for repayment of the interest as per the provisions of law. 6. The learned counsel for the Petitioner has contended that Respondent No. 2 has failed to register the case against the Respondent No. 3 and to carry out their statutory duty, which is in blatant violation of provisions of the Companies Act, 2013 and Companies (Acceptance of Deposits) Rules, 2014. It is submitted that the delay in enquiry and investigation on part of the Respondent No. 2 is acting as a shield for the Respondent No. 3 Company. 7. Learned counsel for the Petitioner further submitted that the Section 2(31) of the Companies Act, 2013 defines the term "deposit" as including any receipt of money by way of deposit or loan or in any other form by a company. Further, it is submitted that Rule 2(1)(c) of Companies (Acceptance of Deposit) Rules, 2014, defines the term "deposit" and excludes various amounts received by a Company from the ambit of Deposit which shall not be considered as deposits. 8. It is also submitted that as per the provisions of Rule 2(1)(c)(vii) of Companies (Accepta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ach other have participated in the wrongdoing and committed the misdeeds of accepting deposits from public despite the same being outrightly barred by law and Respondent No.7 has further failed to report the factum of acceptance of deposits by the Respondent No.3 Company from the public. It is also submitted that the Respondent No. 7, M/s PVRN & Co. has failed to carry out the duty of auditing in accordance with the accounting standards. 14. Furthermore, it is submitted that the Respondent No. 3 Company has failed to return the statutory interest payable to the petitioner as per the Rule 17 of the Companies (Acceptance of Deposits) Rules, 2014 which imposes a penal interest of 18% per annum on the deposits accepted by a private company from the public. It is submitted that the current status of the complaint filed by petitioner is still being shown as "Under Examination", despite the passage of a considerable amount of time, due to inaction on the said complaint by Respondent No. 2. 15. It is submitted that the Respondent No. 2 has not considered the activities of the Respondent No. 3 which are in clear contravention of Section 73 of the Companies Act, 2013 which has created an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the commencement of Companies Act, 2013 with effect from 1st April 2014. 21. Furthermore, it is submitted that with regard to the investor complaint filed by the Petitioner, two letters dated 11th December 2018 and 31st October 2019 had been sent to the company, however, no response has been received. It is averred that the letters were sent as a matter of practice even though the office cannot enforce the matter sought by the complainant as the same is outside the jurisdiction of Respondents No. 1 & 2 as the said transaction of amount in question does not fall under the definition of deposit under Companies Act, 1956 read with Rule 2(b)(vii) of Companies (Acceptance of Deposits) Rules, 1975. 22. In light of the aforesaid, it is submitted that the instant petition is devoid of merits and this Court may be pleased to dismiss the same. 23. Heard learned counsels appearing on behalf of parties at length and perused the record. QUESTION FOR ADJUDICATION 24. A mere perusal of the petition makes it evident that the crux of the entire matter lies in adjudicating whether the penal interest as being claimed by the petitioner is applicable on the amount in question paid to the Responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules, 1975 and the Companies Act, 2013 and Companies (Acceptance of Deposits) Rules, 2014 does not apply. 31. Rule 2(b)(vii) of the Companies (Acceptance of Deposits) Rules, 1975 reads as under: "(b) "deposit" means any deposit of money with, and includes any amount borrowed by, a company, but does not include- (vii) any amount received by way of subscriptions to any shares, stock, bonds or debentures such bonds or debentures as are covered by sub-clause (x) pending the allotment of the said shares, stock, bonds or debentures and any amount received by way of calls in advance on shares, in accordance with the Articles of Association of the Company so long as such amount is not repayable to the members under the Articles of Association of the Company ;" 32. It is clear that as per Rule 2(b)(vii), irrespective of the period for which shares are not allotted, any amount by way of subscriptions to any shares, pending the allotment of the said shares, shall remain excluded from the purview of "deposit". 33. As per the contents of the General Circular No. 05/2015, dated 30th March, 2015 issued by the Ministry of Corporate Affairs, it has been clarified as under: "2. The matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Office on the said letters dated 11th December 2018 and 31st October 2019 was by virtue of the fact that the prayers contained therein were outside the purview of jurisdiction of Respondents No. 1 & 2. 37. Therefore, for the reasons as aforestated, this Court is of the opinion that no case for exercise of writ jurisdiction is made out. In any case, the contractual relations or other obligations arising therefrom between the Petitioner and the Respondent No. 3 are outside the scope of the instant writ petition. It is open for the Petitioner to explore and pursue other legal remedies for recovery of interest or any dues due to him on the part of Respondent No. 3 Company. As such, no cause of action has arisen against the Respondents No. 1 & 2, Ministry of Corporate Affairs and Registrar of Companies, for adjudication between a matter pertaining to the private contract between two individual parties. 38. Hence, in light of the foregoing discussion and analysis, there are no cogent reasons to entertain the petition and allow the prayers sought therein. In the aforesaid terms, the instant petition stands dismissed. 39. It is made clear that any observations made herein shall have no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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