Legal Provisions involved:
Section 73-76 of Companies Act 2013.
Rules 2(1)(c) of Companies (Acceptance of Deposits) Rules 2014 and Rule 16 of Companies (Acceptance of Deposits) Rules 2014.
1. Rule 2(1)(c) of Companies (Acceptance of Deposits) Rules 2014:
“deposit” includes any receipt of money by way of deposit or loan or in any other form, by a company, but does not include –
(i) any amount received from the Central Government or a State Government, or any amount received from any other source whose repayment is guaranteed by the Central Government or a State Government, or any amount received from a local authority, or any amount received from a statutory authority constituted under an Act of Parliament or a State Legislature ;
(ii) any amount received from foreign Governments, foreign or international banks, multilateral financial institutions (including, but not limited to, International Finance Corporation, Asian Development Bank, Commonwealth Development Corporation and International Bank for Industrial and Financial Reconstruction), foreign Governments owned development financial institutions, foreign export credit agencies, foreign collaborators, foreign bodies corporate and foreign citizens, foreign authorities or persons resident outside India subject to the provisions of Foreign Exchange Management Act, 1999 (42 of 1999) and rules and regulations made there under;
(iii) any amount received as a loan or facility from any banking company or from the State Bank of India or any of its subsidiary banks or from a banking institution notified by the Central Government under section 51 of the Banking Regulation Act, 1949 (10 of 1949), or a corresponding new bank as defined in clause (d) of section 2 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970) or in clause (b) of section (2) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), or from a co-operative bank as defined in clause (b-ii) of section 2 of the Reserve Bank of India Act, 1934 (2 of 1934);
(iv) any amount received as a loan or financial assistance from Public Financial Institutions notified by the Central Government in this behalf in consultation with the Reserve Bank of India or any regional financial institutions or Insurance Companies or Scheduled Banks as defined in the Reserve Bank of India Act, 1934 (2 of 1934);
(v) any amount received against issue of commercial paper or any other instruments issued in accordance with the guidelines or notification issued by the Reserve Bank of India;
(vi) any amount received by a company from any other company;
(vii) any amount received and held pursuant to an offer made in accordance with the provisions of the Act towards subscription to any securities, including share application money or advance towards allotment of securities pending allotment, so long as such amount is appropriated only against the amount due on allotment of the securities applied for;
Explanation. – For the purposes of this sub-clause, it is hereby clarified that –
(a) Without prejudice to any other liability or action, if the securities for which application money or advance for such securities was received cannot be allotted within sixty days from the date of receipt of the application money or advance for such securities and such application money or advance is not refunded to the subscribers within fifteen days from the date of completion of sixty days, such amount shall be treated as a deposit under these rules.
(b) any adjustment of the amount for any other purpose shall not be treated as refund.
[(viii) any amount received from a person who, at the time of the receipt of the amount, was a director of the company or a relative of the director of the private company:
Provided that the director of the company or relative of the director of the private company, as the case may be, from whom money is received, furnishes to the company at the time of giving the money, a declaration in writing to the effect that the amount is not being given out of funds acquired by him by borrowing or accepting loans or deposits from others and the company shall disclose the details of money so accepted in the Board’s report;]
(ix) any amount raised by the issue of bonds or debentures secured by a first charge or a charge ranking pari passu with the first charge on any assets referred to in Schedule III of the Act excluding intangible assets of the company or bonds or debentures compulsorily convertible into shares of the company within [ten] years:
[(ixa) any amount raised by issue of non-convertible debenture not constituting a charge on the assets of the company and listed on a recognized stock exchange as per applicable regulations made by Securities and Exchange Board of India.]
Provided that if such bonds or debentures are secured by the charge of any assets referred to in Schedule III of the Act, excluding intangible assets, the amount of such bonds or debentures shall not exceed the market value of such assets as assessed by a registered valuer;
(x) any amount received from an employee of the company not exceeding his annual salary under a contract of employment with the company in the nature of non-interest bearing security deposit;
[(xi) any non-interest bearing amount received and held in trust;]
(xii) any amount received in the course of, or for the purposes of, the business of the company,-
(a) as an advance for the supply of goods or provision of services accounted for in any manner whatsoever provided that such advance is appropriated against supply of goods or provision of services within a period of three hundred and sixty five days from the date of acceptance of such advance:
Provided that in case of any advance which is subject matter of any legal proceedings before any court of law, the said time limit of three hundred and sixty five days shall not apply:
(b) as advance, accounted for in any manner whatsoever, received in connection with consideration for property under an agreement or arrangement, provided that such advance is adjusted against the property in accordance with the terms of agreement or arrangement;
(c) as security deposit for the performance of the contract for supply of goods or provision of services;
(d) as advance received under long term projects for supply of capital goods except those covered under item (b) above:
[(e) as an advance towards consideration for providing future services in the form of a warranty or maintenance contract as per written agreement or arrangement, if the period for providing such services does not exceed the period prevalent as per common business practice or five years, from the date of acceptance of such service whichever is less;
(f) as an advance received and as allowed by any sectoral regulator or in accordance with directions of Central or State Government;
(g) as an advance for subscription towards publication, whether in print or in electronic to be adjusted against receipt of such publications;]
(xiii) any amount brought in by the promoters of the company by way of unsecured loan in pursuance of the stipulation of any lending financial institution or a bank subject to fulfillment of the following conditions, namely:-
(a) the loan is brought in pursuance of the stipulation imposed by the lending institutions on the promoters to contribute such finance;
(b) the loan is provided by the promoters themselves or by their relatives or by both; and
(c) the exemption under this sub-clause shall be available only till the loans of financial institution or bank are repaid and not thereafter;
(xiv) any amount accepted by a Nidhi company in accordance with the rules made under section 406 of the Act.
[(xv) any amount received by way of subscription in respect of a chit under the Chit Fund Act, 1982 (40 of 1982);
(xvi) any amount received by the company under any collective investment scheme in compliance with regulations framed by the Securities and Exchange Board of India;
(xvii) an amount of twenty five lakh rupees or more received by a start-up company, by way of a convertible note (convertible into equity shares or repayable within a period not exceeding [ten years] from the date of issue) in a single tranche, from a person.
(xviii) any amount received by a company from Alternate Investment Funds, Domestic Venture Capital Funds [Infrastructure Investment Trusts,] [Real Estate Investment Trusts] and Mutual Funds registered with the Securities and Exchange Board of India in accordance with regulations made by it.]
Rule 16 of Companies (Acceptance of Deposits) Rules 2014:
Return of deposits to be filed with the Registrar. – Every company to which these rules apply, shall on or before the 30th day of June, of every year, file with the Registrar, a return in Form DPT-3 along with the fee as provided in Companies (Registration Offices and Fees) Rules, 2014 and furnish the information contained therein as on the 31st day of March of that year duly audited by the auditor of the company.
[Explanation. – It is hereby clarified that Form DPT-3 shall be used for filing return of deposit or particulars of transaction not considered as deposit or both by every company other than Government company.]
Rationale for reporting outstanding figures rather than current figures in Form DPT-3:
1. Rule 2(1)(c) of Companies (Acceptance of Deposits) Rules 2014:
Form DPT-3 is a comprehensive umbrella form that can be used to report both:
1. figures of deposits and
2. figures of transactions not considered as deposits but are specifically included in Rule 2(1)(c) of Companies (Acceptance of Deposits) Rules 2014.
If noticed every highlighted word used in Rules 2(1)(c) for instance, received/raised/ brought/accepted is in the past tense. The words used are not qualified by any other word for instance lets say, “during a year”.
Since the first rule of interpretation says every word in law is to be interpreted in its literal grammatical sense, it would be incorrect to qualify it with any word and accord it a meaning on the basis of an assumptious qualification and restricting the figures to a particular year.
To further clarify lets consider the definition of Paid Up Capital, as per Section 2(62) of the Companies Act 2013, paid-up share capital or share capital paid-up means such aggregate amount of money credited as paid-up as is equivalent to the amount received as paid-up in respect of shares issued and also includes any amount credited as paid-up in respect of shares of the company, but does not include any other amount received in respect of such shares, by whatever name called;
Here again, the word received is used standalone without being qualified by any other word for instance let’s say, “during the year.” Now interpreting in a sense that the amount received is with respect to a particular year, in such case we would end up considering only that amount which we have received for every particular year while reporting figures for paid up share capital
2. Rule 16 of Companies (Acceptance of Deposits) Rules 2014:
While interpreting the words, “and furnish the information contained therein as on the 31st day of March of that year”, the word furnish the information contained herein make a reference to
1. figures of deposits and
2. figures of transactions not considered as deposits but are specifically included in Rule 2(1)(c) of Companies(Acceptance of Deposits)Rules 2014.
The words of the section, “and furnish the information contained therein as on the 31st day of March of that year”, read together can be interpreted to mean every transaction of the company till date that finds its place in Rule 2(1)(c) or in the exclusive definition of the word deposit, as on 31st March of a year, forms a part of Form DPT-3.
While reading both the points co-jointly, it is to be noted that the filing of Form DPT-3 has a yearly requirement or is qualified by the condition of filing it every year, the definition of deposits or Rule 2(1)(c) is nowhere qualified by any condition that the figures pertain to any particular year.
As per Rule 16 of Companies(Acceptance of Deposits) Rules 2014, we simply report every transaction that finds its place in either the definition of deposits or transactions not considered as deposits.
3. Purpose of the form:
The main purpose of filing form DPT-3 is to report deposits raised by a company in order to safeguard the interests of all the creditors of the company and to ensure the that the company complies with all the compliances outlined under Section 73-76 of Companies Act 2013 read with Companies(Acceptance of Deposits)Rules 2014.
The list of transactions which are included in Rule 2(1)(c) are those transactions which though are not considered a deposits yet constitute a liability for a company which will ultimately affect the interest of all the creditors of the company, hence in order to regulate these transactions, MCA vide its notification dated 2019 rolled out provisions for every company to even disclose such transactions which are not considered as deposits.
Hence in this case if we narrow down the scope to disclose transactions for just a particular year, it would not do justice to the spirit of law.
4. Case Laws:
Apart from this, observation in the following case reveals that outstanding figures instead of current year figures are to be reported in form DPT-3,
Jaisal Mechatronics Private Limited and Ors. vs. JNJ Machines Private Limited (16.11.2021 – NCLT – Ahmedabad) : MANU/NC/2706/2021
The case involves a scheme of arrangement between a few companies who have submitted an application under section 232 of Companies Act 2013 and accordingly in pursuance of the direction of NCLT-Ahmedabad, have sent notices to various statutory authorities including but not limited to the Regional Director. The RD has raised certain contentions with respect to non-filing of Form DPT-3 by the petitioner companies.
Contention by RD: “IX. In Para-2 (f) (ix) The RD observed that all the petitioner companies have outstanding unsecured creditors/secured creditors as on 31.03.2020, whereas all the petitioner companies have failed to file return up to the date 30 June 2020 in prescribed form DPT-3 as per the requirement of Section-73 read with Rule 16 of the Companies (Acceptance of Deposit) Rules 2014.”
Response of Parties by way of an Affidavit: “In response to the observation of RD at Para-2 (f) (ix) the petitioner company submitted that company is duty-bound and also will comply with filing of form DPT-3, if it has skipped inadvertently.”
Order of NCLT: After considering the responses of the parties to all the contentions raised by the RD including but not limited to the contention with respect to non-filing of DPT-3, the tribunal disposed of the petition and approving the scheme of arrangement.
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