The Section 76A Penalty
Contravention of Section 73 or Section 76 attracts Section 76A. The company is liable to a fine, and every officer in default is punishable with imprisonment which may extend to seven years and with fine which shall not be less than ₹25 lakh but which may extend to ₹2 crore. The penalty is not a purely monetary exposure; it includes the possibility of imprisonment.
The Penal Rate of Interest
Rule 17 of the Companies (Acceptance of Deposits) Rules, 2014 requires every company to pay a penal rate of interest of eighteen per cent per annum for the overdue period in the case of matured deposits, whether secured or unsecured. The penal interest is in addition to the contractual interest and runs until repayment.
The Section 75 Fraudulent Acceptance
Where the failure to repay is connected with the acceptance of deposits with intent to defraud depositors or for a fraudulent purpose, Section 75 applies. The consequence is a higher penalty and a fraud characterisation that can affect the directors’ disqualification and the company’s standing.
The NCLT Route
Depositors may approach the NCLT for an order directing repayment. A failure to comply with the NCLT order attracts further imprisonment and fine. The NCLT route is often faster than prosecution, and the company should treat an NCLT petition as a priority remediation trigger.
Remediation
The company should quantify the overdue deposits, compute the penal interest, repay or settle with the depositors, and file a compounding application. The application should include the repayment proof, the depositor consents, and the board resolution. A company that waits for prosecution loses the benefit of proactive compounding.
Call to Action: For deposit default quantification, NCLT response, or compounding application support, contact office@anujdesaiassociates.com or 9619456656. Website: https://anujdesaiassociates.com. LinkedIn: linkedin.com/in/ca-anuj-desai-122547230.