Oral Deposit Still Repayable: NCLT Allahabad Directs NBFC To Refund Over ₹30 Lakh To Depositor

The National Company Law Tribunal (NCLT) at Allahabad has directed a non-banking financial company (NBFC) to refund nearly Rs 30 lakh with interest to a depositor with whom the company did not have any written deposit agreement.

The tribunal held that the absence of a written agreement cannot be used as a defense to withhold repayment once receipt of funds is admitted and there is utilization.

Allowing a petition filed by Nidhi Agarwal against Shivam Traders and Hire Purchase Private Limited, the tribunal held that an NBFC remains bound by its statutory obligation under the Reserve Bank of India Act, 1934, even if the deposit was made under an oral arrangement.

A bench of Judicial Member Praveen Gupta and Technical Member Ashish Verma noted that the company had admittedly received and utilised the money. It held that the company could not avoid repayment merely because there was no written agreement recording the terms of the deposit.

The dispute arose from deposits totalling Rs 29,90,956, which Agarwal, a shareholder and a relative of the company's directors, had advanced under an oral arrangement carrying 9% interest per annum in 2019-20.

Agarwal argued that the amount was repayable at the end of the financial year. However, despite repeated demands through emails sent in April and June 2020, and even after approaching the Reserve Bank of India, the company did not refund any money.

The tribunal noted that the NBFC had consistently reflected these sums as unsecured loans from shareholders in its audited financial statements from FY 2019–20 to FY 2023–24.

It also recorded that the company had deducted tax at source on the interest, which amounted to a clear acknowledgment of liability.

The company, on the other hand, opposed the petition by arguing that Section 45QA of the RBI Act permits repayment only in accordance with the terms of a deposit. Since there was no written agreement setting out those terms, it claimed that no default could be established. It also contended that the transaction was a business loan repayable only after nine years, citing similar arrangements within its group.

The NCLT rejected this defence. It held that the RBI Act defines a “deposit” broadly to cover any receipt of money not specifically excluded, and that unsecured loans from shareholders fall within this definition. Once receipt of funds is admitted, the obligation to repay follows.

Calling the company's stand self-contradictory, the tribunal noted that its own balance sheets recorded that no loan agreements had been executed for these unsecured loans. It also held that oral agreements are legally valid when supported by conduct and mutual understanding.

It observed that the family relationship between the parties explained the absence of a written contract.

The tribunal said that “the mere fact that such advancement was made pursuant to an oral arrangement does not, in law, absolve the Respondent of its obligation to repay the amounts admittedly received and utilised.”

On limitation, the NCLT held that the continuous acknowledgment of debt in signed balance sheets extended the limitation period under Section 18 of the Limitation Act and also took note of the Supreme Court's Covid-19 extension orders.

Holding that intervention was necessary to safeguard the depositor's interest, the tribunal exercised its powers under Section 45QA(2) of the Reserve Bank of India Act, 1934, and directed the company to repay the deposit along with interest. It asked the parties to mutually reconcile the exact amount payable based on the company's books of accounts.

For Petitioner: Advocates Ravi Kapoor and Aditi Singhal

For Respondent: Advocates Arun Saxena, Nalini, and Amit Verma