Promoter Fund Infusion To Satisfy Bank's Terms Not a 'Deposit' Under Companies Act: NCLT Mumbai

The National Company Law Tribunal at Mumbai (NCLT) has held that unsecured money brought into a company by its promoters to meet a bank's lending condition does not qualify as a deposit under the Companies Act, and that repayment proceedings under the deposit provisions cannot be maintained.

A bench of Judicial Member Mohan Prasad Tiwari and Technical Member Charanjeet Singh Gulati passed the order on January 21. The tribunal said, “Once the transaction is covered by the statutory exclusion, the amount so received cannot be treated as a 'deposit' within the meaning of Section 2(31) of the Companies Act, 2013.”

Explaining what follows the finding, it said, "Consequently, Section 73 of the Companies Act, 2013, which regulate acceptance and repayment of deposits, are not attracted, and the transaction in question is, therefore, an exempted transaction under the Companies Act, 2013,"

The matter concerned Anusmera Realty and Infra Pvt. Ltd., which had availed term loan facilities of Rs 20 crore from Saraswat Bank. The loan was sanctioned subject to certain conditions. One such condition required the promoters to bring in Rs 7.5 crore as unsecured loans and keep those funds subordinated to the bank's dues. The promoters, including Vimla Dedhia, infused the money before 2015 to meet this requirement.

A petition was filed in 2021 seeking repayment of these amounts by invoking the deposit provisions of the Companies Act. Anusmera Realty challenged the maintainability of the petition. It said the funds were infused only because the bank required it. It also pointed out that there was no invitation or circular for accepting deposits and that none of the statutory compliances applicable to deposits were followed.

The tribunal agreed with this view. It noted that promoter funds brought in pursuant to a stipulation imposed by a lending bank fall within the prescribed exclusion under the deposit rules and therefore cease to be deposits.

“In absence of amount being 'deposit', the invocation of Section 73(4) and 76(2) of the Companies Act, 2013 is wholly unsustainable,” the bench observed.

The tribunal also upheld the objection on limitation. It noted that the transactions related to a period prior to 2015, while the petition was filed only in 2021. There was nothing on record to show any acknowledgment of liability or a continuing cause of action. On these grounds, the application was allowed and the petition was dismissed.