Acceptance of deposits

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

24 June 2012 Dear Experts,

Kind Attn : Mr. Ankur Garg

I see many companies offering attractive returns on moneys collected by them (they say that the money invested will double in 5 years to be exact).

One such company's representatives persuaded me to make an investment decision and hence i did some due diligence work on the Company on the MCA -21 portal.

I was shocked to find that in the Auditors Report, the Auditor has stated that the Company has not accepted any deposits under section 58A of the Companies Act, 1956 ( I personally know some people who have been investing in that company for about 3 years as a Recurring Deposit of Rs 1000 per month).

On scrutiny of all the available data of the Company in the MCA -21 site, I found that the Company in its financial statements, never expressed its intention to accept public deposits.

Further the reason why the Company became popular among the people was that the commission it offered to one who collected the deposit.

Now let me ask you one thing, what is the fate of those who invested in the Company ?

Is there any competent authority to whom an official complaint can be lodged so as to protect the investors interest before it becomes a case of embezzlement of public money ?

CS Suraj Arora

CS Suraj Arora (Expert)
Follow

26 June 2012 Dear Friend

As per my Opinion this does not come under purview of Public Deposit. I would like to bring in your kind notice the General meaning of “Public”. if anyone in the Open public has right to subscribe the scheme of deposit then its Public offer. If I have approached to specific class of peoples or to you then its not a Public deposit. One more Example If I have come with a prospectus and this prospectus is only for you and not for ordinary public then it is only a Private Placement and in your case I can say a Interest bearing Loans .

Again , While under this Scheme I have not any intention in my mind anywhere that Public at Large is invited, I have not issued any advertisement that is in public domain, You have used words Persuaded in your above said query ,the word Persuaded even denotes that there is some kind of relationship between you and me( Company accepting deposit ) that is why I am in a position to Persuade you. The unknown person have not influence on the other and it is free will of Public whether to Subscribe in to that Scheme or not.

Auditors have rightly remarked that the Company has not accepted any deposit during the year. The above mentioned question is also resolved by case law Girija Smelters Ltd v Saraswati Finance Corporation wherein it was cleared that nature of money comes under purview of Deposit or not will be determined by the intention of the parties to the transactions. When Conditions laid down in the rules made for the purpose like Advertisement, minimum period and ceiling etc are not there then it is a interest bearing Loan.

Further, One more thing I would like to share with you, That is fine the Company is accepting funds from you or from any other people. But One thing to check whether the Company has actually underlying assets as against of those Funds meaning thereby Where the Company has invested those funds. If there is same underlying assets then you hav’nt any right to say that there are chances of embezzlement. But again if there is some doubt s about the same then there are forums wherein you can approach to protect the interest of those inventors. The forums are Like:
Registrar of Companies,
Company Law Board
High Court
If you have some doubt then I can specifically tell you under which section or Regulation you can approach these forums for Example a Public Interest Writ Petition in High Court can be filed.

Last But not least, there may be lots of other People having Expertise in this Club while writing Kind. Attn. Mr. Ankur Garg is little absurd.
Regards
Suraj Arora

Message likes : 1 times

Querist : Anonymous

Querist : Anonymous (Querist)

12 July 2012 Thank you sir,

On further observation, I note that in the company's balance sheet there are no amounts opposite the head Secured Loans and Unsecured Loans.

This has raised further doubts in my mind.

Also it has shown a revenue of around some 5 Crores as Sale of soap powder, diary products and others.

Upgrade to CAclubindia Pro. Subscribe Now!