Self-introspection after watching "The Kashmir Files"

When I was returning home after seeing the Kashmir file, I was accompanied by ten people from the family and friend circle. Everyone was silent, and not a single word could come out of anyone's mouth. Maybe everyone was shocked to see this file. All were surprised to see the truth of the one who had heard the flying, broken news, on the screen. Was it even possible that their own neighbours, on whom they had kept their faith throughout their lives, had become enemies of life in their own country? The same neighbours’ bullets were ridding the body? Every one mind was flooded with many questions, but not a single word could come out of our mouths. But questions were getting louder and louder in our minds while stepping back into our home.

Is it time for Kashmiri Pandits to return and settle back

in Kashmir? Will they be able to bear it? Will they return to their homes, or ashes spread in their original courtyard like "Pushkar Nath Pandit"? after all why did all this happen? 

This film brings out many bitter truths. The truth that does the dirty business of 'hope'. While Kashmiri Pandits are expected to return home, there are campuses of some particular universities where 'Afzal we are ashamed, your murderers are alive' (अफजल हम शर्मिंदा हैं, तेरे कातिल जिंदा हैं). The slogans sound silly. The brainwashing is so prevalent that so-called academics cultivate a different hatred and drag youth into anti- nation activities.

If these intellectuals can nurture a certain mindset by shouting slogans for Afzal Guru, will they now open their eyes to the injustice done to Kashmiri Pandits through this film? Will those slogans also echo in the premises of the same universities against this injustice that 'Ashish Kaul, we are ashamed, the murderers of your loved ones are alive (आशीष कौल हम शर्मिंदा हैं, तुम्हारे अपनों के कातिल जिंदा हैं)?' Or is it just that we will see Kashmiri Pandits living in Kashmir, laughing in Kashmir (कश्मीरी पंडितों को कश्मीर में बस्ते, कश्मीर में हंसते हम देखेंगे). Will these songs also be sung?

After all, why have we never tried to understand the pain and suffering of 'Roliv Chaliv and Galiv' till now? When it was shown on the screen, there was a flood of tears and an emotional breakdown in the cinema hall. This film has created a national emotion. Will this emotion remain with us, or will it end in a day or two? Will we be able to save Bengal, Kerala or any other part of India from becoming a Kashmir file?

Earlier, whenever there was a discussion on Kashmir Pandits, many of our intellectual friends also used to say that Kashmir Pandits are cowards. They ran away after leaving their house and family. They did not fight to save them and restore their rights; they were cowards. Like these, many more things were said about Kashmiri Pandits by our so-called intellectual friends. But after watching the Kashmir file, we feel reverence and devotion towards Kashmiri Pandits because we realise that this community is not only peace-loving but also knows the importance of peace and harmony. They left the valley to save the valley from bleeding, left the valley to keep the next generation from getting into animosity, left the valley to remain with the country and not betray the nation, left their home to save the nation, they left the valley to stay in the religion and keep the dharma alive.

What happened to them is now in front of the country in the shape of Kashmir Files.

The massacres of Kashmiri Pandits were not external forces but some Muslim families living inside Kashmir as neighbours and friends whose religion, insecurities and greed helped the separatist forces. As a result, the 1990s episode came into the lives of Kashmiri Pandits.

Kashmiri Pandits lived in the Valley till 1990 with some open-minded faith and confidence in their Muslim brothers and friends. Their faith in Kashmiriyat was alive even after a history of six times displacement and 700 years of repression, and this belief led to their destruction and exile. There must be some similar people living in our neighbourhood. We will also have some similar friends on whom we are reposting confidence and trust and keep ourselves sitting ideally.

Do we need to learn anything from the Kashmir file? Do think about it.

 

 CS Ravi Bhushan Kumar

Advisory on shifting of Registered Office

Rule 30 (5) of Companies (Incorporation) Rules 2013 interalia provide that in case of shifting of Registered Office from one state to another state the company shall advertise in the Form No. INC.26  in the vernacular newspaper of the principal vernacular language in the district and in English language in an English newspaper with the *widest* circulation in the state in which the registered office of the company is situated.  Earlier RD was accepting advertisment in any news paper but now the new RD-N started raising question on news paper advertisement and asking company to prove whether the news paper in which advertisment has been published is in widest circulation?
RD-N view is that there can be only one newspaper in one state as per second amendment rules 30(5) which says that newspaper shall have the *widest* circulation. So be careful while submitting application before RD-N.
CS Ravi Bhushan Kumar
NOIDA

http://www.csravibhushan.com/blogs/index/1

Naresh Gujaral opposed the provision to make it mandatory to have full time company secretary for those firms whose paid equity capital is Rs 5 crore and above irrespective of turnover as per section 2 and 3 of the Act. Tapan Sen of Communist Party of India-Marxist or CPI-M said that this bill would not lead to ease of doing business in the country but would take our country to ransom.

He used to be a Chartered Accountant by profession and an industrialist, now is a MP from Punjab under Shiromani Akali Dal.

Please read the complete story happened during passing Companies Bill 2017, today in Rajya Sabha:

A bill to amend the companies law to strengthen corporate governance standards, initiate strict action against defaulting companies and help improve ease of doing business in the country, was passed by parliament on Tuesday.

The Rajya Sabha passed the Companies (Amendment) Bill, 2017 by a voice vote. It was adopted by the Lok Sabha in July this year during the monsoon session. Replying to issues raised by the members during a discussion on the bill, minister of state for corporate affairs P.P. Chaudhary said the amendment would ensure better corporate governance and improve the ease of doing business in the country.

The bill provides for more than 40 amendments to the Companies Act, 2013, which was passed during the previous united progressive alliance (UPA) regime. The bill was introduced in the Lok Sabha in March 2016 and then referred to the standing committee on finance.

After taking into consideration the recommendations of the panel, the cabinet had cleared a revised bill in March this year. The Companies Act, 2013 has already been amended once under the present government. The latest legislation would help in simplifying procedures, make compliance easy and take stringent action against defaulting companies, Chaudhary said.

The minister dismissed the apprehensions raised by members that the government was not doing enough to ensure that companies comply with the corporate social responsibility (CSR) provisions. Intervening during the reply, Congress leader Jairam Ramesh said CSR has become PSR or political social responsibility, especially for the public sector undertakings.

“There should be an independent audit for the objective of the CSR” spending of PSUs, Ramesh said. The minister said the government has already issued notices to many companies for not complying with CSR provisions under the Companies Act. On the government’s promptness in taking action against companies at fault, the minister said the government has taken several step against such firms which were not taken in last several years.

He said the government has taken action against over two lakh shell companies and Special Fraud Investigation Office was looking into it. Under the Act, certain classes of profitable companies are required to shell out at least 2% of their 3-year annual average net profit towards CSR activities. In case of non-expenditure, such entities are required to provide the reasons for it to the ministry.

R. Ramakrishna (BJP) said there was no provision of carrying forward the CSR funds and they should be given more time to use these funds. The minister said the upper limit of 300 days for filing returns under the Act led to non-compliance and hence changes have been made in the law to improve timely filings.

While the minister was pushing the bill for passage, former finance minister P. Chidambaram pointed out,”Why are you taking power to prescribe another number when Directors’ Index Number (DIN). DIN is a number. Why do you need another number? What is the idea?” He also opposed the proposal to give loans to directors and persons, saying a company should not give loans to the director or to those of interest to a director.

He also opposed the amendment to delete section 195 and 196 which provide for prohibition of insider and forward trading. The minister said insider and forward trading is barred d under the Securities and Exchange Board of India (Sebi) law and therefore there was no need of this provision in the Act which would anyway is superseded by the Sebi law.

Chidambaram said the provision should be part of the Act as Sebi does not have jurisdiction over unlisted companies and there could associate or subsidiary companies of listed companies, which can do insider or forward trading.

The minister said unlisted companies do not do insider or forward trading. V. Vijayasai Reddy (YSRCP) said the independent directors should not have any pecuniary interest in the company and they should not continue for longer terms. He also proposed having a statutory body for appointment of independent directors and provision of special resolution for their removal from the board.

T.S. Reddy (Congress) said the independent directors should not be responsible for companies’ liabilities as this would discourage them to come on board. D. Raja did not support the bill, saying it was a reiteration of the government to secure private capital and extend help to private corporates and big companies.

Naresh Gujaral opposed the provision to make it mandatory to have full time company secretary for those firms whose paid equity capital is Rs5 crore and above irrespective of turnover as per section 2 and 3 of the Act. Tapan Sen of Communist Party of India-Marxist or CPI-M said that this bill would not lead to ease of doing business in the country but would take our country to ransom.

Source: http://www.livemint.com/Politics/wbBL8yclbHa88DV07pKhGN/Parliament-passes-Companies-Amendment-Bill.htm

Case Study on Section 185 and Section 186 of Companies Act 2013

Case Study on Section 185 and Section 186 of Companies Act 2013

Facts in Brief

An India Private Limited Company (The Company) has advanced certain amounts to one of its subsidiary namely “S Private Limited”

The Company had planned to acquire 100% stake in the subsidiary vide Share purchase agreement from the shareholders of the subsidiary.

Pursuant to the above planned purchase of shares in the subsidiary, the Company had nominated its two directors as additional directors in the subsidiary which resulted in having common directors in both the companies.

The Company also had the responsibility of running the operations of the subsidiary and for this purpose it had appointed the employees in the Subsidiary for the same. Further, to run the subsidiary company, the Company also advanced certain amounts to the subsidiary for running the operations smoothly and shown as advance in the Balance Sheet of Subsidiary Company.

Later on, there were disputes amongst the then shareholders of the subsidiary and the Company on certain matters and the company could not complete the 100% stake in the subsidiary. Due to the disputes, the Company could not recover the amounts advanced earlier and also the investment in the subsidiary. Accordingly, various legal suits were filed in the court of law.

As the Company had hired employees for the subsidiary, the Company kept on paying the salary of the staff and showed the same as advances recoverable from the subsidiary company.

Finally, the Company and the then shareholders of the subsidiary has entered into a settlement agreement in the year 2015-16 and settled the entire claim of the Company via one time full and final settlement which included investment, loans and advances etc.

The Company wants to understand whether the above said advances given  attracts the provisions of Section 185 and 186 of the Companies Act, 2013 or not.

Answer:

Relevant provisions regarding providing of Loan to Directors, etc

Section 185(1) of the Companies Act, 2013 provides that no company shall, directly or indirectly, advance any loan, including any loan represented by a book debt, to any of its directors or to any other person in whom the director is interested or give any guarantee or provide any security in connection with any loan taken by him or such other person:

Explanation.—For the purposes of this section, the expression “to any other person in whom director is interested” means—
(a) any director of the lending company, or of a company which is its holding company or any partner or relative of any such director;
(b) any firm in which any such director or relative is a partner;
(c) any private company of which any such director is a director or member;
(d) any body corporate at a general meeting of which not less than twenty five per cent. of the total voting power may be exercised or controlled by any such director, or by two or more such directors, together; or
(e) any body corporate, the Board of directors, managing director or manager, whereof is accustomed to act in accordance with the directions or instructions of the Board, or of any director or directors, of the lending company.

 Analysis:

The company affianced to appoint two of its directors in the Subsidiary vide its Share Purchase, ergo both having common directors.

The pre requisite for the applicability of the provisions of Sub section 1 of Section 185 of the Companies Act, 2013 is whether the company has advanced loan to any of its directors or to any other person in whom the director is interested.

As per the terms and conditions stipulated in the covenant, the company had advanced certain amounts to the subsidiary for meeting the operational expenses. This amount of money cannot be construed to be loan to the directors of the company or any other person in whom the director is interested as the incumbents did not hold any prior interest at the time of advancing the loan, but were appointed only to fullfil the requirement of the Agreement as nominee of acquirer, thus is not repugnant to the above provisions.

Further in view of the serious implications in the event of violation of the provisions of section 185 it is absolutely necessary to understand the precise and concise meaning of word “loan”  and “Advances”;

Loan:

Loan has not been defined under Companies Act, 2013. Therefore we have to rely on the dictionary meaning of the term “Loan” and judicial clarification in this regard. As per dictionary meaning, loan is a sum of money or other valuables or consideration that an individual, group or other legal entity borrows from another individual, group or legal entity with the condition that it be returned or repaid at a later date with or without interest.

The Hon’ble Supreme Court in the case of Shree Ram Mills Ltd Vs. Commissioner of Excess Profit Tax, MANU/SC/0054/1954 = AIR 1953 SC 485 has defined the word “Loan” in the following words:-

At bottom this is a question of fact. Of course, money so left, could by a proper agreement between the parties, be converted into a loan, but in the absence of an agreement mere inaction on the part of the managing agents cannot convert the money due to them, and not withdrawn, into a loan. A loan imports a positive act of lending coupled with an acceptance by the other side of the money as a loan.

The Calcutta High Court in the case of Saradindu Sekhar Banerjee Vs. Lalit Mohan MANU/WB/0045/1941, AIR 1941 Cal. 538 Every loan is a debt but every debt is not a loan.

ADVANCE:

The Hon’ble Madras High Court in the case of KM. Mohammed Abdul Kadir Rowther Vs. S. Muthia Chettiar MANU/TN/0424/1959 that advance means literally a payment beforehand.  In certain cases,  it may be a loan but it cannot be said that a sum paid by way of advance is necessarily a loan.

The Hon’ble Privy Council in the case of Raja of Venkatagiri vs. Krishnayya Rao Bahadur MANU/PR/0017/1948  : AIR 1948 PC 150 at p. 155, has observed that ordinarily advance does not connote any idea of repayment is, hence loan is completely different from an advance as is understood in the common parlance in the sense of payment of money beforehand and which is likely to become due at some future time.

In the judgement passed by Madras High Court in K.M. Mohamad Abdul Kadir Rowther vs S. Muthiah Chettiar on 5 August, 1959, it was contended that, the advance were not to be considered as a loan, the amount was intended to be recovered, and that, therefore an obligation to repay the sum should be inferred; there being thus an obligation to repay a personal liability would subsist. The learned advocate for the appellant urged that the word 'Advance' itself would imply a loan. 'Advance' means literally a payment before hand; in certain cases it may be a loan but it cannot be said that a sum paid by way of advance is necessarily a loan, this decision was based on London Financial Association v. Kelk L.R. (1884) 26 Ch. D. 107, where it was observed, that the words-'advancing' and 'lending' each have a different significance, the money might be 'advanced' without being 'lent'.

Whether section 185 is talking about loan or advance or both?

Section 185(1) of the Companies Act, 2013 inter-alia provides that no company shall, directly or indirectly, advance any loan, including any loan represented by a book debt, to any of its directors or to any other person in whom the director is interested or give any guarantee or provide any security in connection with any loan taken by him or such other person

Here words “advance any loan” are used, it is not used as “advance or loan/advance and loan”, and hence the word “advance any loan shall be read together and word advance is a verb and loan is a noun, accordingly “advance any loan” means to give any loan This section is not at all include the words ‘Advance’ as noun which means paying something in advance before it is actually due.

It is pertinent to refer to the case of Pennwalt India Ltd. v. RoC , wherein the Hon’ble High Court of Bombay has held that to ascertain whether a transaction is a loan or not, surrounding circumstances, relationship and character of the transaction and the manner in which parties treated the transactions will have to be considered. Hence, with reference to each transaction with Directors and other person in whom the Directors are interested; the nature of transactions has to be studied.

Purpose of Section 185:

It seems that legislature was intended to prohibit the flow of funds from the company to its directors or other persons in whom the Director is interested, more emphasis is likely to be laid on the fiduciary duty of the Directors and for such reason the loans, etc. to Directors and other specified person are prohibited. It simply means that a director shall not be enriched at the funds of the Company.

This provision is to curb the misuse of the powers by directors, whereby they do not use their fiduciary powers for self-benefit, and move the funds of the company away to their personal pocket directly or through any intermediaries.

Although the terms  “loans and advances” are used together and in common parlance deemed to be synonyms of each other but in view of various judicial decision as illustrated above “Loan” and “Advance” both are two different words carrying independent  meaning. In the given case the acquirer has given advances to its subsidiary company during the course of acquisition of 100% shares in accordance with Share Purchase for business purpose and to meet day to day running expenses and salary requirement of the employees appointed by the acquirer. It seems that neither it was intended by the acquirer to “advance any loan” nor has been reflected in the balance sheet of the target company the said amount as loan and we presume that the said amount has been shown as advance under sub head advance under the head “Loan and Advance”.  

Whether there is any direct or indirect personal interest of Directors concerned?

There is no question of personal interest of directors where the Holding Company advance supports to its subsidiary company which was undergoing the course 100% acquisition. If it is not wrong to have subsidiaries, it cannot be said to be wrong to support subsidiaries. If the subsidiary does well, it augments the asset value of the holding company, therefore, the well-being of the subsidiaries is the well-being of the holding company. If the directors of the company are helping the subsidiaries, they are helping the business of the company, which is the very purpose for which they exist. Further in the given case the subsidiary company was under the process to become 100% subsidiary of the acquirer company in accordance with share purchase agreement and in pursuance of that the acquirer has already acquired 51% of shares of the target company as first trench acquisition and appointed two of its directors as its nominee directors in the subsidiary company as mandated in Share Holders Agreement and Share Purchase Agreement. Merely because of directorship in the subsidiary as the nominee of the holding company, such advance could not be treated  as indirect loan to such Directors.

Meaning of Direct & Indirectly:

When section 185 is also talking about indirect loan, in the light of various judicial pronouncements illustrated above  “indirect loans” will connote that the company shall not give loan through the mode of one or more intermediaries. However, the word ‘indirectly’ cannot be read as converting what is not a loan into a loan.  Hence, the amount given must be strictly a loan, which is not in the nature of loan, cannot be said to be the case of an indirect loan.  

Section 186(vii)- Loan and Investment by Company provides that no loan shall be given under this section at a rate of interest lower than the prevailing yield of one year, three year, five year or ten year Government Security closest to the tenor of the loan.

An advance is not loan as discussed above hence there is no question of applicability of section 186(iii) Although the terms  “loans and advances” are used together and in common parlance deemed to be synonyms of each other but as per various judicial decisions there is a clear line of demarcation between the two terms. Further nature and purpose of transaction of the current case do not resemble with that of loan.

Inferences Drawn

Therefore in light of the above observations and examination of the provisions of the Companies Act, 2013 and the rules framed there under and various judicial decisions cited above, we are of the opinion that the company has not contravened any  provisions of Section 185 or Section 186.

Regards

CS Ravi Bhushan Kumar

Partner

SR & Associates

9990339200

cs.ravibhushan@Gmail.com

Noida

Disclaimer 

1.           The conclusions reached and views expressed are matters of opinion based on my  understanding of the related laws, rules, notifications, circulars, etc.

2.           This is complete a personal opinion on the basis of imaginary facts and figure.

  

Every woman has a past. Some were physically abused. Some had violent parents. Some had pubertal issues. Some had sexual abuse as a child from their own family members. Some had messed up love stories. Some had been forced into sex in the name of love. Some had been drugged. Some were date raped. Some had been viciously photographed on bed. Some had been blackmailed by their ex-boyfriend. Some were in an abusive relationship. Some had menstrual problems. Some had a broken family. Some had a divorce. Some had an obesity issue. Some had financial droughts. Some had drug or alcohol addiction. Some had a few unsuccessful suicide attempts.

If you see a woman, who went through any of these but had already wiped her tears, tied her hair up, masked her sorrows with a divine smile, stood tall and strong, started walking towards her future because she still has some hope left inside her and has not given up on the concept of love that still exists in this world, do not stab her with her past. Do not confront her. Do not slap her with more abuse. Give way for her and walk beside her. May be hold her hands and walk for a while. You'll know how sweet that soul is and how strong her hopes are! You'll be amazed at how she carries herself after all her energy has been sucked out.

She need not always be only the woman next door or from a different home. She could be your own friend, your own sister, your own girlfriend, your own wife, even may be your own mother. Do not judge her by her past. Gift her the peaceful future that she deserves. Hold her hands against the world, which knows only to judge.

Give her the love that she always yearned for.

Love respect women.

ISSUE OF UNSECURED NON-CONVERTIBLE DEBENTURES TO A PRIVATE SECTOR BANK

Facts in Brief:

A Company issue Unsecured Unlisted Non-Convertible Debentures of maturity of three years to private sector bank against the Corporate Guarantee of its holding Company. The Company will appoint a Debenture Trustee and will execute a Debenture Trust Deed.

Query: Whether raising money from a private sector bank by way of issue of unsecured non-convertible debentures would be treated as Deposits?

Relevant Provisions:

Before replying to the query, it is pertinent to understand and analyze the position under the provisions of Companies Act, 2013.

Debenture:

Section 2(30) provide inclusive definition of debentures as follow:

“Debenture include debenture stock, bonds, or any other instrument of a company evidencing a debt, whether constituting a charge on the assets of the company or not.

The debenture is a note of thanks, a certificate issued by a company to lenders that offer loan to the company in exchange of the fixed rate of interest for a long term. These bonds bear the seal of the company and contain the details of the contract for the repayment of the principal sum on a date after the time period of the debentures with the payment of interest at a rate which is also specified in the certificate. The obligations are the responsibility of the company and are reflected as such in the financial statements of the company.

In other words we can say Debenture is a statement by the company that the company will pay a certain some of money on a given day, and will also pay periodical interest at certain time and at certain place.

Thus in term debenture simply means a document acknowledging a loan made to the company and providing for the payment of interest on the sum borrowed until the debenture is redeemed, i.e., repayment of principle sum.

Deposit:

Section 2(31) of the Companies Act defines deposit as under “deposit” includes any receipt of money by way of deposit or loan or in any other form by a company, but does not include such categories of amount as may be prescribed in consultation with the Reserve Bank of India;

By reading of the definition of debentures and deposits its seems that debentures and deposits both are borrowing and all borrowing or loan or receipts of money or in any other form are deposit except excluded categories. Further borrowing from a bank is excluded from the ambit of deposit vide deposit rules 2(1)(c)(iii).

Refer to Section 73 of the Companies Act, 2013 “Prohibition on acceptance of Deposits from Public”

and

Rule 2(1)(c)(iii) and Rule 2(1)(c)(vii) 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 it does not include:

·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) (sub-rule iii of rule 2 (1) (c) of the Companies (Acceptance of Deposits) Rules, 2014);

·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. {sub-rule 7 of rule 2 (1) (c) of Companies(Acceptance of Deposits) Rules, 2014}.

   Further also we refer to Section 58A of the Companies Act, 1956 “Deposits not to be invited without issuing an advertisement” and Rule 2(b)(ii), 2(b)(vii) and 2(b)(x) of Companies (Acceptance of Deposits) Rules, 1975,

·any amount received as a loan 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 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); {sub rule ii of rule 2(b) of Companies(Acceptance of Deposits) Rules, 1975}.

In the current scenario, the money raised from the bank is a sort of a debt by issuing debentures which although is not secured by furnishing any asset of the company as security, but secured by providing Corporate Guarantee by the promoters of the Company. Thus the raising of the money is protected from being treated as deposit by operation of rule 2(1) (c) iii of the Companies (Acceptance of Deposits) Rules, 2014.

Moreover Section 73 and Section 76 talks about prohibition of deposits from public and acceptance of deposits from public respectively. The underlying principle behind these Sections is to protect the public who are depositing the marginal saving from their regular income into the Company by way of deposits. These are not to protect the bank whose principal business is to accept deposits and grant loans. It is a regular feature of the Bank to provide loan and other facility as its regular business activities as per the prescribed terms and condition in accordance with the guidelines and regulations issued by the Reserve Bank of India for the purpose of lending amount. Therefore bank could not be treated as public for the purpose of section 73 to section 76 of Companies Act 2013. Accordingly the 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 has been excluded from the ambit of deposits vide rule 2(1) (c) iii of the Companies (Acceptance of Deposits) Rules, 2014.

Further, since the money raised shall be in form of securities which shall be issued by the Company pursuant to an offer made in accordance with the provisions of the Act towards subscription to any securities shall keep such an issue out of the ambit of being treated as Deposit. Moreover, it is clear as per the definition of Securities as laid down under Section 2 (h) of Securities Contracts (Regulation) Act, 1956 that “securities” include— (i) shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate; (ia) derivative; (ib) units or any other instrument issued by any collective investment scheme to the investors in such schemes; (ic) security receipt as defined in clause (zg) of section 2 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; (id) units or any other such instrument issued to the investors under any mutual fund scheme; (ii) Government securities; (iia) such other instruments as may be declared by the Central Government to be securities; and (iii) rights or interest in securities.

As per the definition of securities, it includes debentures. Debentures are transferable and tradable/marketable also, if get listed. In contrary to the receipts which are to be issued against deposits which is never be treated as securities and neither transferable nor tradable and not eligible for being listed as securities with a recognized stock exchanges because only a security can be listed on stock exchanges, not deposits.

Inferences Drawn

Therefore in light of the above observations and examination of the provisions of the Companies Act, 2013 and the rules framed there under, we are of the opinion that the amount as proposed to be borrowed by the Company shall not be considered as deposit as per the provisions of the Companies Act, 2013.

Regards

CS Ravi Bhushan Kumar

Partner

SR & Associates

Noida

9990339200

Cs.ravibhushan@gmail.com