Section 76A of CA 2013 : Section 76A: Punishment For Contravention Of Section 73 Or Section 76

Explanation using Example

Imagine that XYZ Private Ltd. decides to raise funds for its new project. Instead of following the legal process, it starts accepting deposits from the public without complying with the conditions of Section 73 or Section 76 of the Companies Act, 2013. The company promises high returns and collects a significant amount from various depositors.

After a year, the project fails and the company is unable to repay the deposits or the promised interest. The depositors file a complaint and the matter is investigated. It is found that XYZ Private Ltd. has not only accepted deposits illegally but also failed to repay them as per the terms agreed.

As a result, under Section 76A of the Companies Act, 2013:

• The company is fined a minimum of one crore rupees, which could go up to ten crore rupees, depending on the amount of deposits collected.
• The officers of the company, including the directors who were aware and involved in the decision to accept the deposits, face imprisonment for a term that may extend to seven years, and are also fined between twenty-five lakh to two crore rupees.

Furthermore, if it's proven that any officer of the company accepted deposits with the intention to deceive stakeholders, they might face stricter penalties under section 447, which deals with fraud.