Section 76A of Companies Act, 2013: Punishment for Contravention of Section 73 or Section 76

Section 76A of the Companies Act, 2013 provides the penal consequences where a company accepts or invites deposits in breach of the statutory deposit framework, or fails to repay a deposit, a part of it, or interest due within the prescribed or permitted time.

In brief: Section 76A operates alongside the substantive deposit requirements in Section 73 and Section 76, together with the applicable rules governing acceptance of deposits.

What does Section 76A cover?

The provision applies where a company accepts, invites, allows or causes another person to accept or invite deposits on its behalf in contravention of the manner or conditions prescribed under Section 73, Section 76 or the rules made under those provisions. It also applies where the company fails to repay the deposit or any part of it, or the interest due, within the applicable statutory period or such further time as may lawfully be allowed by the Tribunal.

Meaning of the related provisions

Section 73 - Acceptance of deposits from members

Section 73 regulates acceptance of deposits by companies and, subject to the Act and prescribed conditions, permits acceptance of deposits from members. The detailed compliance framework is supplemented by the Companies (Acceptance of Deposits) Rules, 2014.

Section 76 - Acceptance of deposits from the public by certain public companies

Section 76 permits prescribed classes of public companies meeting the applicable net worth or turnover criteria to accept deposits from persons other than members, subject to the requirements of Section 73(2) and the rules prescribed by the Central Government.

Section 447 - Punishment for fraud

The proviso to Section 76A links a knowing or wilful contravention, committed with the intention to deceive specified persons or authorities, to action under Section 447. Section 447 is the Companies Act provision dealing with punishment for fraud.

Penalty under Section 76A

Company In addition to repayment of the deposit or part thereof and the interest due, the company is punishable with a fine of not less than ₹1 crore or twice the amount of deposit accepted by the company, whichever is lower. The fine may extend to ₹10 crore.

Officer in default Every officer of the company who is in default is punishable with imprisonment which may extend to seven years and with a fine of not less than ₹25 lakh, which may extend to ₹2 crore.

Additional consequence for knowing or wilful deception

If it is proved that an officer in default knowingly or wilfully contravened the deposit provisions with an intention to deceive the company, its shareholders, depositors, creditors or tax authorities, the officer may also face action under Section 447.

Section 76A at a glance

Issue	Position under Section 76A
Deposit accepted contrary to law	Section 76A may apply where the manner or conditions under Section 73, Section 76 or the applicable rules are contravened.
Failure to repay	The section covers failure to repay the deposit, part of the deposit or interest within the applicable time.
Company liability	Repayment and interest remain payable in addition to the statutory fine.
Officer liability	An officer in default may face imprisonment and fine.
Fraudulent intent	A knowing or wilful contravention with the specified intent to deceive may attract action under Section 447.

Legislative history relevant to the present text

Section 76A was inserted by the Companies (Amendment) Act, 2015 with effect from 29 May 2015. The Companies (Amendment) Act, 2017 subsequently amended the minimum fine applicable to the company and changed the wording governing punishment of an officer in default, with effect from 9 February 2018.

Official legal resources

Practical note: Deposit compliance should be checked against the current text of the Companies Act, 2013, the Companies (Acceptance of Deposits) Rules, 2014 and applicable MCA notifications or exemptions. The facts of a particular deposit, company classification and default period can affect the legal position.