Section 74 of Companies Act, 2013: What Happens to Old Deposits?
When the Companies Act, 2013 came into force, it didn’t just introduce new rules.
It also looked backward.
Because thousands of companies had already accepted deposits under the old law — and those deposits couldn’t simply disappear with a change in legislation.
That’s where Section 74 steps in.
This provision exists for one simple reason — to make sure companies don’t walk away from promises they made in the past.
Especially to those who trusted them with their money long before the 2013 Act ever came into force.
It’s not about punishment.
It’s about responsibility.
Why Section 74 Was Introduced
Before 2013, accepting deposits was common practice. Many companies relied on them as a regular funding source. Some deposits had long maturity periods. Others kept getting renewed.
But when the new law arrived, the government saw a risk.
What if companies used the transition as an excuse to delay repayments?
What if depositors were left chasing money they had trusted companies with?
Section 74 was created to stop that from happening.
Its purpose is simple:
No company should escape repayment just because the law changed.
What Section 74 Actually Covers
Section 74 applies to all deposits accepted before 1 April 2014 — whether from members or the public.
It doesn’t matter whether the company is big or small, private or public.
If deposits existed before the new Act, they must be dealt with under this section.
The law doesn’t leave room for interpretation here.
Every such company must either repay the deposits or follow the prescribed legal route for extension.
What Companies Are Required to Do
The law expects companies to act — not wait.
They must:
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Acknowledge old deposits
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Disclose full details to the Registrar of Companies
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Repay them within the prescribed timeline
This includes details like:
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Amounts outstanding
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Names of depositors
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Repayment schedules
The idea is transparency. Regulators must be able to see exactly where things stand.
Silence is not an option.
Time Limit for Repayment
Section 74 lays this out clearly.
Companies must repay deposits within one year from the commencement of the Act, or by the original due date, whichever comes earlier.
This prevents companies from using the new law as a delaying tactic.
Depositors come first. Always.
What If a Company Cannot Repay?
The law does recognise that genuine financial difficulty can exist.
If a company is unable to repay within the prescribed time, it may approach the National Company Law Tribunal (NCLT) for relief.
But this is not automatic.
The company must:
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Prove genuine financial hardship
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Show intent to repay
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Seek approval through proper legal process
The Tribunal may grant additional time, but only under strict conditions.
Conditions Imposed by the Tribunal
When relief is granted, it comes with strings attached.
The Tribunal may:
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Fix phased repayment schedules
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Impose reporting obligations
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Restrict certain financial activities
These conditions exist to protect depositors and prevent misuse of extensions.
Once the Tribunal steps in, compliance is closely monitored.
Consequences of Non-Compliance
Section 74 is not lenient.
Failure to repay deposits or comply with Tribunal directions can lead to:
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Heavy monetary penalties
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Fines running into crores
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Imprisonment of responsible officers (up to 7 years)
This is one of the few provisions where personal liability becomes very real.
Directors and officers cannot hide behind the company structure.
Personal Liability of Directors and Officers
Section 74 makes it clear — responsibility is personal.
If a company defaults, the officers in charge may be held individually liable.
This reinforces the idea that managing deposits is not a casual administrative task. It’s a fiduciary duty.
The law expects leadership to act responsibly, transparently, and ethically.
How Section 74 Changed Corporate Behaviour
Over time, Section 74 has reshaped how companies approach fundraising.
Many organisations now prefer structured financial instruments rather than informal deposits.
Others have strengthened compliance systems to avoid regulatory risk altogether.
This shift has brought greater discipline and improved trust between companies and stakeholders.
Practical Challenges on the Ground
Of course, implementation hasn’t always been smooth.
Some companies struggled with liquidity.
Others faced issues tracing old depositors.
But courts and tribunals have generally taken a balanced approach — firm, but fair.
Genuine hardship is considered. Deliberate non-compliance is not.
Why Section 74 Truly Matters
Section 74 is more than a legal requirement.
It protects people who trusted companies with their money.
It reinforces accountability at the top.
And it sends a clear message — growth cannot come at the cost of honesty.
In many ways, it’s a cornerstone of corporate credibility.
Final Thoughts
Section 74 of the Companies Act, 2013 ensures that deposits accepted before the new law are not forgotten, ignored, or delayed indefinitely.
By enforcing repayment timelines, empowering tribunals, and imposing strict penalties, it safeguards depositor interests and strengthens confidence in corporate governance.
Compliance isn’t optional here — it’s a responsibility.
Need Help With Section 74 Compliance?
If you need support with deposit repayment, NCLT filings, or regulatory compliance under the Companies Act, 2013, professional guidance can save time, cost, and risk.
Explore expert assistance at Callmyca.com — and stay on the right side of the law.
