S.2(31) Companies Act 2013 Which Defines ‘Deposit’ Does Not Operate Retrospectively: Delhi High Court

[22 July 2022] The Delhi High Court has held that there cannot be retrospective application of Section 2(31) of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.

A single judge bench of Justice Chandra Dhari Singh held that for issues that had arisen with respect to a share purchase agreement in 2010, the Companies Act, 1956 and the Rules of 1975 shall be applicable.

In this case, the court framed two questions that required determination-
a) First, whether the Companies Act 2013 and the Companies (Acceptance of Deposit) Rules, 2014 were applicable on the amount in question and;
b) whether the amount in question could be treated as “deposit”.

Here, the court opined that Section 2(31) of the Companies Act, 2013 that defines “deposit”, came into force from 1st April 2014 and as such, could not be applied retrospectively for the share-purchase agreement between the Company and Petitioner that was entered into between the parties back in the year 2010. For the same reason, Rules of 2014 could also not be applied on the amount in question.