ABC Ltd. is an eligible company to accept deposits. It had accepted a fixed deposit of 5,00,000 from Mr. R on 1st April, 2022 for a period of 36…

(a) (i) Section 76 of the Companies Act, 2013 and Rule 15 of the Companies (Acceptance of Deposits) Rules, 2014 deal with acceptance of deposits from public by eligible companies. Premature Repayment of Deposits (for eligible companies): Where a company makes a repayment of deposits, on the request of the depositor, after the expiry of a period of six months from the date of such deposit but before the expiry of the period for which such deposit was accepted, the rate of interest payable on such deposit shall be reduced by one per cent. from the rate which the company would have paid had the deposit been accepted for the period for which such deposit had actually run and the company shall not pay interest at any rate higher than the rate so reduced. As per the Explanation given under the said rule- For the purposes of this rule, where the period for which the deposit had run contains any part of a year, then, if such part is less than six months, it shall be excluded and if such part is six months or more, it shall be reckoned as one year. In the situation given in the question: Original deposit tenure = 3 years; Contracted rate = 9% (for 3 years); Actual period run = 2 years 8 months. As per the explanation provided in the Rule, if the actual period contains a fraction of a year, the period will be determined as below: 1. For less than 6 months → The full year is to be ignored ignoring the part of the year: and 2. For 6 months or more → To be count as one full year. So, 2 years 8 months to be count as 3 years. Therefore, while calculating the rate of interest payable, the "actual run period" will be considered as 3 years and contract rate applicable for 3 years (and not for 2 years) will be: 9% (same as original scheme) Less penalty for premature reduction 1% = 8%. Hence, for the period of deposit is 32 months the rate of interest payable to Mr. R would be 8%. (ii) Reduction of rate of interest is not applicable in the following cases: (a) Where the deposit is prematurely repaid to comply with Rule 3 i.e. premature repayment made in order to reduce the total amount of deposits to bring it within the permissible limits; or (b) Where the deposit is prematurely repaid to provide for war risk or other related benefits to the personnel of naval, military or air forces or to their families during the period of emergency declared under Article 352 of the Constitution.