RS Ltd. received share application money of 50 Lakh on 01.06.2025 but failed to allot shares within the prescribed time limit. The share application…

According to Rule 2 (1) (c) of the Companies (Acceptance of Deposits) Rules, 2014, the following category of receipt is not considered as deposit: Any amount received and held pursuant to an offer made in accordance with the provisions of the Companies Act, 2013 towards subscription to any securities, including share application money or advance towards allotment of securities, pending allotment, so long as such amount is appropriated only against the amount due on allotment of the securities applied for. It is clarified by way of Explanation that if the securities for which application money or advance for such securities was received cannot be allotted within 60 days from the date of receipt of the application money or advance for such, securities and such application money or advance is not refunded to the subscribers within 15 days from the date of completion of 60 days, such amount shall be treated as a deposit under these rules. Further, it is clarified that any adjustment of amount for any other purpose shall not be treated as refund. In the given question, RS Limited has received 50Lakh as share application money on 01.06.2025. It failed to allot shares within the prescribed limit. Further, on 30.07.2025 the company adjusted the amount of 5Lakh received from Mr. Khanna (a customer of the company), by way of book adjustment towards the dues payable by him to the company. In the light of the facts of the question and provisions of Law: (1) If such application money or advance is not refunded to the subscribers within 15 days from the date of completion of 60 days, such amount shall be treated as a deposit. In the question, the prescribed limit of 60 days will end on 31.07.2025 and the company has 15 more days to refund such application money to the subscribers. Otherwise, after lapse of such 15 days, the amount not so refunded will be treated as deposit. Hence, the Company Secretary of RS Limited is not correct in treating the entire amount of 50Lakh as 'Deposits' on 31.07.2025. (2) Any adjustment of the amount for any other purpose shall not be treated as refund. Thus, the amount of 5Lakh adjusted against payment due to be received from Mr. Khanna, cannot be treated as refund.