Partho is the Manager (Marketing) of unlisted company Seesaw Machineries Ltd. The company was listed earlier but got delisted two years back. The company took ₹1 lakh from him under an employment contract @3% interest pe

Rule 2(c)(x) of the Companies (Acceptance of Deposits) Rules, 2014 states that any amount received from an employee of the company not exceeding his annual salary under a contract of employment with the company in the nature of non-interest-bearing security deposit is not a deposit. In the given case, company took ₹1 lakh from Partho under an employment contract @3% interest per annum. Partho is paid a salary of ₹60,000 per month i.e., ₹7.20 lakh per year. The amount taken by the company is less than the annual salary of the employee. Thus, one limb of the conditions of clause is fulfilled. However, the amount is interest bearing. The fact that rate of interest is less than the rate of external loans has no relevance. Hence, the dual conditions under the rule are not complied with and the amount will fall within the meaning of the term 'deposit'. The comment by the internal auditors that there is non-compliance of provisions of the Companies Act, 2013 is correct.