Arnav is the Senior Manager (Purchase) of Future Products Ltd. The company is not listed in any stock exchange. It took ₹7 lakh from Arnav under an employment contract @ 4% interest per annum. Arnav is paid a salary of ₹

Rule 2(c)(x) of 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 exempted from the definition of the Deposit. In the given case, company took ₹7 lakh from Arnav under an employment contract @4% interest per annum. Arnav is paid a salary of ₹75,000/- per month i.e. ₹9 lakh per year. The amount taken by the company is less than annual salary of the employee. Thus one limb of the conditions of clause is fulfilled. However, the amount is interest bearing. Hence, the dual conditions under rules are not complied with and the amount will fall within the meaning of term 'deposit'. The comment by the auditor that there is a non-compliance of provisions of the Companies Act, 2013 is correct.