1. The petitioners have filed this petition under the provisions of section 633 of the Companies Act, 1956.
2. The facts that give rise to this petition are that the Registrar of Companies (hereinafter referred to as 'the respondent') served a notice dated December 27, 1984, on the petitioners asking them to show cause why legal action should not be taken for contravention by the company of section 370 of the Companies Act, 1956. In the said notice, it has been, inter alia, stated as follows :
'WHEREAS the company has deposited Rs. 25.80 lakhs with various companies.
WHEREAS section 370 provides that no company shall make loans to all bodies corporate exceeding 20% or 30% as the case may be, and if it exceeds, then the company is required to obtain prior approval of the Central Government.
WHEREAS the total of subscribed capital and reserves, i.e., Rs. 12,00,000 and Rs. 11,93,028, respectively amounting to Rs. 23,93,028 and 30% of this come to Rs. 7,17,908 whereas the company has deposited in other companies amounting to Rs. 20.80 lakhs. Prima facie it has exceeded the limit prescribed under this Act. Hence, it has contravened the provisions of section 370 of the Companies Act, 1956.
AND WHEREAS the company by not obtaining the approval of the Central Government the as required under section 370 of the Companies Act, 1956, has contravened the provisions of the above section of this Act.'
3. The petitioners have hence filed this petition seeking relief. The petition has been opposed by the respondent.
4. At the hearing of this matter, Mr. Rele, learned counsel for the respondent, urged that it is not in dispute that the company, viz., Birla Consultants Ltd., had advanced a sum of Rs. 12,00,000 to the Associated Cement Companies Ltd. That, in a monetary transaction, whether it be a deposit or a loan, the relationship of a creditor and debtor must come about. That the word 'loan' is a 'generic' term and includes a deposit. That money placed with the bank on a current account is in the position of money lent by the customer to bank although all incidents of an ordinary transaction of a loan do not exist. (vide N. Joachimson v. Swiss Bank Corporation  3 KB 110 (CA)). That section 58A of the Companies Act deals with deposits and applies to 'borrowing companies' (term used by Mr. Rele). Section 370 of the Companies Act deals with 'loan' and applies to 'lending companies' (term used by Mr. Rele). That the company, viz., Birla Consultants Ltd., has in fact in the guise of a 'deposit' actually lent moneys to the Associated Cement Companies Ltd. and the transaction is squarely a 'loan' within the meaning of section 370 of the Companies Act. Then again, rule 2 of the Companies (Acceptance of Deposits) Rules, 1975, provides as follows :
'2. Definitions. - In these rules, unless the context otherwise requires, - ......
(b) 'deposit' means any deposit of money with, and includes any amount borrowed by a company, but does not include - .....
(iv) any amount received by a company from any other company;'
5. If this be so, then, in the present case, since there is no dispute that the money given by the company are to another company, the same cannot be considered as a 'deposit', but would in fact be a 'loan'. In the circumstance, the petitioners would be entitled to no relief whatsoever on this petition.
6. Now, as regards the aforesaid contentions, it may be stated that there can be no controversy that in a transaction of a deposit of money or a loan, a relationship of a debtor and creditor must come into existence. The terms 'deposit' and 'loan' may not be mutually exclusive, but none the less in each case what must be considered is the intention of the parties and the circumstances. This is also the ratio laid down in V. E. A. Annamalai Chettiar v. S. V. V. S. Veerappa Chettiar, : AIR1956SC12 , as also in Ram Janki Devi v. Juggilal Kamlapat, AIR SC 2551. What must also be borne in mind is that under the Limitation Act, the period when limitation would begin in a case of deposit and in a case of lending are differently provided. Hence, the distinction between a loan and a deposit is fine but appreciable. In the present case, barring the assertion of the respondent that the moneys advanced by the company to the Associated Cement Companies Ltd. constitute a loan and offend section 370 of the Companies Act, there is nothing else to show that these money have been advanced as a 'loan'. From what is aforestated, it follows, that in the context of the statutory provision, the word 'loan' may be used in the sense of a 'loan' not amounting to a deposit. (vide Nawab Major Sir Mohammed Akbar Khan v. Attar Singh, AIR 1936 PC 171; 63 IA 279 and Ram Janki Devi v. Juggilal Kamlapat, : 3SCR573 . In other words, the word 'loan' in section 370 must now be construed as dealing with loans not amounting to deposit, because, otherwise, if deposit of moneys with corporate bodies were to be treated as loans, then deposits within scheduled banks would also fall within the ambit of section 370 of the Companies Act. Mr. Rele has, however, fairly conceded that deposits with scheduled banks do not fall within the ambit of section 370 of the Companies Act. Then to treat certain deposits of money and not other as being within the ambit of section 370 of the Act would be to give an inconsistent construction to the section.
7. In the circumstances, the contention of Mr. Rele that in this case the moneys given by Birla Consultants Ltd. to the Associated Cement Companies Ltd. is a loan within the meaning of section 370 of the Companies Act must be negatived.
8. In the result, the petitioners would well be entitled to the relief in terms of payers (a) and (b) of the petition.