Before you pay a deposit: how to check the company taking your money
A deposit is an unsecured loan you make to a stranger. Match the bank account to the contracting entity, then check paid-up capital, charges and RERA before the money leaves.
The agreement is drafted, the photographs looked right, and the person on the phone is friendly and slightly impatient. Six months’ rent as deposit, or two lakh to hold the flat, or a joining fee for the franchise. The account details are in your inbox.
Here is the uncomfortable framing. A deposit is an unsecured loan you make to a company you have not met, at zero interest, with no collateral, repayable at a date you do not control. If you were a bank, you would run checks. You are not a bank, but the checks are free and they take about three minutes.
Start with the name, because it is where the problem usually is
Get the exact legal name of the company you are contracting with, and get it from the agreement rather than from the signage, the website or the brochure. Then get the CIN, the 21-character identifier every company has. Ask for it if it is not on the agreement. A company that will not give you its CIN has told you something.
Three mismatches to look for, and any one of them is worth a pause:
The trading name is not the legal name. Extremely common and usually innocent. “Sunrise Homes” on the hoarding is “Sunrise Buildcon Private Limited” on the register. You want the second one.
The agreement names one entity and the invoice names another. Groups run several companies and staff use whichever letterhead is open. Innocent most of the time, and it matters enormously if you later need to make a claim, because you can only claim against the entity you contracted with.
The bank account is in a different name again. This is the one to stop on. A payment into an account that is not the contracting entity, especially an individual’s account, is the feature that shows up again and again in advance payment losses, and it is the hardest thing to unwind afterwards.
Once you have the CIN you can read it, and it will tell you the state, the year of incorporation and whether the company is private or public before you have looked anything up.
Two numbers that change how large a deposit you should pay
Once you have the CIN, the two-minute check on whether a company is real tells you whether the entity exists and whether it is still on the register. If the status is anything other than Active, stop; what each status means is the reason. If nothing comes back under the name on your agreement, you may have a proprietorship or a partnership, which is not illegitimate, but it changes who you are dealing with and what you can recover from.
What the two-minute check does not do is size the deposit. Two free fields on the same master-data page do.
How old is it? A company incorporated four months ago taking six-figure deposits is not necessarily doing anything wrong. It is a different risk from one that has been filing since 2009, and the deposit should reflect that.
What is its paid-up capital? This is the amount shareholders have actually put into the company. Compare it with the size of your deposit, and with the total deposits the company is presumably holding from everyone else. A company with ₹1 lakh of paid-up capital holding thirty deposits of ₹2 lakh each is running on your money. That is not illegal and it is worth knowing.
The check almost nobody does: who else has a claim
Still free. On the MCA portal, under Master Data, there is an item called View Index of Charges.
A charge is a lender’s registered claim over the company’s assets. If a bank lent against the building, the land or the receivables and registered that charge, the bank is a secured creditor. Your deposit is an unsecured claim. If things go wrong, secured comes first.
For a deposit this is unusually relevant, because the asset you care about is often the very thing that has been pledged. A landlord company whose property carries an open charge is a landlord whose property has a lender’s name attached to it. That is ordinary commercial borrowing and not by itself alarming. It is information you should have before deciding how much to hand over and on what terms.
One caveat: a charge stays on the register until the company files to release it, and long-repaid loans routinely sit there for years because nobody filed the form. An open charge is a registered claim, not proof of a live debt.
The register most people forget
If you are paying for a flat, a plot, or anything in an under-construction housing project, the MCA register is the wrong register to start with.
Section 3(1) of the Real Estate (Regulation and Development) Act 2016 is deliberately wide. No promoter shall “advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner any plot, apartment or building, as the case may be, in any real estate project or part of it, in any planning area, without registering the real estate project” with the state authority. Note “in any manner” and “or part of it”: a brochure, a soft launch and a single tower of a larger scheme are all inside it. The Act also treats each phase as a stand-alone project.
The exemption in section 3(2)(a) is narrow: no registration is required “where the area of land proposed to be developed does not exceed five hundred square meters or the number of apartments proposed to be developed does not exceed eight, inclusive of all phases”. The limbs are joined by “or”, which has been argued about, and a state government may lower the thresholds further.
Each state runs its own RERA portal, and a registered project has a registration number that the promoter is required to quote in advertising. So:
- Ask for the RERA registration number of the project, not just of the promoter.
- Look it up on your state’s RERA portal, where you will usually also find the declared completion date, the approved plans and any complaints.
- Then check the promoter company on MCA, because a well-registered project run by a company that stopped filing three years ago is still worth knowing about.
The same logic applies elsewhere. A coworking operator, a franchisor, a travel agent, a chit fund: whichever sectoral register exists is more specific than the companies register, and the companies register is the one that tells you whether the entity behind it is healthy.
When it is worth paying the ₹100
The free layer answers “is this real and is it alive”. It does not answer “can they give the deposit back”.
Pay for the filings when the amount is large enough to hurt, or when the free checks turned up something. What you get for the registry’s inspection fee is the company’s annual accounts and its filing history, and two things in there matter for a deposit:
Has it been filing at all? A company that has not filed for two or more years is a company that has stopped doing the things functioning companies do. Late filing is expensive and accrues daily, so a sustained gap is a decision, not an oversight.
What direction is it going? One year of accounts is nearly useless. Three years tell you whether revenue is growing or shrinking and whether borrowings are climbing.
Retrieving those from the portal is a fiddlier exercise than it sounds, and we have written up the full route and its four constraints.
What none of this tells you
Whether they will return the deposit. Nothing public will. The register describes the entity, not its intentions or its cash.
Whether the property is actually theirs. Ownership of land and buildings sits with the sub-registrar and the local land records, not with MCA. If you are paying against a specific property, that is a separate check and often the more important one.
Whether anyone else is in dispute with them. Litigation is not in the MCA record.
And it is a record, not the truth. Filings lag by months. An Active status means nobody removed the company, not that anybody is at their desk.
What to actually do, before the transfer
- Get the legal name and the CIN in writing, on the agreement.
- Look up status, incorporation date and paid-up capital. Free, three minutes.
- Check the index of charges. Free.
- Check the sectoral register if there is one, RERA above all for property.
- Pay only the contracting entity, into an account in that entity’s name. No exceptions, however convincing the reason offered.
- Get a receipt that names the entity and the CIN, and says what the money is for and when it is refundable.
- If the number is large, buy the accounts and read three years of them before you send anything.
- Keep a dated copy of what you checked. If this ever becomes a dispute, “the register showed X on this date” is worth having.
None of this makes a deposit safe. It makes it a decision you took with your eyes open, at a cost of three minutes and, at the outside, ₹100. Set against what is about to leave your account, that is the cheapest thing in the transaction.
If you would rather have the whole filing set in one place than work the portal yourself, that is what we do.
Written by the Entiva team, who read Indian company filings for a living. Not legal advice.
Frequently asked
How do I check if a builder or landlord company is genuine before paying a deposit?
Get the exact legal name and CIN from the agreement, and pay only an account in that entity's name. Then look the company up: if it is not Active, stop. Compare your deposit with its paid-up capital, check the index of charges, and for a housing project look up the RERA registration of the project, not just the promoter.
What if the bank account name does not match the company on the agreement?
Stop and ask why. A payment to a name that is not the contracting entity is the single most common feature of advance-payment losses, and it is also the hardest thing to unwind afterwards. Pay the entity you have a contract with.
Is a deposit paid to a company secured?
Ordinarily not. A deposit is an unsecured claim. If the company has registered charges over its assets, the lenders holding those charges rank ahead of you if things go wrong. The index of charges on the MCA portal is free to check.
