2001 (8) TMI 1247 - HC - Companies Law

Issues Involved:
1. Repayment of fixed deposits by the company.
2. Compliance with the Company Law Board (CLB) directions.
3. Hardship cases and special provisions.
4. Pending scheme of arrangement under sections 391/394 of the Companies Act, 1956.
5. Jurisdiction and inherent powers of the court.
6. Interest and penalty on delayed payments.

Issue-wise Detailed Analysis:

1. Repayment of Fixed Deposits by the Company:
The applicants, Smt. Promila and Shri Ram Prakash Gupta, deposited six fixed deposits with DCM Financial Services Limited, which matured on 29-9-1998, amounting to Rs. 1,31,796. The company defaulted on repayment, leading the applicants to seek directions from the CLB under section 45QA of the Reserve Bank of India Act.

2. Compliance with the Company Law Board (CLB) Directions:
The CLB directed the company to repay deposits in installments over three to four years, with specific provisions for pre-and-post maturity interest. The company partially complied but failed to meet the directions in totality, particularly for deposits over Rs. 5,000 and hardship cases.

3. Hardship Cases and Special Provisions:
The CLB's order dated 17-7-1998 included provisions for hardship cases, requiring the company to set aside Rs. 1 crore for such cases. The applicants, aged 76 and 69, needed funds for medical treatment and alleged the company did not set apart the required amount, leading to their application for immediate repayment.

4. Pending Scheme of Arrangement under Sections 391/394 of the Companies Act, 1956:
The company proposed a scheme of restructuring and arrangement with creditors, approved by a majority of creditors, and filed a petition under sections 391/394, pending before the High Court. The company argued that individual creditor applications should not be entertained during the pendency of this petition.

5. Jurisdiction and Inherent Powers of the Court:
The court acknowledged that while individual creditor applications are generally not entertained during the pendency of a scheme under sections 391/394, it has inherent power to do complete justice. The court found extraordinary circumstances warranting deviation from the normal course due to the applicants' urgent medical needs.

6. Interest and Penalty on Delayed Payments:
The applicants claimed interest on the maturity amount from 29-9-1998 and sought a penalty for delayed payment. The court directed the company to pay the unpaid portion of the maturity amount (Rs. 39,796) by 28-9-2001 but dispensed with the 10% interest post-maturity and did not impose any penalty.

Conclusion:
The application was disposed of with a direction to the company to pay Rs. 39,796 to the applicants by 28-9-2001, considering the applicants' urgent medical needs and the inherent power of the court to ensure justice. The court balanced the interests of the applicants and the pending scheme of arrangement, providing a fair resolution under the circumstances.

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