2002 (4) TMI 790 - HC - Companies Law

Issues Involved:
1. Petition for winding up the respondent-company under Section 45MC of the Reserve Bank of India Act, 1934.
2. Non-compliance with the RBI Directions of 1998.
3. Failure to repay depositors and complaints from the public.
4. Prohibitory order from RBI and subsequent legal actions.
5. Appointment of provisional liquidator and advertisement of winding up petition.
6. Respondent-company's request to recall the winding up order.
7. Applications from depositors and employees for repayment.
8. Scheme framed by the Company Law Board (CLB) for repayment.
9. Deliberate failure of the respondent-company to file a reply and submit details of assets.

Detailed Analysis:

1. Petition for Winding Up:
The petitioner filed a company petition under Section 45MC of the Reserve Bank of India Act, 1934, seeking to wind up the respondent-company, appoint an official liquidator, and issue an ad interim injunction to restrain the respondent from encumbering or disposing of its assets.

2. Non-Compliance with RBI Directions:
The respondent-company, a Non-Banking Financial Company (NBFC), was bound by the RBI Directions of 1998. Despite being denotified from its 'NIDHI' status in 1999, it continued to operate without obtaining a Certificate of Registration, violating Section 45IA of the Act. The RBI's inspection revealed non-compliance with Chapter IIIB of the RBI Act and the Directions.

3. Failure to Repay Depositors:
The company failed to repay amounts due to depositors, leading to numerous complaints from the public. The balance sheet showed total assets and liabilities of Rs. 194.02 crores as of 31-3-1998.

4. Prohibitory Order and Legal Actions:
On 5-4-1999, the RBI issued a prohibitory order restraining the company from accepting deposits. The company challenged this order and the denotification in Civil Misc. Writ Petition No. 16458 of 1999. Additionally, the RBI filed a complaint against the company and its directors for violating the Act, which is pending before the Chief Judicial Magistrate, Meerut.

5. Appointment of Provisional Liquidator:
Notices issued on 27-10-1999 were returned undelivered. The court directed advertisements in newspapers, and the official liquidator was appointed as provisional liquidator to take possession of the company's assets. An injunction was issued restraining the company from dealing with its assets without court permission.

6. Respondent's Request to Recall Order:
The respondent-company, through its advocate, requested to recall the winding up order, citing the directors' judicial custody and lack of knowledge about the proceedings. The court allowed time to submit a detailed counter-affidavit, but the company failed to comply, leading to the rejection of the adjournment request.

7. Applications from Depositors and Employees:
Several applications were filed by depositors and employees seeking repayment of their deposits. These applications highlighted discrepancies in the company's handling of deposits and the need for the court to ensure repayment.

8. Scheme by CLB:
The CLB had framed a repayment scheme for the respondent-company, categorizing deposits and scheduling repayments in phased instalments. However, the company did not adhere to this scheme, selectively paying chosen depositors.

9. Failure to File Reply and Submit Asset Details:
The respondent-company deliberately failed to file a reply and submit details of its assets despite several adjournments. The court found no intention from the company to comply with the legal requirements.

Conclusion:
The court allowed the petition filed by the RBI, directing the winding up of the respondent-company. The official liquidator was appointed to take charge of the company's properties and assets, ensuring compliance with the Companies (Court) Rules, 1959. The directors were required to file a statement of affairs and submit a report to the court.

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