2001 (9) TMI 1067 - SC - Companies Law

Appointment of custodian - belated payments - Held that - In the special circumstances of the case where a sum of Rs. 90,48,631 was paid without much ado and thereafter a further sum of Rs. 48,73,865 on 12th December, 1996 was paid pursuant to the order dated 5th November, 1996, it will be in fitness of things that there should be some concession in the rate of interest. The Special Court gave a concession of 4 per cent by reducing the rate of interest from 24 per cent to 20 per cent. The rate of interest should further be reduced to 18 per cent, especially because we are not deciding the question as to whether the payment of Rs. 90,48,631 which was made in December 1994, was first to be adjusted against the principal or not. Without going into the correctness of the conclusion of the Special Court that the same was to be adjusted first toward interest and not against the principal, we feel that ends of justice will be met by varying the decision of the Special Court to a limited extent, namely, reducing the rate of interest to 18 per cent.

Summary

Issues:
1. Calculation of outstanding amount due to the notified party.
2. Determination of interest rate on belated payments.
3. Adjustment of payment towards interest and principal.
4. Concession in the rate of interest.

Analysis:

1. The appellant owed a sum of Rs. 90,48,631 to the respondent as of 31-3-1992 under the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992. Despite discrepancies in the amount claimed by the Custodian, the appellant made a payment of Rs. 90,48,631 into the Custodian's account on 9th September, 1994.

2. The Custodian demanded an additional amount of Rs. 95,58,631 from the appellant, including interest at the rate of 24 per cent. The Special Court passed a decree against the appellant for the principal amount along with interest at the rate of 24 per cent per annum from 1st April, 1992 till 9th December, 1994. A concession was offered if the interest at 20 per cent was paid within a specified period.

3. Subsequently, the Special Court clarified that interest was payable not just on the principal amount but also on the balance principal amount, with the payment being adjusted towards interest first and then towards principal. The interest was to run until the date of payment, and a mistake in the original order was rectified.

4. After further payments by the appellant, the court considered the circumstances and reduced the rate of interest from 24 per cent to 18 per cent, despite not delving into the adjustment of the initial payment against interest or principal. The court found it appropriate to vary the decision to reduce the rate of interest to 18 per cent while upholding the rest of the decree.

In conclusion, the appeal was disposed of with the decision to reduce the rate of interest to 18 per cent, providing a concession to the appellant based on the circumstances of the case.