9911796707
|
Home
Issues:
Challenge to order of the Company Law Board regarding repayment of deposits before approval of scheme of arrangement. Analysis: The appellant, a non-banking financial company, faced financial difficulties due to defaults by another company in 2002, leading to mass withdrawals and demands for repayment. To address this, the appellant proposed a scheme of arrangement before the court. Meanwhile, depositors sought repayment before the Company Law Board, which issued an order on June 16, 2003, challenged in the present petitions. The Company Law Board ordered repayment of deposits under section 45QA(2) of the Reserve Bank of India Act, subject to the scheme's approval by the High Court. The Board's decision was based on the interpretation of section 45QA and its implications on pending proceedings under section 391 of the Companies Act. The High Court found the Board's decision to order repayment during the pendency of the section 391 application as unwarranted and not in the interest of the members, in line with a similar ruling by the Kerala High Court in a related case. The High Court accepted the appeal, setting aside the Company Law Board's order. It reserved liberty for respondents to approach the Board if the scheme is not approved by the High Court eventually. The High Court's decision was based on the principle that the Board should await the outcome of the section 391 application before ordering repayments, ensuring a better status for all parties involved. In conclusion, the High Court's judgment focused on the proper exercise of discretion by the Company Law Board in matters of repayment of deposits in the context of pending scheme of arrangement proceedings. The ruling emphasized the need for coherence between different legal provisions and the importance of considering the overall interests of the stakeholders involved.
|
