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Issues:
Repayment of deposits to depositors under section 58A(9) of the Companies Act, 1956; Applicability of section 22 of the Sick Industrial Undertakings (Special Provisions) Act, 1985 in the present case. Repayment of Deposits to Depositors under Section 58A(9) of the Companies Act, 1956: The appellant company, registered under the Companies Act, 1956, received deposits from respondents for working capital needs. Due to financial difficulties, the appellant referred the matter to the Board of Industrial and Financial Reconstruction (BIFR) under the Sick Industrial Undertakings Act, 1985. Respondents sought repayment under section 58A(9) of the Companies Act, leading to the Company Law Board ordering repayment in instalments based on deposit amounts. The court rejected appellant's argument against repayment, citing past judgments and the nature of deposits as not constituting a loan. The court emphasized the importance of honoring deposit repayments to protect innocent depositors, especially from the poorer section of society, and confirmed the repayment order with interest for delayed payments. Applicability of Section 22 of the Sick Industrial Undertakings (Special Provisions) Act, 1985: The appellant argued that section 22 of the Act should bar recovery proceedings due to the BIFR reference. However, the court examined various judgments, including Anumati v. Punjab National Bank and Maharashtra Tubes Ltd. v. State Industrial & Investment Corpn., to determine the scope of section 22. The court highlighted that deposits are held in trust by the company and not considered loans, thus not falling under the restrictions of section 22. Referring to past decisions like Indian Plywood Mfg. Co. Ltd. v. Commissioner of Labour and Deepak Insulated Cable Corpn. Ltd. v. Union of India, the court rejected the appellant's defense under section 22, emphasizing the obligation to repay deposits to protect depositors, especially those from vulnerable backgrounds. In conclusion, the court upheld the Company Law Board's order for deposit repayment, dismissed the appellant's defense under section 22 of the Act, and stressed the importance of promptly settling deposit repayments to safeguard the interests of innocent depositors, particularly those from disadvantaged backgrounds.
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