2013 (6) TMI 37 - HC - Companies Law

Whether the Respondent was paid in excess as claimed by the OL? - Winding up - Held that - The facts not in dispute are that the Respondent along with her husband did make as many as twenty investments in the company. From the tabular chart placed on record, it is seen that the deposits which were processed for payment on various dates, the earliest being 23rd April 1990 and the last 27th February 1992. There can be two situations one where no interest is prescribed as payable on any debt or certain sum by the company. In that event, the creditor would be entitled to interest not exceeding 4% p.a. from the time when the debt or sum was payable up to the date of payment. In the second situation, if there was nothing to indicate from when the debt was payable, then it would be payable from the date when a demand is made and the interest would be calculated from that date till the date of payment. In the instant case, beyond the date of maturity of the deposits, there was no agreement between the Respondent and the company as to the rate of interest that was payable. There was no automatic deemed renewal of the deposit. The compound rate of interest was payable only as long as the deposits had not matured. After the date of maturity and in the absence of any renewal, the Respondent would be entitled to interest not exceeding 4% on the deposit amounts for the period from the date of the maturity till the date of payment. The amount payable to Mrs. Madhu Bala Sharma was Rs. 1,26,701.14. Therefore, clearly, an excess payment was made to her. None of the objections of the Respondent either to the maintainability of the application or to its merits is tenable. The Respondent is directed to refund to the OL the excess amount of Rs. 6,13,408 together with simple interest @ 9% p.a. from 12th May 2006 till the date of payment, which, in any event, cannot be beyond eight weeks from today. If the payment is not made within the time granted, the Respondent will be liable to pay penal simple interest @ 12% p.a. on the said sum for the period of delay.

Issues Involved:
1. Maintainability of the application under Section 446 of the Companies Act, 1956.
2. Whether the claim for recovery is time-barred.
3. Entitlement to compound interest under Rule 156 of the Companies (Court) Rules, 1959.
4. Calculation of interest and the legitimacy of the excess payment made to the Respondent.
5. Requirement for leading evidence and cross-examination of the Chartered Accountant (CA).

Detailed Analysis:

1. Maintainability of the Application under Section 446 of the Companies Act, 1956:
The respondent contended that the application was not maintainable under Section 446(2)(b) of the Act since no leave of the Court was obtained by the Official Liquidator (OL) before filing the application. The Court rejected this plea, clarifying that under Section 446(2)(b), any claim can be brought by the OL on behalf of the company without the need for leave from the Court. The expression "claim" is of wide amplitude and includes a claim for refund of payment made in excess.

2. Whether the Claim for Recovery is Time-barred:
The respondent argued that the recovery was beyond the prescribed period of limitation, as the disbursement was made on 12th May 2006, and the application was filed only on 12th July 2010. The Court rejected this contention, noting that the cause of action for claiming the sum arose only when it was brought to the knowledge of the OL by way of the CA's report in February 2010. The claim was filed pursuant to the Court's orders on 7th September 2009 and 21st January 2010, making it timely.

3. Entitlement to Compound Interest under Rule 156 of the Companies (Court) Rules, 1959:
The respondent claimed entitlement to compound interest under Rule 156 of the Rules. The Court analyzed Rule 156, which allows for simple interest not exceeding 4% per annum on debts or sums payable at a certain time. The Court found that beyond the date of maturity of the deposits, there was no agreement for compound interest, and the respondent was only entitled to simple interest at 4% per annum from the date of maturity till the date of payment.

4. Calculation of Interest and Legitimacy of the Excess Payment:
The OL, based on the CA's report, calculated that an excess payment of Rs. 4,81,169 was made to the respondent. The respondent had included compound interest in her claim, which was not admissible. The Court noted that the deposits were not renewed beyond their maturity dates, and the respondent's calculation of interest up to the winding-up date was incorrect. The respondent was entitled to simple interest at 4% per annum from the date of maturity till the date of payment, resulting in an excess payment of Rs. 6,13,408.

5. Requirement for Leading Evidence and Cross-examination of the Chartered Accountant (CA):
The respondent argued for the right to lead evidence and cross-examine the CA. The Court found that given the nature of the claim, which was a simple arithmetic calculation based on settled legal principles, there was no need for cross-examination. The matter was straightforward, involving the application of Rule 156 to the facts, and did not require framing issues or leading evidence.

Conclusion:
The Court directed the respondent to refund the excess amount of Rs. 6,13,408 with simple interest at 9% per annum from 12th May 2006 till the date of payment, within eight weeks. Failure to comply would result in penal interest at 12% per annum for the period of delay. The application was allowed with no order as to costs.

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