9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (3) TMI 1716 - AT - Companies LawExtending the time in favour for repayment of balance outstanding amount - failure to repay the deposit accepted by the company or to pay interest thereon - Held that - A number of extensions of time cannot be granted under Sub-section (2) of Section 74 without any ground, particularly when the company has not shown any interest in paying part of the deposit with interest to depositors either during the pendency of the Company Petition or this appeal. Learned Counsel for the Respondents have also informed that they will pay the dues by 31st March 2017. We make it clear that if the dues of depositors with interest is not paid by the Company by 31st March 2017, the Registrar of the Companies, NCR and Haryana will take steps to file petition under sub-section (3) of Section 74 of the Act 2013 before the Special Judge to punish the company and its directors and members and every officer of the company, whoever is in default. It will be open to the appellant and other depositors to sue the Company, its directors & officers for damages and fraud under Section 75 of the Companies Act 2013. Further if it comes to the notice of the Registrar of the Companies or the Central Government, that the business of the company was being conducted with intent to defraud its creditors or any other person or otherwise for a fraudulent or unlawful purpose, they may investigate into the affairs of the company either under Section 210 or 213 of the Companies Act 2013. It is also open to the appellant to move an application under clause (b) of Section 213 of the Companies Act 2013, if the circumstances so suggest that the business of the company was being conducted with intent to defraud its creditors and other persons. It is noted that failure to repay the deposit accepted by the company or to pay interest thereon is also disqualification for appointment of directors in terms of Section 164(2)(b) of the Companies Act, 2013 and any director who incurs any of the disqualifications specified in section 164 vacates the office of the director. Registrar of Companies may examine this aspect in case the Company fails to repay the dues by 31.03.2017 as already allowed by the Tribunal.
Issues Involved:
1. Extension of time for repayment of deposits by the respondent company. 2. Compliance with Section 74 of the Companies Act, 2013. 3. Formation and role of the Hardship Committee. 4. Utilization of sale proceeds from the company’s assets. 5. Non-payment of deposits and interest to depositors. 6. Potential penalties and legal actions for non-compliance. 7. Disqualification of directors for non-repayment of deposits. Detailed Analysis: 1. Extension of Time for Repayment of Deposits by the Respondent Company: The appeal was filed against the order dated 17th June 2016 by the National Company Law Tribunal (NCLT), New Delhi, which extended the time for the respondent company to repay the outstanding amount of ?1079.31 Crore plus interest till 31st March 2017. The Tribunal kept the petition pending for further reports. 2. Compliance with Section 74 of the Companies Act, 2013: Section 74 mandates companies to repay deposits accepted before the commencement of the Act by 31st March 2015 or the due date, whichever is earlier. The respondent company failed to comply within the prescribed time and sought further time from the Tribunal under sub-section (2) of Section 74, which allows the Tribunal to grant additional time based on the company's financial condition and other relevant factors. 3. Formation and Role of the Hardship Committee: The appellant argued that there is no provision under Section 74 for constituting a Hardship Committee to assess the payment situation. The Tribunal is competent to extend time based on the financial condition of the company and other relevant matters. The Tribunal extended the time up to 31st March 2017 without disposing of the main Company Petition. 4. Utilization of Sale Proceeds from the Company’s Assets: The appellant contended that there was no specific direction from the Tribunal for the company to use the sale proceeds of its cement plants towards repaying the depositors. The company had entered into an agreement to sell its cement plants for ?16,189 crores and intended to start repaying depositors around 25th March 2017, concluding by 30th March 2017. The Tribunal directed the company to deposit the sale proceeds in a specified bank account and not to withdraw any amount except for repaying depositors. 5. Non-Payment of Deposits and Interest to Depositors: Despite the extension granted by the Tribunal, the respondent company had not deposited any amount in its account or paid any amount to depositors. The Tribunal noted that approximately three years had passed since the commencement of Section 74, yet the deposits with interest remained unpaid. The Tribunal directed the company to pay the dues by 31st March 2017 and close the Company Petition. 6. Potential Penalties and Legal Actions for Non-Compliance: The Tribunal warned that if the company failed to pay the dues by 31st March 2017, the Registrar of Companies would take steps to file a petition under sub-section (3) of Section 74 to punish the company and its officers. The depositors could also sue the company for damages and fraud under Section 75 of the Companies Act, 2013. Additionally, the Central Government could investigate the company’s affairs under Sections 210 or 213 if there were indications of fraudulent conduct. 7. Disqualification of Directors for Non-Repayment of Deposits: Failure to repay deposits or pay interest disqualifies directors from their positions under Section 164(2)(b) of the Companies Act, 2013. The Registrar of Companies was instructed to examine this aspect if the company failed to repay the dues by 31st March 2017. Conclusion: The Tribunal directed the closure of Company Petition No. 25/10/2014 and disposed of the appeal with the observations and directions mentioned above. The Tribunal emphasized that multiple extensions of time cannot be granted without any substantial grounds, especially when the company had shown no interest in repaying the deposits. The order was to be forwarded to the National Company Law Tribunal, New Delhi Bench.
|
