2013 (9) TMI 1270 - Board - Companies Law

Summary

Issues Involved:
1. Non-redemption of debentures and non-payment of interest.
2. Applicability of Section 117C of the Companies Act, 1956.
3. Allegation of parallel proceedings.
4. Barred by limitation.

Summary:

Issue 1: Non-redemption of debentures and non-payment of interest
The debenture holders filed applications u/s 117C of the Companies Act, 1956, claiming that Bharat Hydro Power Corporation Ltd. failed to redeem the debenture amounts with interest. The company argued that its assets were taken over by the Board on 1st December 1996, making it unable to repay the debentures. However, the applicants contended that the company's balance sheet showed the debentures as liabilities, and the company had acknowledged this obligation in its annual returns.

Issue 2: Applicability of Section 117C of the Companies Act, 1956
The applicants argued that Section 117C, inserted by the Companies (Amendment) Act, 2000, mandates the creation of a Debenture Redemption Reserve (DRR) for debentures issued before and after 13th December 2000. The CLB had previously held in Deepak Jain v. Vijaya Leasing Ltd. that Section 117C(4) applies to all debentures pending redemption, regardless of their issuance date. The company contended that Section 117C could not apply retrospectively to debentures issued before the amendment.

Issue 3: Allegation of parallel proceedings
The company alleged that the applicants had filed parallel proceedings under Section 12B of the MRTP Act, 1969, which were disposed of as not maintainable. The applicants argued that the MRTP application sought compensation for losses due to deceptive practices, while the CLB application sought redemption of debentures.

Issue 4: Barred by limitation
The company argued that the applications were barred by limitation u/s 113 of the Limitation Act, as the right to sue accrued on 31st March 2000, and the applications were filed on 23rd March 2005. The applicants contended that the liability was acknowledged in the company's balance sheet for the year ending 31st March 2011, which should reset the limitation period.

Judgment:
The CLB held that Section 117C applies to all debentures pending redemption, including those issued before the amendment. The balance sheet acknowledgment of debenture liability extended the limitation period. The applications were deemed maintainable, and the company was directed to redeem the debentures with interest within six months. No order as to costs.