2016 (11) TMI 1165 - Tri - Companies Law

Enhancement of time for repayment u/s 74 - rights of the applicants to seek recovery of their dues - Held that - Seeing the sentiments of the agitated depositors, and with a view to secure whatever asset could be salvaged, this Bench has accepted the Undertaking of the respondents that the six parcels of land in Kochi, Hyderabad, Chennai and Maharashtra offered in the present proceedings would be sold, and the proceeds would be deposited in IDBI Bank, A/c No. 0110102000026309 maintained with IDBI Bank Limited at E-29, PVR Road, Saket, New Delhi-110017 and shall be used only to liquidate the liability towards the present applicants. This would be without prejudice to the rights of the applicants to seek recovery of their dues from any other tangible assets of the R1 Company or take recourse to any other remedy available under law. It is being made abundantly clear that the Undertaking given by the respondents to liquidate the assets would in no way be their defence in the prosecution initiated under section 74(3) of the Companies Act, 2013 or in any other Court of law. As observed earlier during the proceedings, that though the parcels of land offered are mere sops which are either of little value or are unsaleable, but have been taken to secure and salvage the depositors interest at least to that extent. The agitated depositors also apprehend that the directors of R1 Company may escape the boundaries of the country and they may have little to realise their hard earned money. The office of the ROC may take appropriate steps. Though tardy, prosecution under section 74 (3) of the is stated to have started. Respondents have submitted, as directed, the photocopies of their passports. In addition, they have filed their Affidavits giving their individual assets and the statements of their JVs, Subsidiaries and Associates. It was observed in some financial statements on record that some of the alleged loans to the subsidiaries etc. had been written off. It would be beyond the scope of this Bench to look into this aspect. The documents submitted shall be handed over to the RoC to investigate the allegations of siphoning off or diverting money on account of which the applicants are unable to retrieve their deposits. All documents be handed over by the Bench Officer to the office of the RoC under acknowledgement of Receipt.

Summary

Issues:
1. Maintainability of petitions under section 73(4) of the Companies Act, 2013.
2. Interpretation of the term "deposits" under section 73(1) of the Companies Act, 2013.
3. Definition of "depositors" under the Companies (Acceptance of Deposits) Rules, 2014.
4. Jurisdiction of the National Company Law Tribunal (NCLT) in addressing grievances of depositors.
5. Remedies available to depositors under the Companies Act, 2013.
6. Allegations of siphoning off money and diverting investments by the respondents.
7. Dismissal of respondent's application for maintainability of petitions.
8. Undertaking by the respondents to sell assets for repayment of dues to depositors.
9. Concerns regarding directors escaping the country and steps taken by the Registrar of Companies (RoC).

Detailed Analysis:

1. Maintainability of Petitions under Section 73(4): The Tribunal received over 300 applications from depositors seeking redressal under section 73(4) of the Companies Act, 2013. The lead case involved matured fixed deposits not being repaid by the Respondent Company, leading to grievances from depositors, especially senior citizens facing financial crises.

2. Interpretation of "Deposits" under Section 73(1): The Respondent argued that deposits taken under the Companies Act, 1956, before the enactment of the Companies Act, 2013, should not fall under the purview of section 73(1) of the new Act. However, the Tribunal disagreed, stating that all previous deposits should be considered under the new Act.

3. Definition of "Depositors" and Jurisdiction of NCLT: The Respondent contended that only depositors under the Companies Act, 2013 could seek relief under section 73(4). However, the Tribunal held that the NCLT has adjudicatory rights for equitable jurisdiction, emphasizing that the Act does not differentiate between depositors pre or post the new Act.

4. Remedies Available to Depositors: The Tribunal dismissed the Respondent's argument that depositors should seek relief in Civil Courts, asserting that NCLT has the authority to address grievances. The ruling emphasized that all depositors, regardless of when deposits were made, are entitled to remedies under the Act.

5. Allegations of Siphoning Off and Diverting Investments: Deposit-taking company faced allegations of siphoning off funds and diverting investments, leading to depositors' inability to retrieve their investments. The Tribunal noted the concerns raised by depositors regarding the company's financial health and actions taken by the Respondent.

6. Undertaking to Sell Assets for Repayment: Respondents offered to sell specific parcels of land to repay depositors, with proceeds to be deposited in a designated account. The Tribunal accepted this undertaking to secure depositors' interests, clarifying that it does not absolve the Respondent from legal actions.

7. Concerns Regarding Directors and Registrar of Companies: Deposit-taking company's directors faced concerns of fleeing the country to evade liabilities. The RoC initiated steps to investigate allegations of siphoning off funds. The Tribunal acknowledged these concerns and directed appropriate actions to safeguard depositors' interests.

This detailed analysis covers the key issues addressed in the judgment delivered by the National Company Law Tribunal, New Delhi.