2018 (10) TMI 1425 - AT - Companies Law

Repayment of deposits - Fresh Scheme filed to re-fix schedules/instalments - Held that - Here is an Appellant who just before stringent provisions of new Act are to be enforced, rushes to CLB under the old Act and gets a comfortable scheme settled for repayment of deposits which were due and would become due within one year and then under the new Act declares to the ROC that maturity of all the outstanding FDs has been extended. We do not think that such Appellant deserved indulgence from NCLT, even if it was to be held that such second application could be maintained. If Section 74 is seen, where in respect of any deposit accepted by a Company before the commencement of the Act, the amount of such deposit or part thereof or interest due thereon remains unpaid on the commencement (that is w.e.f. 01.04.2014) or becomes due at any time thereafter, the Company shall repay within one year from such commencement or from the date on which such payments are due, whichever is earlier. This is clear from Section 74(1)(b). This provision grants one year s time from the date of commencement of the Act or date when the repayment is due, whichever is earlier. It is obvious that all deposits accepted before commencement of the new Act are required to be paid not later than one year from the date of commencement of the Act irrespective of whether such deposits had fallen due for payment or not and whether or not the Company was regular in payment of interest/deposit or not. Considering these provisions, it appears to us that Section 74(1)(b) was attracted and when it appears from record that the Appellant defaulted, the penal provisions would get attracted. We are not convinced with the argument of the learned counsel for the Appellant that the reference to the matter of Jainendra Sahai Sinha 2017 (3) TMI 1716 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI helps the Appellant to state that multiple applications for extension of time could be filed. When once a scheme had been got settled, from CLB, default on the part of the Appellant would attract penal provisions as the earlier scheme itself laid down. If we accept the argument of Appellant that more than one application could be filed under Section 74(2) of the Companies Act, it would be like rewriting the Section to read that The Tribunal may on an application made by the company, from time to time, after considering the financial condition of the Company allow further time to the Company. We cannot read or add words like from time to time in the provision as no such multiple applications are provided for. Else, the provision will become a tool to stall recovery suits and Insolvency Proceedings, which cannot be allowed. No substance in this Appeal.

Summary

Issues Involved:

1. Earlier relief taken from CLB under the old Act.
2. Fresh scheme filed to re-fix schedules/instalments under the new Act.
3. Plight of depositors.
4. Offering yet another "revised scheme."
5. Still another proposal to tone down liability.
6. Impugned order - discussion.
7. Application for modification of impugned order - withdrawn.
8. The appeal.
9. Response of ROC.
10. Counsel heard.

Detailed Analysis:

1. Earlier Relief Taken from CLB under the Old Act:
The appellant, a listed company incorporated on June 6, 1986, filed a petition before the Company Law Board (CLB) under Section 58AA of the Companies Act, 1956, seeking a scheme for repayment of its deposits and exemption from maintaining liquid assets. The company had been regular in repaying deposits until 2013 when it faced liquidity problems and incurred significant losses. The CLB sanctioned a repayment scheme on September 30, 2013, with specific guidelines for repayment of fixed deposits over extended periods and reduced interest rates.

2. Fresh Scheme Filed to Re-fix Schedules/Instalments Under the New Act:
On September 27, 2016, the appellant filed an application under Section 74 of the Companies Act, 2013, seeking further rescheduling of repayment periods and instalments, citing continued liquidity problems. The appellant proposed a new scheme with extended repayment periods and reduced interest rates, arguing that the earlier CLB order was not fully accepted.

3. Plight of Depositors:
The NCLT issued notices and received objections from depositors and the Registrar of Companies (ROC). Various depositors, including senior citizens and those with serious illnesses, raised objections to further extensions, citing bounced cheques and financial hardships. The ROC opposed the extension, emphasizing the need to secure the interests of public depositors.

4. Offering Yet Another "Revised Scheme":
The appellant filed another application on March 28, 2017, proposing a revised scheme for repayment, citing notices from secured lenders and outstanding debts. The revised scheme offered different repayment schedules for senior citizens and other depositors, seeking further extensions.

5. Still Another Proposal to Tone Down Liability:
On September 12, 2017, the appellant filed another application, claiming improved financial positions of its group companies and proposing to pay depositors as per the original CLB order but from the date of the NCLT order. The appellant cited ongoing financial losses and sought further extensions.

6. Impugned Order - Discussion:
The NCLT noted that the appellant had not made any payments to fixed deposit holders since filing the application and observed that the stringent provisions of Section 74 aimed to safeguard depositors' interests. The NCLT rejected the plea for further extensions, emphasizing the need to protect depositors who had already suffered delays.

7. Application for Modification of Impugned Order - Withdrawn:
After the impugned order on December 8, 2017, the appellant filed another application for modification, proposing a better repayment plan. However, the NCLT was not convinced, and the application was withdrawn, leading to the present appeal.

8. The Appeal:
The appellant argued that it had made substantial payments and proposed selling 20 flats to repay depositors. The appeal sought the appointment of a committee to oversee the sale of flats and requested reduced monthly payments and priority payments for hardship cases.

9. Response of ROC:
The ROC opposed the appeal, emphasizing that the NCLT rightly dismissed the application for further extensions. The ROC highlighted the need to secure public depositors' interests and noted that the appellant had already been granted sufficient time by the CLB.

10. Counsel Heard:
The counsel for the appellant argued for further extensions, citing ongoing financial efforts and referencing a judgment that allowed extensions under Section 74(2). The counsel for the ROC emphasized the need to protect depositors and opposed further extensions.

Conclusion:
The NCLT rejected the appellant's applications for further extensions, citing the need to protect depositors and the lack of bona fide efforts by the appellant. The appeal was dismissed, with the tribunal emphasizing the stringent provisions of Section 74 and the need to uphold depositors' interests.