2019 (4) TMI 1274 - AT - Companies Law

Refund of maturity amount of FDR - Case of respondent was that the amount which was unclaimed and unpaid for a period of 7 years from the dates that they became due for payment have been transferred to Investor Education and Protection Fund - HELD THAT - The appellants have sufficiently approached the 1st respondent about his FDR in the year 1992, 1995 and 2000. The FDR was lastly renewed on 27.8.1991 as admitted by the 1st respondent himself. 1st respondent has wrongly intimated the appellant vide letter dated 20.3.2013 (Page 49) that the FDR was matured for payment on 7.10.1988. We have already observed in para No.21, that the appellants were approaching the 1st respondent for payment of FDR since 1992 to 2000 and the 1st respondent should have refunded the FDR matured amount to the appellants when they had claimed earlier. The 1st respondent has not complied with statutory compliances in law and spirit, has given contradictory statements, which is proved on documents, provided no details to ROC Pune about the unclaimed deposits and the financial years to which it belongs and also is not able to satisfy us that the amount which has been deposited actually belongs to the appellants or other investors. By not intimating the details, 1st respondent has compelled the appellants to approach pillar to post to claim their hard earned money with interest. This is for this reasons that the public in large has lost faith to keep their deposits with the companies. In this case also, one of appellants expired in 1998 claiming his FDR amount from 1st respondent since 1992. This is all proved on documents. T he 1st respondent has deposited the amount with IEPF which was payable during the FY 31st March, 2004 whereas in the case of appellant it was payable during FY 2001-2002. On analysis of this document we observe that the 1st respondent has deposited the amount of other depositors whose deposit was due for transfer in the FY 31st March, 2004. Therefore. 1st respondent is unable to convince us that the amount of appellant has been deposited with the IEPF. There is a maxim in law that a man can lie but a document cannot - there is not enough proof that company had discharged its obligation with reference to this FDR while depositing with IEPF. The conclusion drawn by NCLT are not acceptable - In the interest of justice to the appellant who has been approaching 1st respondent for more than two decades, we direct 1st respondent to make payment to the appellant.

Issues Involved:
1. Validity of the claim on the Fixed Deposit Receipt (FDR).
2. Compliance with statutory requirements for unclaimed deposits.
3. Timeliness and adequacy of communication regarding the claim.
4. Legitimacy of the transfer of unclaimed funds to the Investor Education and Protection Fund (IEPF).
5. Entitlement to interest and litigation costs.

Issue-wise Detailed Analysis:

1. Validity of the claim on the Fixed Deposit Receipt (FDR):
The appellant, along with his family, made a Fixed Deposit of ?1 lakh in the 1st respondent company, which was renewed multiple times, with the last renewal on 27.08.1991 for ?1,50,000. The appellant claimed that the maturity amount was not received despite several correspondences from 1992 to 2013. The 1st respondent admitted the last renewal but argued that the claim was time-barred as it was filed in 2013. The Tribunal observed that the appellant had sufficiently approached the 1st respondent about the FDR in 1992, 1995, and 2000, and thus, the claim was valid.

2. Compliance with statutory requirements for unclaimed deposits:
The 1st respondent stated that the unclaimed amount was transferred to the IEPF in 2004, as per Section 205C of the Companies Act, 1956. However, the ROC, Pune, confirmed that no details were provided on the challan regarding whom the amount was deposited for. The Tribunal noted that the 1st respondent failed to provide necessary details, raising doubts about whether the appellant's amount was actually deposited with the IEPF. The 1st respondent's incomplete compliance with statutory requirements was evident.

3. Timeliness and adequacy of communication regarding the claim:
The appellant made multiple attempts to claim the FDR amount through letters and visits from 1992 onwards, but received no response until a letter dated 20.03.2013 from the 1st respondent incorrectly stated that the FDR matured on 07.10.1988. The Tribunal found that the 1st respondent did not adequately communicate with the appellant and provided contradictory statements regarding the FDR's maturity date.

4. Legitimacy of the transfer of unclaimed funds to the IEPF:
The 1st respondent claimed to have transferred the unclaimed amount to the IEPF in 2004. However, the Tribunal observed discrepancies in the details provided and the timing of the transfer. The 1st respondent's failure to provide specific details to the ROC, Pune, about the financial years and the names of the deposit holders cast doubt on the legitimacy of the transfer. The Tribunal concluded that the 1st respondent did not comply with the statutory requirements in letter and spirit.

5. Entitlement to interest and litigation costs:
The appellant claimed interest at 15% per annum on ?1,56,335 from 27.08.1988 to 31.10.2018, totaling ?1,24,07,355, and ?2,50,000 as litigation expenses. The Tribunal awarded the principal amount plus interest at the contracted rate from 07.10.1988 to 27.08.1994, and 9% simple interest per annum on the matured amount from 28.08.1994 till the actual payment date. Additionally, the 1st respondent was directed to pay ?1,00,000 as costs to the appellant.

Conclusion:
The Tribunal set aside the impugned order dated 03.03.2017 and directed the 1st respondent to:
- Pay the principal amount plus contracted interest from 07.10.1988 to 27.08.1994.
- Pay 9% simple interest per annum on the matured amount from 28.08.1994 till the actual payment date within 30 days.
- Pay ?1,00,000 as costs to the appellant within 30 days.
- Ensure compliance of the order by the ROC, Pune.

← Previous Next →