2018 (7) TMI 2301 - HC - Companies Law

Imposition of condition of payment of Rs. 94,000/-, 94,000/- and 54,000/- respectively, under Section 87 of Companies Act - case of petitioner is that it had taken three loans from State Bank of India amounting to Rs. 10,00,000/-, 6,00,000/- 3,00,000/- respectively against movable/immovable properties not specifically pledged for which a charge was created and filed with the respondent no. 2 ROC - HELD THAT - It is noticed that undisputedly there was a delay in complying with the requirement of filing of e-forms for satisfaction of charge with the respondents - In the present case the petitioner has disclosed that delay had taken place because there was change in entire management of the company, therefore, the default had taken place for the bonafide reason. The impugned orders reveal that respondent no. 1 has also reached to the conclusion that delay was caused due to inadvertence and has found it to be just and equitable to grant relief of condonation of delay and has accordingly condoned the delay. But while condoning the delay the respondent no. 1 has imposed the condition of payment of Rs. 94,000/- in a case where the loan was of Rs 10,00,000/-, Rs. 94,000/- in another case where the loan was of Rs. 6,00,000/- and Rs. 54,000/- where the loan was of Rs. 3,00,000/- - Undisputedly the loan amount was already repaid in the year 2006 itself and there was only a default in non complying with the requirement of filing of e-forms for satisfaction of the charge. In these circumstances the condition of payment of such a high amount imposed by respondent no. 1 is not reasonable in terms of Section 87 of the Act. Under Section 87, the condition which is required to be imposed should be just and expedient. In the considered opinion of this court in the case of default where the loan was of Rs. 10,00,000/- just and proper condition would be to condone the delay subject to payment of Rs. 45,000/-; in the case where the loan was of Rs. 6,00,000/-, to condone the delay, subject to payment of cost of Rs. 30,000/-; and in the case where the default was of Rs. 3,00,000/- to condonue the delay, subject to payment of cost of Rs. 20,000/- . The writ petition is disposed off.

Summary

Issues:
Challenge to orders imposing payment conditions under Section 87 of Companies Act.

Analysis:
The petitioner challenged the orders imposing payment conditions for delays in filing satisfaction of charges under Section 87 of the Companies Act. The petitioner had taken loans from a bank, repaid them, but failed to file necessary forms for charge satisfaction on time. The petitioner applied for condonation of delay, which was granted, but with high payment conditions. The petitioner argued that the costs were disproportionate to the defaults, while the respondents supported the orders.

The court noted the delay in compliance and the power of respondent no. 1 to extend time under Section 87 of the Act. The petitioner explained the delay was due to management changes, a bonafide reason. Respondent no. 1 found the delay inadvertent and justifiable, but still imposed high payment conditions based on loan amounts.

The court held that the repayment of loans in 2006 showed only a default in filing forms, making the high payment conditions unreasonable. The court emphasized that conditions under Section 87 should be just and expedient. It deemed the imposed amounts disproportionate and rationalized them. The court modified the orders, setting new payment conditions based on loan amounts to Rs. 45,000, Rs. 30,000, and Rs. 20,000 for different loan values.

In conclusion, the court modified the impugned orders, reducing the payment conditions to Rs. 45,000, Rs. 30,000, and Rs. 20,000 for different loan amounts, and disposed of the writ petition accordingly.