9911796707
TMI Blog1978 (7) TMI 220X X X X Extracts X X X X X X X X Extracts X X X X ..... ncorporated as a public limited company and having its registered office at No. 4, Mango Lane, Calcutta. The authorised capital of the company is Rs. 10 crores, the issued capital is Rs. 8,65,79,340 and the subscribed capital is Rs. 4,57,429.23 in cumulative preference shares, redeemable cumulative preference shares, 'A' redeemable cumulative preference shares and equity shares as stated in para. 4 of the petition. The objects of the company, as from the name, it appears are, inter alia , to own and operate hotels and provide services in the field of hotel management. The company owns and operates at present a chain of luxury hotels throughout India and also in foreign countries and amongst those are Oberoi Sheraton in Bombay, Oberoi Inter Continental in New Delhi, Oberoi Grand in Calcutta and Oberoi Palace in Sri Nagar. It is stated that these hotels have not only helped in providing the base for the growth of tourism industry in the country and in creating a valuable source of earning foreign exchange but these have also carved out in the realm of international hotel and tourism industry a special place for the country, as possessing technical know-how and expertise in the field ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company in the meantime by an application dated 29th March, 1973, made before the Reserve Bank prayed for exemption from application as to the direction for deposits, in view of the special circumstances of this company. It is further stated that pending the said application before the Reserve Bank the company was advised by the Reserve Bank to secure deposits by creating trusts in favour of banking institutions. Accordingly in March, 1974, the company was the first to secure deposits to safeguard the interest of the depositors, and the company created trusts of 1,300 lakhs of which 950 lakhs were in favour of the Bank of India and 350 lakhs were in favour of the United Bank of India. During the pendency of the said application the Companies Act, 1956, was amended and section 58A of the Companies Act, 1956, came into force and, furthermore, the Companies (Acceptance of Deposits) Rules, 1975, became operative. The said Rules came into force on 3rd February, 1975. It now appears that admittedly the company has certain excess beyond the limit fixed by the Companies (Acceptance of Deposits) Rules, 1975, under rule 3(2)( i ) and rule 3(2)( ii ). In view of the said excess deposits the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ptember, 1977, between the Bank of India as the trustees and the depositors as the beneficiaries whereby the said deposits have been secured. In the said supplementary affidavit the petitioners have annexed a chart showing the ceiling on the deposits as actual position from the commencement of the Companies (Amendment) Act, 1974, wherefrom it appears that admittedly there were certain excess deposits under rule 3(2)( ii ) and rule 3(3) of the Companies (Acceptance of Deposits) Rules, 1975. But the position at the present moment, i.e ., at the time of the hearing of the application after securing the said deposits by the deed of trust in favour of Bank of India, Bombay, and United Bank of India, Calcutta, as stated in para. 3 of the said supplementary affidavit affirmed on the 22nd April, 1978, there is no longer any excess deposits as the deposits having been secured those have become loans secured and, therefore, under Expln. 1 to rule 3(3) of the Companies (Acceptance of Deposits) Rules, 1975, those ceased to be deposits and, therefore, the said provisions of section 58A of the Companies Act and the Companies (Acceptance of Depotits) Rules, 1975, have no application as within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpln. 1 to rule 3(3) of the Companies (Acceptance of Deposits) Rules, 1975, the same ceased to be deposits within the meaning of section 58A and the Companies (Acceptance of Deposits) Rules, 1975, it cannot be said to be a violation and evasion of the said provision but lawful avoidance of the consequence of the said provisions by taking it out of the operation of the said statute and rules. Mr. Law submitted that the wordings of the said Expln. 1 is that in order to be exempted the loan and security must be together and not deposits first and subsequently secured by mortgage or otherwise. In my view, such a construction is not warranted from the wording of the said Explanation in the Companies (Acceptance of Deposits) Rules, 1975, or the definition of the word "deposit" in rule 2, sub-rule ( b ) and various clauses thereunder. Mr. Law's contention is this that the company cannot avoid the consequence of a default already committed even by subsequent rectification of the same by securing the deposits and converting the same into a loan secured by the mortgage, etc., within the meaning of Expln. 1 to rule 3(3) of the Companies (Acceptance of the Deposits) Rules, 1975. In my ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for exemption by the Reserve Bank of India, as aforesaid, the company took the opinion of eminent jurists and lawyers and also made the present application and obtained an order for maintaining the status quo on the 27th July, 1977. In the meantime, in September, 1977, the company has secured the said deposits and thereby the excess deposits were wiped out and it became no longer the deposit under section 58A of the Companies Act read with the Companies (Acceptance of Deposits) Rules, 1975. The deposits are defined in rule 2( b ) and various clauses thereunder and in the Companies Act and also in rule 3 of the Companies (Acceptance of Deposits) Rules, 1975, the limits thereof are set out and it appears that the company at a certain point of time had certain deposits within the meaning of rule 3(2)( i ) and rule 3(2)( ii ) of the Companies (Acceptance of Deposits) Rules, 1975. The same will also appear from the chart annexed to the supplementary affidavit affirmed on 22nd April, 1978, by Ramlal Chowdhury. But the company had secured the said deposits by creating the trust by the trust deed in September, 1977, as stated in para. 3 of the said supplementary affidavit of Ramlal Chowdh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other prayers of the company. The said rejection of granting exemption under section 58A(7)( a )( ii ) was intimated by the Reserve Bank of India only by its letter dated 21st May, 1977. Immediately thereafter the company has made this application under s, 633(2) of the Companies Act, 1956, and has taken opinions of eminent lawyers and jurists and in September, 1977, they have secured the said deposit by a trust in favour of the Bank of India and the United Bank as stated above and thereby the said deposits have become loans secured by mortgage, etc., under Expln. 1 to rule 3(3) of the Companies (Acceptance of Deposits) Rules, 1975. As I have already observed, anybody is free to arrange his matter in a lawful manner and thereby he can take his matter out of the mischief of any statute and that cannot constitute an evasion or violation of any Act and if it is lawfully permissible, the same cannot be said to be illegal or evasion. It appears to me that the company has made up the default by securing the deposits as aforesaid and, therefore, the said deposits ceased to be deposits any more within the meaning of Companies (Acceptance of Deposits) Rules, 1975, and there is no further ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
