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TMI Blog2018 (10) TMI 1425X X X X Extracts X X X X X X X X Extracts X X X X ..... sion 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 Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regular and punctual and sincere in deposit/payments of its taxes as well as repayment of fixed deposits and interest accrued. As public limited company, it had accepted deposits since 2002 and regularly paid back till 28th February, 2013. In 2013, it started facing liquidity problems and incurred losses to the extent of ₹ 111.29 crores. The Appellant gave reasons for the liquidity problems to CLB. It was claimed that as on 31.03.2013, the liabilities of the Appellant aggregated to ₹ 1178.48 crores. It was claimed that in the next 3 years, there was cash outflow which is not met by cash inflow and so there is cash deficit which does not warrant repayment of fixed deposits unless the repayment is rescheduled/restructured. The Appellant referred to the efforts it was making with the banks, and, the Petition filed before CLB stated as to the remedial measures/steps it wanted to take. It was claimed that there were outstanding fixed deposits of ₹ 49.83 crores which had become due for payment as on 31.05.2013 and that there were further fixed deposits to the value of ₹ 44.99 crores which had not yet matured. Cheques issued by the Company towards repayment of depo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst year, 15% in the second year, 20% in the third year, 30% in the fourth year and the remaining 20% in the fifth year. The interest for both pre and post maturity period will be paid along with the last instalment. (vii) Regarding fixed deposits of ₹ 1,00,001/- and above, payment shall be made within five years from the date of maturity of deposits, at 10% in the first year, 15% in the second year, 20% in the third year, 25% in the fourth year and the remaining 30% in the fifth year. The interest for both pre and post maturity period will be paid along with the last instalment. (viii) In regard to the hardship cases like serious illness, senior citizen above 65 years of age, widows/widowers marriage and higher education of dependent children etc. payment shall be made on priority basis to the extent of ₹ 15 lakhs as quarter. 1.2 Thus, when the new Companies Act, 2013 was already on the scene and initial enforcements had begun w.e.f. 12.09.2013, with stringent Section 74 about to follow suit, long instalments to the extent of 4 5 years were got fixed with reduced rate of interest even for small amounts of ₹ 15,001/- to ₹ 25,000/- deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 30th September, 2013. b) The Fixed Deposits up-to the amount of ₹ 10,000/- shall be paid fully in one year from the date of order. c) The repayment of Fixed Deposits ranging from ₹ 10,001/- to ₹ 15000/- will be made within 2 years from the date of order, at 50% in the first year and 50% in the second year. d) All Fixed Deposits ranging from ₹ 15,001/- to ₹ 25,000/- will be paid in 6 years tenure, 15% in the first year, 15% in the second year, 15% in the third year, 15% in the fourth year, 15% in the fifth year and 25% in the sixth year. e) With regard to deposits ranging from ₹ 25,001/- to ₹ 50,000/- payments will be made in 6 years, 10% in the first year, 15% in the second year, 15% in the third year, 20% in the fourth year and remaining 20% in the fifth year and 20% in the sixth year. f) In regard to fixed deposits ranging from ₹ 50,000/- to ₹ 1,00,000/-, payments will be made in eight years, 5% in the first year, 10% in the second year, 10% in the third, fourth and fifth year and 10% in the sixth and 20% in the seventh year and 25% in the eighth year. g) Regarding Fixed Deposits of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It appears that various depositors filed objections in the NCLT. One U.C. Wadhwa - fixed deposit holder of ₹ 3 Lakhs has on 22.10.2011 raised objections that the Company agreed to pay on expiry of 3 years with interest @ 12.50% per annum and that the Company had issued two cheques. One was dated 22.10.2014 for ₹ 1,20,608/- and another cheque was for ₹ 3 Lakhs but the cheques bounced. This Wadhwa claimed before NCLT that he had to recover ₹ 1,72,000/- from the Company and he was 80 years old and also a cancer patient. There was yet another depositor - Sushma Wadhwa of ₹ 2 Lakhs claiming that she was 76 years old and had to recover ₹ 1,72,000/-. It also appears that there were other objectors who opposed further extension of time. Learned NCLT in Impugned Order took note of their objections. One Mr. Subramanian Chanderashekhar claimed that out of fixed deposit of ₹ 3 Lakhs, the balance as on date was ₹ 1,99,500/- with interest and that in terms of the Order passed by CLB, the Company paid 10% of the amount in December, 2015 but failed to pay the rest of the amount. CLB took note of the other objectors also, and these defaults. Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed deposit holders since the institution of the application before NCLT. It was then observed:- The only amount being paid after institution of the instant application is the amount of ₹ 15 lacs per quarter for meeting requirement of hardship cases which was increased to ₹ 30 lacs per quarter vide order dated 18.08.2017 on the prayer made on behalf of the applicant company. Can the applicant company now be permitted to implement the order of the year 2013 w.e.f. the date of order passed by this Tribunal? This all depends on whether this miscellaneous application filed in CP No.27/02/2013 is at all maintainable in view of the circumstances of the case. It would be seen that when in the original scheme sanctioned by the Company Law Board, there was a big relief to the company in granting extensions and the details thereof have already been described while narrating the facts of the case. 8. NCLT referred to Section - 74 of the new Act and further observed:- 30. Such a stringent provision has to be interpreted in the light of the objective of safeguarding the interests of the fixed deposit holders. When once the company had sought the sanction of the scheme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ders. 10. NCLT observed that with the financial position of the Company, there seemed to be no sincere effort at all on the part of the Company to comply with directions of the CLB in 2013. Discarding the arguments which were raised before it, NCLT observed:- For how much period, the depositors would keep suffering because of such kind of the excuses by the company without any fault of theirs. The depositors have been constantly urging on the implementation of the directions passed in the order of the year 2013 of the Company Law Board. 11. Thus the NCLT concluded that there was no merit and rejected the application. Application for modification of Impugned Order - withdrawn 12. The Appellant after such Impugned Order passed on 8th December, 2017, appears to have filed yet another application for modification which the Appellant claims was better proposal but the NCLT was not with the Appellant and the said CA 28/2018 was withdrawn with liberty to avail appropriate remedy. Thus, the present appeal has been filed. The Appeal 13. The present appeal also lists out the various reasons for distress and the earlier developments before and after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osit holders is required to be secured. The Appellant was granted sufficient time by CLB while extending the time for repayment vide Order dated 30th September, 2013. Even for deposit holders of ₹ 15,001/- minimum period of 4 years was provided along with lower rate of interest @ 8%. ROC has claimed that in spite of such benefit, the Appellant Company defaulted in making payments in terms of the Order dated 30th September, 2013. The Impugned Order shows that deposit holders had raised objections against the application seeking further extension of time. According to ROC, the performance of other group companies has no bearing on the present Appeal and the performance of other Companies cannot be taken as indicator in the present Appeal. Counsel heard 15. The Counsel for both sides have been heard. Counsel for Appellant referred to the pleadings and the case as was made out before CLB on earlier occasion and as was claimed before the NCLT at the time of present applications to submit that the NCLT should have appreciated that the Appellant had paid a sum of ₹ 2.82 crores between 1.10.2016 to 31.12.2017 out of ₹ 11.66 crores, leaving unpaid sum of ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he plea for further extension. The NCLT appears to have found that when big relief had already been granted to the Company, further extension was not justified. NCLT noted that there was absolutely no reason for the Appellant to have stopped making payments just because the application had been filed in NCLT. The NCLT considered the objections of depositors who had raised objections and which included old persons aged 80 and 70 years. Objector U.C. Wadhwa claimed before NCLT that he was 80 years old and a cancer patient also. With such depositors objecting, and complaints of default as well as complaints of cheques given bouncing, the NCLT rightly appears to have declined to entertain the applications for extension of time. 19. The record shows that the Appellant once came up with a scheme which Appellant got settled from CLB. Then Appellant came up with CA 8/2016 making proposals by way of fresh scheme to repay by re-fixing instalments and time gaps. During the pendency of the matter, yet another CA 39/2017 was filed making suggestions as revised scheme and even before they could be settled, filed yet another CA 144/2017 making further alternative proposals to tone down liabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but even others. The list of depositors filed with ROC in view of Section 74(1)(a) of the new Act (Diary No.6022) does not show that the list was limited to depositors of amounts less than ₹ 20,000/-. The CLB Order shows deposit holders being put in slabs of even ₹ 50,000/-, ₹ 1 Lakh and ₹ 1 Lakh and above. We are aware that we are not sitting in Judgement over the Order of CLB. Our reference is limited for the purpose that when relief had been obtained even beyond contractual rates of interest and comfortable instalments were got fixed in terms of slabs and time, the Appellant failed to keep up with the scheme settled before CLB and came up with the present fresh application before NCLT to again re-fix the instalments and time frame. With objectors claiming bouncing of cheques, we find no reason to interfere and ask them to further wait. 20. The Companies Act, 2013 came up with Chapter V relating to acceptance of deposits by Companies. Section 73 provides for prohibition on acceptance of deposits from public and lays down how deposits from members could be accepted. Section 74 deals with repayment of deposits, etc. accepted before commencement of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Tribunal under sub-section (2), the company shall, in addition to the payment of the amount of deposit or part thereof and the interest due, be punishable with fine which shall not be less than one crore rupees but which may extend to ten crore rupees and every officer of the company who is in default shall be punishable with imprisonment which may extend to seven years or with fine which shall not be less than twenty-five lakh rupees but which may extend to two crore rupees, or with both. 21. It appears that the Appellant in view of Section 74(1)(a) filed statement with ROC with Form GNL-2. The Form annexed was DPT-4 along with a certificate of Chartered Accountant and list of depositors. This form appears to have been submitted to ROC on 28.08.2014. Section 74(1)(a) inter alia requires the Company to state as to the arrangements made for such repayment notwithstanding anything contained in any other law for the time being in force or under the terms and conditions subject to which the deposit was accepted or any scheme framed under any law. Thus, even if CLB had accepted a scheme of repayment under the old Act, it was obligatory for the Appellant to inform ROC as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from public by eligible companies. Explanation .- For the purposes of this rule, it is hereby clarified that in case of a company which had accepted or invited public deposits under the relevant provisions of the Companies Act, 1956 and rules made under that Act (hereinafter known as Earlier Deposits ) and has been repaying such deposits and interest thereon in accordance with such provisions, the provisions of clause (b) of sub-section (1) of section 74 of the Act shall be deemed to have been complied with if the company complies with requirements under the Act and these rules and continues to repay such deposits and interest due thereon on due dates for the remaining period of such deposit in accordance with the terms and conditions and period of such Earlier Deposits and in compliance with the requirements under the Act and these rules; Provided further that the fresh deposits by every eligible company shall have to be in accordance with the provisions of Chapter V of the Act and these rules; 24. What appears from the above Rule is that the rigor of Section 76(2) read with Sections 73 and 74 would apply to acceptance of deposits from public by eligible Companies b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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