Company Law Board
Shri J. Satyanarayana vs The Purasawakum Permanent Fund Limited on 6 December, 2004
Equivalent citations: [2006]131COMPCAS493(CLB), (2006)5COMPLJ125(CLB), [2005]60SCL595(CLB)
ORDER
K.K. Balu, Member
1. This is an application filed by Shri J. Satyanarayana, son as well as nominee of late J.V. Krishnan, under Section 45QA (2) of the Reserve Bank of India Act, 1934 ('the Act') claiming refund of the deposit amount of Rs. 10,000/- along with interest from The Purasawakum Permanent Fund Limited .('the Company'). The facts in brief are that J.V. Krishnan, since deceased had deposited a sum of Rs. 10,000/- with the Company on 04.05.1994 in Fixed Deposit account (No. 45563) for a period of 36 months. The deposit was matured on 04.05.1997. In the meanwhile, J.V. Krishnan had expired on 2.11.1995 i.e., prior to maturity of the deposit. According to the applicant, he came to know of the deposit made by his father only in August, 2004 on vacating the premises, where his father lived upon which immediately contacted the Company for getting the maturity amount. However, the Company reported that it had transferred the maturity amount to the Investor Education and Protection Fund, constituted under Section 205C of the Companies Act, 1956. Hence the present application.
2. According to Shri T.K. Seshadri, learned Counsel, J.V. Krishnan had deposited a sum of Rs. 10,000/- for a period of three years which was matured on 04.05.1997. The Company never received any communication from J.V. Krishnan on maturity of the deposit either for renewal or for repayment. The Company deputed one of its staff members to the depositor's residence, viz., Shri Sai Kripa, 4, 2nd Cross Street, Shastri Nagar, Chennai-600020 on 04.04.2004 to apprise him about the matured deposit and the Company's proposal to transfer the amount to the Investors Education and Protection Fund, in the event of not taking any steps to renew or withdraw the deposit, which was followed by a communication dated 05.04.2004 by the Company in favour of J.V. Krishnan. There was no response from the depositor, compelling the Company to transfer the deposit amount of Rs. 10,000/- to the Investors Education and Protection Fund. Thereafter, the applicant by a letter dated 13.09.2004 claimed the deposit amount, forwarding copies of the fixed deposit receipt, death certificate of the depositor etc., from which the Company came to know that the depositor died as early as on 02.11.1995 and further advised the applicant by a letter dated 13.09.2004 about the remittance of the deposit amount in the Investors Education and Protection Fund. At present, no amount is lying to the credit of J.V. Krishna in the books of account of the Company and, therefore, the Company is not obliged to make any payment in favour of the applicant and therefore sought for dismissal of the application.
3. According to the applicant the depositor was seriously ill for quite some time and died on 02.11.1995. The applicant came to know of the fixed deposit only in August, 2004, while vacating the premises where the depositor was residing. The applicant was used to collect the letters sent in the name of the depositor, during the period between the years 1998 and 2004 as borne out by copies of the communication sent in the name of the deceased depositor at his above residential address. Had the Company sent any reminder by post at the relevant point of time to the depositor, the applicant would have taken appropriate action in collecting the deposit amount. The Company has not produced any material to show whether any communication was ever sent to the depositor after the date of maturity, viz., 04.05.1997, at his address known to the Company, in the absence of which the Company cannot be absolved of its responsibility of repaying the deposit amount. The plea of the Company that a staff member was deputed on 04.04.2004 to the depositor's residence followed by a letter dated 05.04.2004 through one of its employees is an after-thought to avoid its liability in favour of the applicant. The Company ought to have sent its communication by registered post A/D, but failed in its duty, thereby it is answerable to the claim of the applicant. Though the Company's communication dated 05.04.2004 shows that it had sent a number of letters informing the depositor regarding maturity of the fixed deposit, yet there is no evidence substantiating the claim of the Company. According to the applicant, the said communication dated 05.04.2004 of the Company is a fabricated and false document. The Company has not taken efforts between 04.05.1997 and 05.05.2004 to intimate maturity of the deposit enabling the applicant to collect the deposit amount. There is no obligation cast upon the depositor to claim the repayment of deposition its maturity. The Company ought to have kept the deposit amount in trust for the applicant, but ' utilised the amount for its operations. In these circumstances, the applicant is entitled for the interest on the deposit amount from the date of maturity till remittance of the deposit amount in the Investors Education and Protection Fund.
4. I have considered the pleadings and submissions made on behalf of the applicant and the Company. The short issue that arises for my consideration is whether the applicant is entitled for the interest as claimed by him in the facts and circumstances of the present case.
5. The facts not in dispute are that the Company being a Nidhi Company has been accepting deposits from the Public as per the rules prescribed by Government of India, Ministry of Law, Justice and Company Affairs, Department of Company Affairs, in exercise of the powers conferred by Sub-section (1) of Section 637A of the Companies Act, 1956, as amended upto date. Accordingly, the Company has prescribed the deposit application form, which contains, inter alia, the terms and conditions governing fixed deposits, the relevant of which as applicable to the contentious issue are as under:
Clause 6: Interest will cease on the due date of deposit if withdrawal is made after the date, or if deposit is not renewed within a month from the date.
Clause 8: For repayment of deposits the deposit receipt has to be surrendered duly discharged 20 paise revenue stamp. In the case of Former or Survivor (F or S) deposit the discharge has to made by the first named depositor during his/her life time. However in the case of Either or Survivor (E or S) deposits either depositor can give the discharge. In the case of joint accounts the deposit receipt should he discharged by both the depositors.
It is on record that the fixed deposit kept with the Company by J.V. Krishnan, since deceased was matured on 04.05.1997. The applicant being a nominee of the deceased depositor neither surrendered the duly discharged fixed deposit receipt nor renewed the same in accordance with the terms and conditions prescribed by the Company. By virtue of Section 205C(2)(c), the Investor Education and Protection Fund was established with effect from 31.10.1998 and matured deposits with companies shall be credited to the Investors Education and Protection Fund, if such amounts have remained unclaimed and unpaid for a period of seven years from the date they became due for payment. The explanation to Sub-section (2) of Section 205C clearly provides that no claims shall He against the Fund or the Company in respect of individual amounts which were unclaimed and unpaid for a period of seven years from the dates that they first became due for payment and no payment shall be made in respect of any such claims. In the instant case the matured deposit remained unclaimed for a period of more than seven years till August 2004, compelling the Company to transfer the deposit amount of Rs. 10,000/- to the Investors Education and Protection Fund. As no claim shall lie against the Investors Education and Protection Fund, no order for directing repayment of the deposit amount from the Investors Education and Protection Fund can be made by this Bench, irrespective of genuineness of the reasons put forth by the applicant. In regard to the claim for interest from the date of maturity, it shall be borne in mind that though the deposit was matured on 04.05.1997, it was hot renewed with in a month in terms of clause 6 of the terms and conditions governing fixed deposits, in which case interest ceased on the due date of the deposit. The applicant bound by the contractual obligations arising out , of the terms and conditions is barred from claiming interest from the date of maturity, notwithstanding veracity of the defense taken by the Company. The position regarding payment of interest after the date of maturity would be different had the applicant claimed the deposit in accordance with clause 8 of the terms and conditions and the Company defaulted to return the deposit, as contemplated in Section 45QA(2) of the Act. By virtue of this section, where a company failed to repay any deposit or part thereof, in accordance with the terms and conditions of such deposit, the Company Law Board may, if it is satisfied, either on its own motion or on the application of the depositor, direct the Company to make repayment of such deposit or part thereof in the manner as may be specified. There is no material on record to show that the Company defaulted in repayment of the deposit accepted from the J.V. Krishnan, and therefore, this Bench in my view cannot exercise the powers vested in Section 45QA (2) to direct the Company to pay interest as claimed by the applicant. In view of my foregoing conclusions, the applicant's claim against the Company must fail. Ordered accordingly. The application is disposed of in these lines.