Company Law Board
Mrs. Kanak Vinod Mehta vs Jyoti Wire Industries Ltd. on 2 April, 1991
Equivalent citations: [1991]72COMPCAS366(CLB)
ORDER
S.P. Upasani, Chairman
1. This is an application dated March 14, 1990, and filed on April 9, 1990, by Mrs. Kanak V. Mehta under Section 58A(9) of the Companies Act, 1956, against Jyoti Wire Industries Ltd., Bombay, as the company failed to repay an amount of Rs. 2,10,000 deposited with the company. In the application, neither the number and date of fixed deposit receipt nor the terms and conditions of the deposit are mentioned. In the various documents filed along with the application, it has been stated that there is a dispute between the depositor-applicant and her husband, who also controls Jyoti Wire Industries Ltd. A letter dated July 25, 1988, from the respondent-company has been filed in which it has been mentioned that the deposit of Rs. 2,10,000 is jointly held by the applicant and her husband, Shri Vinod D. Mehta, and interest dues are being paid periodically to Mrs. Kanak V. Mehta. It has been stated by the depositor-applicant that she had made a number of applications to the company to give a photo copy of the application made at the time of placing the fixed deposit, a photo copy of the fixed deposit receipt issued by the company and the details as to when the fixed deposit matures for repayment. However, the company has neither supplied the information nor replied to her letters.
2. The case came up for final hearing on March 6, 1991. While the advocates appearing on behalf of the depositor-applicant were present, none appeared on behalf of the company. Earlier hearings were held on May 18, 1990, July 12, 1990, August 1, 1990, September 7, 1990, and October 4, 1990. Some of the hearings were attended by the representative of the respondent-company. The company had an adequate opportunity to have its say. The company has already filed its interim replies dated July 9, 1990, July 31, 1990, September 4, 1990, October 1, 1990, and a counter-affidavit has been filed on October 30, 1990. There is no request from the respondent-company for adjournment of the case and since the say of the company is already on record, it was decided to proceed with the hearing of the case. In the written communications from the company, it has been pointed out that the company, Jyoti Wire Industries Ltd., was incorporated as a private limited company on December 31, 1971, and Mrs. Kanak V. Mehta is a shareholder of the company right from the inception of the company. The company became a deemed public company on July 2, 1988, because of the operation of the provisions of Section 43A(1A) of the Companies Act, 1956. It has also been stated that, as per Rule 2(b)(ix) of the Companies (Acceptance of Deposits) Rules, 1975, the amount deposited by the shareholders is not covered within the definition of "deposits". Therefore, it has been contended by the company that the provisions of Section 58A of the Companies Act, 1956, are not applicable in this case. It has also further been stated by the respondent-company that none of the fixed deposits has matured as on October 29, 1990, and, therefore, the question of repayment does not arise.
3. Shri J. Dwarakadas, advocate, appearing on behalf of the depositor-applicant, Mrs. Kanak V. Mehta, stated that, in spite of the Company Law Board's orders, the company has not given inspection of original documents. It was further pointed out that, in the hearing held on August 1, 1990, while the respondent-company had furnished a copy of the application for fixed deposit as well as the rules and regulations governing the acceptance of deposits, it has not submitted for inspection the original application along with the letter of renewal containing a declaration especially in view of the applicant-depositor's denial in her letter of August 20, 1990, addressed to the company of having signed any such declaration. Shri Dwarakadas further argued that the company has admitted that it was a joint deposit and since the depositor-applicant does not have original records with her because of family disputes, the burden should be on the respondent-company to prove that the fixed deposit has not matured.
4. The main question in this case is regarding the maintainability of the proceedings under Section 58A in the absence of any evidence as to the terms and conditions of the fixed deposit, especially relating to the date of maturity and whether the deposit made by a shareholder will be covered under the definition of deposit in Rule 2(b) of the Companies (Acceptance of Deposits) Rules, 1975. Therefore, it was decided to first examine the preliminary objection regarding the maintainability of the application. According to Section 58A(9) of the Companies Act, 1956, the jurisdiction of the Company Law Board is extended only if the company has failed to repay any deposit or part thereof, in accordance with the terms and conditions of such deposit. In this connection, the depositor-applicant has not placed any material evidence before me to indicate that the deposit is overdue. The company has stated in the affidavit filed on October 30, 1990, by R.J. Mooni, constituted attorney, that Mrs. Kanak V. Mehta is a shareholder of the company right from inception of the company and that none of her deposits have matured and, therefore, the question of repayment does not arise. As against this, the affidavit filed by the depositor-applicant on September 25, 1990, does not state categorically whether the deposits have matured and whether the depositor-applicant has signed any declaration while placing the fixed deposit with the respondent company. It is stated in the affidavit in para 10 : "I say that disputes and differences between me and my husband arose some time in January, 1988. I say that, prior thereto, I reposed complete trust and confidence in my husband as well as in my father-in-law who were in complete charge and control of the affairs of the company, viz., Jyoti Wire Industries Ltd. I say that, in view of the trust and confidence reposed by me in my husband as well as my father-in-law, my signatures were often obtained on letters, cheques, etc., which I often signed without questioning or reading the contents thereof. I say that if at all the company is in possession of any declaration allegedly signed by me (which is as stated hereinabove I do not recollect as having signed), my signature on the same might have been obtained in the aforesaid circumstances." It is on record that the impugned deposit is held jointly by the applicant and her husband and both are shareholders in the company. The management of the company is controlled by the husband of the applicant. Because of strained relations between the joint holders, the applicant has not been able to produce any material evidence in respect of maturity of the fixed deposit and the terms and conditions of the fixed deposit. The company has claimed exemption from the provisions of Section 58A and also categorically stated that none of the deposits of the applicant have matured. In view of the circumstances, I hold that the depositor-applicant has not been able to establish her case as required under Section 58A(9) of the Companies Act, 1956, and the petition is, therefore, dismissed.