Company Law Board
A.B. Appanna vs Southern Petrochemical Industries ... on 16 January, 2003
Equivalent citations: [2004]118COMPCAS114(CLB), [2003]45SCL43(CLB)
ORDER
K.K. Balu, Member
1. The depositor in M/s Southern Petrochemical Industries Corporation Limited ("the Company") has made this application under Section 58A(9) of the Companies Act, 1956 ("the Act") submitting that the Company has failed to repay on maturity the deposit amount of Rs. 1,11,000/- with interest thereon. The application came up for hearing from time to time and finally on 06.01.2003.
2. According to Shri Prakash Goklaney, Counsel appearing for the Company, the maturity amount of Rs. 1,22,685/- after deduction of tax at source in respect of the FDR No. 628591 payable to the applicant was dispatched by way of 7 warrants by registered post on 23.01.2001 in favour of the applicant, to the address furnished by him and at his risk, in accordance with the deposit terms. When the applicant complained of non-receipt of the warrants, the Company, as a matter of concern, made detailed enquiries with the Postal Authorities and their Bankers and came to realize that three warrants of Rs. 20,000/- each were encashed at City Union Bank Limited, Trichy and the remaining warrants aggregating Rs. 62,685/- remained unpaid. The amount of unpaid warrants was paid in March 2002 against the indemnity bond furnished by applicant. In this connection, Shri Goklaney referred to the correspondence exchanged in relation to this deposit transaction, viz., copy of the Register Postal Journal (Sl. No. 2 of the Counter), letter dated 09.11.2001 addressed to City Union Bank Limited (Sl. No. 7), letter dated 20.11.2001 addressed to Postal Authorities (Sl. No. 8), letter dated 29.11.2001 of City Union Bank Limited addressed to the Company (Sl. No. 11) and letter dated 15.03.2002 (Sl. No. 18) of the Company to the applicant substantiating the contentions of the Company.
Shri Goklaney pointed out that the three warrants aggregating Rs. 60,000/- sent by registered post were purportedly intercepted and encashed by an unauthorized person through fraudulent means for which the Company cannot be held responsible. Shri Goklaney referred to the terms and conditions governing the fixed deposit schemes of the Company and specifically read out condition No. 9, which reads as under:-
"9. If repayment is sought, the Fixed Deposit Receipt shall be duly discharged on a Re. 1 revenue stamp and returned to the Company at least 30 days before the date of maturity. Repayment of principal amounts will be made by 'A/c Payee' cheques/DDs/warrants drawn on the Company's Bankers and payable at par. The cheques/DDs/warrants will be sent by Registered Post/Recorded Delivery to the registered address of the depositors, at their risk."
Shri Goklaney further urged that the debt of the Company is discharged as soon as the Company put into the post a letter containing the warrants duly addressed to the applicant, in support of which he referred to the illustration
(d) of Section 50 of the Indian Contract Act, 1872 and further relied on Indore Malwa United Mills Limited v. Commissioner of Income Tax--AIR 1966 SC 1466 to show that where the debtor, by express or implied contract, is authorized to send the payment by cheque to the creditor, the post office is the agent of the creditor to receive the cheque and the creditor receives the payment as soon as the cheque is posted to him. In the present case, Shri Goklaney pointed out that warrants were duly dispatched to the applicant by registered post extinguishing the liability of the Company. In the circumstances, the applicant cannot have any remedy before the CLB. Shri Goklaney, therefore sought for dismissal of the application.
3. According to the applicant, when he had forwarded the discharged Fixed Deposit receipt claiming the deposit amount, through the Company's Agents, viz., M/s Integrated Enterprises (India) Ltd., Mysore, the Company ought to have sent the warrants through its Agent. But the Company failed. The Company did not send the warrants to his address at South Kodgu District, Karnataka. Moreover, the Company failed to take any action or lodge police complaint on knowing the fact that the warrants were ingeniously encashed by a stranger at Trichy, a place not connected to the applicant. The company and its staff members are responsible for the interception and encashment of the warrants at Trichy. The Company is not discharged by merely sending the warrants by registered post and cannot disown its liability unless and until the amount is actually realized by the applicant. Therefore, the Company should be directed to pay forthwith balance of the deposit amount together with interest.
4. I have considered the pleadings and oral submissions made by Counsel for the Company. A careful perusal of the available records reveal that out of the seven warrants amounting to Rs. 1,22,685/- dispatched by the Company in January 2001 three warrants accounting for Rs. 60,000/- were encashed by a third party and that the remaining warrants remained unencashed. The Company made payment of Rs. 62,685 representing the unencashed warrants to the applicant in March 2002. The dispute is in relation to the three warrants which were encashed, admittedly by a third party. While, according to the Company these warrants were duly sent by registered post at the address of the applicant, thereby claiming discharge of the liability, the applicant stoutly denies the same. It is observed that these warrants, though according to the Company, were sent to the applicant at his address, namely, South Kodgu District, Karnataka they were found to be encashed by a third party at Trichy, Tamil Nadu. By virtue of Section 58A(9) of the Act, where a non-banking non-financial company fails to repay any deposit in accordance with the terms and conditions of such deposit, the CLB, if it is satisfied, either on its own motion or on the application of the depositor, that it is necessary so to do to safeguard the interests of the Company, the depositors or in the public interest, direct, by order, the non-banking non-financial company to make repayment of such deposit, after giving a reasonable opportunity of being heard to the non-banking non-financial company and other persons interested in the matter within such time and such conditions as may be specified in the order. Thus, the CLB has power under Section 58A(9) to order for repayment only in the event of default to repay any deposit by the Company. Moreover this Bench cannot decide these contentions issues in the summary jurisdiction under Section 58A(9) as has been held by the CLB in a number of cases. In this connection, beneficial reference is invited to Dr. Mahesh Batra v. Gajaraj Beverages (P) Ltd.--(2002) 51 CLA 4 (CLB). Accordingly, the applicant is at liberty to agitate his claim before a competent Civil Court, if so advised. I am not, therefore, going into the legal submissions made on behalf of the Company and the decision cited thereof. In the result, the application is dismissed.
No order as to costs.