National Company Law Appellate Tribunal
Jaiprakash Associates Limited vs Neena Somani & Ors on 9 December, 2022
1
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
PRINCIPAL BENCH, NEW DELHI
Company Appeal (AT) No. 302-315 of 2019
IN THE MATTER OF:
Jaiprakash Associates ...Appellant
Versus
Neena Somani & Ors. ...Respondents
Present:
For Appellant : Mr. Krishnendu Dutta, Sr. Advocate with Ms. Ruchira
Gupta, Ms. Nancy Shah, Mr. Rajat Sinha, Advocates.
For Respondents : Mr. Vaibhav Shukla, Ms. Durga Dutt, Advocates for R-
2 to 5.
Ms. Gitanjali N. Sharma, Advocate for R-6, 8,10
Ms. Shefali M., Advocate for R-23
Mr. Ravjyot Singh, Advocate for R-13 to 16
Mr. Pratyush Miglani, Mr. Prakhar Srivastava,
Advocates for R-17 to 20
ORDER
09.12.2022: Heard Mr. Krishnendu Dutta, Ld. Sr. Counsel assisted by Ms. Ruchira Gupta, Ld. Counsel for the Appellant as well as Mr. Pratyush Miglani, Ld. Counsel for the Respondents.
2. The present Appeal under Section 421 of the Companies Act, 2013 has been preferred against common order dated 13.09.2019 passed by National Company Law Tribunal, (herein after referred to as 'NCLT') Allahabad Bench, in CP No. 320/ALD/2018. By the said common order Ld. NCLT, Allahabad Bench, while disposing of CP Nos. i.e. 103/2019, 104/2019, 105/2019, 106/2019, 68/2019, 69/2019, 70/2019, 71/2019, 72/2019, 131/2019, 03/2019, 333/2018, 321/2018 issued direction to the Appellant, who had accepted deposits from the Respondents, to pay interest @ 12/12.5% p.a. from the date of maturity till the date of actual payment is released. CA (AT) No. 302-315 of 2019 2
3. The Respondents had filed Petition under Section 73(4) of the Companies Act, 2013 before the NCLT mainly for a direction to make payment of interest on their deposits from the date of maturity of the fixed deposit till the date of actual payment. Before the NCLT, the Appellant appeared and raised question of maintainability of petition under Section 73 (4) of the Companies Act, 2013 and also contested the matter.
4. During the pendency of the case before the NCLT one of the investor filed an appeal before this Appellate Tribunal vide Company Appeal (AT) No. 11 of 2016 against the extension of time granted to the Appellant in a proceedings i.e. C.A. No. 01/2016 in C.P. No. 25/10/2014) filed under Section 74 of the Companies Act, 2013 by the Appellant. One of the depositor was aggrieved with repeated extension of time in making repayment of deposit/interest.
5. This Appellate Tribunal by order dated 02.03.2017, issued certain directions.
6. Aggrieved with this order dated 02.03.2017, the Appellant had preferred a statutory appeal before the Hon'ble Supreme Court which was registered as Civil Appeal No. 4525-4526 of 2017. In the said case Hon'ble Supreme Court directed for making payment of interest even after the date of maturity till the date of actual payment. This was one of the reason which persuaded Ld. NCLT to frame, three issues which are as follows:
(i) Whether the Petition is maintainable under Section 73(4) of the Companies Act, 2013 or not?
CA (AT) No. 302-315 of 2019 3
(ii) Whether the petitioner is entitled to get the interest at the rate of 12/12.5% p.a. from the date of maturity of the FDRs till the date of actual payment was made or not?
(iii) Whether the Judgment passed by Hon'ble Supreme Court in the case of M/s Jaiprakash Associates vs. Jainendra Sahai Sinha in Civil Appeal No. 4525- 4526 of 2017 is binding upon this Tribunal or not?
7. After detailed hearing, the Ld. NCLT passed an order in affirmation and decided that the petition under Section 73 (4) of the Companies Act, 2013 was maintainable and also directed to make payment of interest even after the date of maturity till the date of actual payment.
8. Aggrieved with the impugned order the present appeal has been preferred. Mr. Dutta, Ld. Sr. Counsel appearing on behalf of the Appellant assailing the order has argued that the order impugned is firstly liable to be set aside on the ground that once the proceedings which were initiated by the Appellant under Section 74 of the Act was concluded, there was no reason for the NCLT to again entertain the petitions filed under Section 73 (4) of the Act which were filed by the Respondents.
9. He submits that the dispute was finally adjudicated by an order dated 23.10.2017. He submits that the Ld. NCLT in CP No. 37/ALD/2017 which was filed under Section 74 (2) of the Companies Act, 2013 by the Appellant, after granting extensions and extensions and considering the fact that all the deposits were cleared by the Appellant closed the issue by assigning detailed reason which is reflected in the order itself.
CA (AT) No. 302-315 of 2019 4
10. Mr. Dutta, Ld. Sr. Counsel has specifically referred to paragraph 2 of the order dated 23.10.2017 which is reproduced herein below:
"The Petitioner Company has earlier got extension of time for making repayments of such deposits amount till 31st March, 2017. That apart the time for making repayment was being extended from time to time by the Company Law Board, New Delhi and by the NCLT as per its latest order dated 17.06.2016. This came to further challenge before the Hon'ble NCLAT, New Delhi in an appeal which while disposing of the appeal by its order dated 02.03.2017 confirmed such extension of time with further direction that no further extension for payment would be granted. The order of Hon'ble NCLAT again impugned before the Hon'ble Supreme Court by way of a SLP. The Hon'ble Supreme Court vide its order dated 29.03.2017 which pleased to grant stay on the same. At present the above mentioned SLP is still pending and subjudice before the Hon'ble Supreme Court".
11. He has further referred to Page -104, para- 2 of the Memo of Appeal which is reproduced herein below:
"It is a matter of record that during the course of hearing, this court as an interim major and in exercise of its power conferred under Section 74(2) of the Companies Act and after being satisfied with the reason shown by the Petitioner Company for seeking such extension (kept on granting time for making payment and thus equally monitored the performance of the company for taking measure for repayment).
As per record the SLP filed before the Hon'ble Supreme Court is still pending and the operation of the order impugned as passed by the Hon'ble NCLAT has now been stayed. It may be noted that during the course of hearing of the present petition, the petitioner company made sincere effort to make repayment of the amount of due under the FDs to its depositors. As per its report as submitted time to time to this Court an amount of Rs. 1442.91 Crores between the period of 01.04.2014 to 31.03.2017 has already been paid in respect of 92994 depositors out of total 178704 depositors aggregating to Rs. 2722.53 Crores as were outstanding on 01.04.2014. The Petitioner Company has made further CA (AT) No. 302-315 of 2019 5 payment of Rs. 1279 Crores and above between the period of 31.03.2017 till 13.09.2017. Thus, the current outstanding due remains only around Rs. 38 Lakhs and odd in respect of some of withheld deposits which are around 51, those are withheld for want of necessary clearance from the statutory authority like CBI, a court of Law etc. which in fact is not within the domain of the Petitioner Company".
12. He has also referred to running Page -105 and Page - 110 of the Memo of Appeal which is reproduced herein below:
"Thus, it may be seen that the petitioner company has paid almost entire amount except to Rs.38,84,715/- as such payment can also be released by the company, provided the cause for withholding the amount is removed. Hence, such withheld payment on such deposits cannot be treated as wilful default under Section 74 (3) of the Companies Act".
"Hence, we find the reason given for withheld payment seems to be reasonable and genuine, moreover, such payments have been withheld due to some statutory/administrative order and such cannot be counted as wilful default on the part of Company under Section 74 (3) of the Companies Act. Moreover, the Section 74 (2) confer such power to this court to extend the time of payment by considering the financial condition of the company".
13. Ld. Sr. Counsel for the Appellant has further referred to running Page - 112, Para- 2 & 3 of the Memo of Appeal which is reproduced herein below:
"We considered the above stated comments and duly examined the merits of the present petition seeking for extension of time in the light of the above stated statutory position and by also perused the previous performance and past tract of the Company's record so far as the present case is concerned in making repayment of the fixed deposits. We find that the almost amount towards fixed deposits has now been paid although at belated stage. Hence, we record our satisfaction and in our view belated payment can be regularized".
"Therefore, such period needs regularization and accordingly is extended upto 13.09.2017 as per the CA (AT) No. 302-315 of 2019 6 provisions contained in Section 74 (2) of the Companies Act. However, such payment stands regularized with following directions (in respect of the disputed/withhold payments) that, "the company is directed to keep on operating separate bank account and such account not to be closed without prior intimation to this court. Further, the petitioner company is directed to file a quarterly statement in the present matter before the registry of this Tribunal showing the updated status of unpaid deposit time to time, so that the court may issue necessary direction, if deem appropriate".
14. By way of drawing our attention to the said order and quoted portions it has been argued that the Ld. NCLT has taken note of the fact that the Appellant was taking all endeavour to make payments of depositors. He submits that even the Appellant for clearing the deposit has also preferred to sell their properties including some of the 'Cement Plants'. According to Mr. Dutta, Ld. Sr. Counsel once extension was finally concluded under Section 74 of the Companies Act, 2013, there was no reason for NCLT to entertain the Petition filed by the Respondents wherein they had claimed for payment of interest on the deposits which were already paid to them.
15. It was clarified that whatever deposits were made, were cleared with interest up to the date of maturity.
16. It was contended by Mr. Dutta, Ld. Sr. Counsel that the Petition filed under Section 73 (4) by the Respondents were not maintainable, in view of the fact that it was not a case that deposits were accepted after the commencement of the new Act.
17. He submits that Section 73 was applicable in the case of accepting deposit after the commencement of the new Act, whereas in the present case it is not in dispute that all the deposits were accepted while old Act i.e. Companies Act, CA (AT) No. 302-315 of 2019 7 1956, were in operation. Accordingly, it has been argued that the order impugned is liable to be set aside.
18. In reply it was argued by Mr. Pratyush Miglani, Ld. Counsel appearing on behalf of Respondent No. 17 to 20 that the deposits though were matured in the year 2015, payment was not made, however much belatedly payments were made in the month of July, 2017. The said Respondents were not paid interest after the maturity date till the date of actual payment.
19. He submits that of course, it has been argued from the appellant side that 73 (4) is not applicable, in cases of deposits were prior to the new Act, but fact remains that by issuance of a Government of India circular i.e. General Circular No. 09/2015 dated 18.06.2015, it was clarified that depositors were free to file application under Section 73 (4) of the Act, regarding its payment. He has produced the copy of Circular of 2015 which is reproduced herein below:
"General Circular No. 09 /2015 No. 1/8/2013-CL-V Government of India Ministry of Corporate Affairs 5thFloor, A Wing, ShastriBhavan, Dr R.P. Road, New Delhi Dated: 18th June, 2015 To All Regional Directors, All Registrars of Companies, All Stakeholders.
Subject: Clarification on repayment of deposits accepted by the companies before the commencement of the CA (AT) No. 302-315 of 2019 8 Companies Act, 2013 under section 74 of the said Act Sir, This Ministry has received representations seeking clarification regarding processing of the deposits related complaints received from investors under section 74 of the Companies Act, 2013 (the said Act) in respect of defaults made by companies in repayment of deposits accepted by them before the commencement of the said Act i.e. before 1st April, 2014 and filing of prosecutions against defaulting companies by the Registrars of Companies/Regional Directors.
2. The matter has been examined in the Ministry and it is clarified that vide Removal of Difficulties (Second) Order [S.O. 1428(E)] dated 2nd June, 2014 and Removal of Difficulties (Fourth) Order [S.O. 1460(E)] dated 6th June, 2014, the Company Law Board has been empowered to exercise the powers of National Company Law Tribunal under sub-section (4) of section 73 and sub-section (2) of section 74 of the said Act, till the latter's constitution. Thus, a depositor is free to file an application under section 73(4) of the said Act, with the Company Law Board if the company fails to make repayment of deposits accepted by it. Further the company may also file application under section 74(2) of the said Act with the Company Law Board seeking extension of time in making the repayment of deposits accepted by it before the commencement of the provisions of the said Act.
3. Further, attention is also drawn to Explanation appearing below Rule 19 of the Companies (Acceptance of Deposits) Rules, 2014 which clarifies the conditions subject to which a company would be deemed to have complied with the requirements laid down in Section 74(1)(b) of the Companies Act, 2013. Companies can repay deposits accepted prior to 1st April, 2014 in accordance with terms and conditions for which the deposits had been accepted.
4. It is also clarified that there is no bar on the Registrar of Companies for filing of prosecution against a company if such company fails to make repayment of deposits accepted by it under the provisions of the Companies Act, 1956 or Companies Act, 2013, subject to the contents of para 3 above.
This issues with the approval of the competent authority. CA (AT) No. 302-315 of 2019 9 Yours faithfully (KMS Narayanan) Assistant Director (Policy) Copy to:-
1. e-Governance Section and web contents Officer to place this circular on the Ministry website.
2. Guard File"
18. By referring to aforesaid circular, Ld. Counsel for Respondents submits that even though Section 73 (4) does not put a bar on filing Petition claiming deposits but in view of clarification by the aforesaid circular there was no reason to raise a question of non-applicability of Section 73 (4) of the Act. He submits that the Ld. NCLT has rightly considered the matter and decided the maintainability issue in favour of Respondents herein.
19. Ld. Counsel has further referred to an order dated 17.06.2016 passed by the National Company Law Tribunal, New Delhi Bench, CA No. 01/2016 in CP No. 25/10/2014. He has referred to para- 5 of the order which is at running page 84 of the Memo of Appeal and submits that even on application filed by the Appellant for extension of time the NCLT had clarified regarding payment of interest. Since Ld. Counsel has referred to para -5 of the order which is apt to reproduce the same:
"5. This Bench, therefore, extends further time upto 31.03.2017 to repay the dues aggregating to Rs. 1079.31 Crores and interest thereof payable to the depositors".
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20. Ld. Counsel has also referred to certain paragraphs of order dated 02.03.2017 passed by this Appellate Tribunal in Company Appeal (AT) No. 11 of 2016. He has referred to Paragraph -11, 12 & 13 which is at running Page - 95,96 & 97 which are reproduced herein below:
"11. The impugned order was passed by Tribunal on 17th June 2016 allowing the Company time till 31st March 2017 to pay the deposits with interest. Even after passing of the impugned order dated 17th June 2016 and now more than eight months have passed but the company has not deposited any amount in its account, nor paid any amount to any of the depositors. Now, the only ground taken by the Company is that a scheme is pending consideration before the High Court's regarding selling of the plants.
12. We have heard learned Counsel for the parties and perused the record. Now, approximately three years have passed since 1st April 2014 when sub section (1) of Section 74 came into effect but the deposits with interest have not been paid to the depositors. Even after extension of time granted under sub-section (2) of Section 74 there is no likely hood of payment. In the circumstances, while we are not interfering with the impugned order extended time granted by the Tribunal up to 31st March 2017, but direct the tribunal to close the Company Petition as no ground has been shown by the company further extension of time under sub-section (2) of Section 74, after three years of its commencement is not desirable. We make it clear that a number of extensions of time cannot be granted under sub section (2) of Section 74 without any ground, particularly when the company has not shown any interest in paying part of the deposit with interest to depositors either during the pendency of the company petition or this appeal. Ld. Counsel for the Respondents have also informed that they will pay the dues by 31st March 2017.
13. We make it clear that if the dues of depositors with interest is not paid by the Company by 31st March 2017, the Registrar of the Companies, NCR and Haryana will take steps to file petition under sub-section (3) of Section 74 of the Act 2013 before the Special Judge to punish the company and its directors and members and every officer of the company, whoever is in default. It will be open to the CA (AT) No. 302-315 of 2019 11 appellant and other depositors to sue the Company, its directors & officers for damages and fraud under Section 75 of the Companies Act 2013".
21. It was argued that in the appeal which was filed by one of the depositors against the extension of time granted by the NCLT, this Tribunal had taken serious view of the matter and clarified that till the date of payment the depositors were entitled to claim the interest.
22. He further submits that even in the case of one of the depositors the Hon'ble Supreme Court in Civil Appeal No. 4525-4526 of 2017 had directed for making payment of interest @ 12/12.5% p.a. till the date of actual payment. According to Ld. Counsel for the Respondent No. 17 to 20 once in a similar case of depositor the Hon'ble Supreme Court had directed to make payment of interest till the date of actual payment, the Ld. NCLT has not passed any incorrect order.
23. Ld. Counsel appearing on behalf of remaining Respondents have adopted the submissions made by Respondent No. 17 to 20. However, none has appeared on behalf of Respondent No. 22.
24. Mr. Dutta, Ld. Sr. Counsel in rejoinder has taken serious exception to the submissions made by Ld. Counsel for Respondents particularly in view of reference of order dated 02.03.2017 passed by this Appellate Tribunal. It was submitted that against the said order the Appellant had file an appeal before the Hon'ble Supreme Court and Hon'ble Supreme Court once had passed an order of stay of order dated 02.03.2017 passed by this Appellate Tribunal, there was no reason for the Ld. Counsel of the Respondent to place reliance on the said order. It was submitted that the said appeal was finally disposed of by Hon'ble CA (AT) No. 302-315 of 2019 12 Supreme Court on 10.09.2018 i.e. Civil Appeal No. 4525-4526 of 2017. It has also been argued that even though the said order was passed by Hon'ble Supreme Court in which there is a reference of payment of interest @ 12/12.5% p.a., but the Respondents may not get any benefit from the said order since the order of the Hon'ble Supreme Court was a consent order and no reliance can be made by the Ld. Counsel for the Respondent on the said order.
25. Mr. Dutta, Ld. Sr. Counsel has raised an objection regarding the maintainability of the application filed under Section 73 (4) of the Act before the NCLT. He submits that Section 73 (4) specifically states that it relates to deposits accepted to post enactment of the Companies Act, 2013 whereas in the present case deposits were accepted in compliance with the provisions contained in Companies Act, 1956 before the cut-off date i.e. 01.04.2014. He further tried to persuade the court that circular on which reliance was placed by the Respondent may not be applicable in the facts and circumstances of the present case. According to him once on a Petition filed by the Appellant under Section 74 the Ld. NCLT had extended time for clearing the payment and after entire payment was made the Ld. NCLT has closed the proceedings, there was no reason for the NCLT to entertain the application filed by the Respondents under Section 73 (4) of the Act.
26. Ld. Sr. Counsel even in rejoinder has referred to the number of Judgments of Hon'ble Supreme Court on the point that no relief can be granted to the Respondents in the light of order passed in Civil Appeal No. 4525-4526 of 2017. He has placed reliance on Judgment of Hon'ble Supreme Court reported in AIR CA (AT) No. 302-315 of 2019 13 2009 SC 2254 Vishnu Dutt Sharma vs. Manju Sharma'. By way of referring to paragraph 11 of the Judgment it was argued that Hon'ble Supreme Court in categorical term has held that mere direction of the Court without considering the legal position is not a precedent. He submits that bare perusal of the order passed by Hon'ble Supreme Court dated 10.09.2018 reflects that it may not be treated as precedents and no benefit can be granted to the Respondents.
27. Mr. Dutta, has also referred to paragraph 61 of the Judgment of Hon'ble Supreme Court reported in AIR 1982 SC 149 in the matter of 'S.P. Gupta vs. President of India & Ors' which is quoted herein below:
"61. We may now refer to the decision of the Constitution Bench of this Court in the State of Punjab v. Sodhi Sukhdev Singh (supra) on which the greatest reliance was placed by the learned Solicitor General in support of his plea based on Clause (2) of Article 74. The respondent who was the District and Sessions Judge in the erstwhile state of Pepsu was removed from service by an order dated 7th April 1953 passed by the President who was then in charge of the Administration of the State. The respondent made a representation against the Order of removal which was considered by the Council of Ministers of the State as in the meantime the President's rule had come to an end and the Council of Ministers expressed its views in a Resolution passed on 28th Sept. 1955, But before taking any action it invited the Report of the Public Service Commission. On receipt of the Report of the Public Service Commission the Council of Ministers considered the matter again and ultimately on 11th Aug. 1956 it reached the final conclusion against the respondent and in accordance with the conclusion, the order was passed to the effect that the respondent must be re-employed on some suitable post. The respondent thereupon instituted a suit against the successor State of Punjab for a declaration that his removal from service was illegal and in that suit he filed an application for the production of certain documents which included inter alia the proceedings of the Council of Ministers dated 28th Sept. 1055 and 11th Aug. 1956 and the Report of the Public Service Commission. The State objected to the production of CA (AT) No. 302-315 of 2019 14 these documents and ultimately the matter came before this Court. C(SIC)ajen-dragadkar, J. (as he then was) speaking on behalf of the majority of the Court upheld the claim of privilege put-forward on behalf of the State and so far as the Report of the Public Service Commission was concerned, the learned Judge held that it was protected against disclosure both under Clause (3) of Article 163 and Section 123 of the Indian Evidence Act, We are at present concerned only with the claim for protection under Clause (3) of Article 183 because that is an Article which corresponds to Clause (2) of Article 74 in so far as advice by the Council of Ministers to the Governor is concerned. The learned Judge speaking on behalf of the majority, accorded protection to the report of the Public Service Commission under Clause (3) of Article 163 on the ground that it formed part of the advice, tendered by the Council of Ministers to the Rajpramukh. This view taken by the majority does appear prima facie to support the contention of the learned Solicitor General, but we do not think we can uphold the claim for protection Put. forward by the learned Solicitor General by adopting a process of analogical reasoning from the majority view in this decision. In the first place, we do not know what were the circumstances in which the majority Judges came to regard the report of the Public Service Commission, as forming part of the advice tendered to the Rajpramukh. There is no reasoning in the judgment of the learned Judge showing as to why the majority held that the report of the Public Service Commission fell within the terms of Clause (3) of Article 163. The learned Judge has merely set out his ipse dixit, without any reasons at all, saying in just one sentence, "The same observation falls to be made in regard to the advice tendered by the Public Service Commission to the Council of Ministers." It is elementary that what is binding on the court in a subsequent case it not the conclusion arrived at in a previous decision but the ratio of that decision, for it is the ratio which binds as a precedent and not the conclusion. Secondly, we may point out that we find it (SIC) lfrcult to accept the view taken by the majority in this case. We are unable to appreciate how the report of the Public Service Commission which merely formed the material on the basis of which the Council of Ministers came to its decision as recorded in the proceedings dated 11th Aug. 1956 could be said to form part of the advice tendered by the Council of Ministers to the Rajpramukh, We do not think the learned Solicitor General can invoke the aid of this decision in CA (AT) No. 302-315 of 2019 15 support of his claim for protection under Clause (2) of Article 74".
28. He submits that the order on which the reliance has been placed by the Respondent i.e. order dated 10.09.2018 was passed in personam not in rem nor a ratio has been decided by the Hon'ble Supreme Court. Mr. Dutta, has also placed reliance of the Judgment of the Hon'ble Supreme Court reported in AIR 1989 SC 38 'Municipal Corporation of Delhi vs. Gurnam Kaur'. In this Judgment he has placed reliance on para-10 which is quoted herein below:
"10.It is axiomatic that when a direction or order is made by consent of the parties, the Court does not adjudicate upon the rights of the parties nor lay down any principle. Quotability as 'law' applies to the principle of a case, its ratio decidendi. The only thing in a Judge's decision binding as an authority upon a subsequent Judge is the principle upon which the case was decided. Statements which are not part of the ratio decidendi are distinguished as obiter dicta and are not authoritative. The task of finding the principle is fraught with difficulty because without an investigation into the facts, as in the present case, it could not be assumed whether a similar direction must or ought to be made as a measure of social justice. That being so, the direction made by this Court in Jamna Das' case could not be treated to be a precedent. The High Court failed to realise that the direction in Jamna Das' case was made not only with the consent of the parties but there was an interplay of various factors and the Court was moved by compassion to evolve a situation to mitigate hardship which PG NO 938 was acceptable by all the parties concerned. The Court no doubt made incidental observation to the Directive Principles of State Policy enshrined in Art. 38(2) of the Constitution and said:
"Article 38(2) of the Constitution mandates the State to strive to minimise, amongst others, the inequalities in facilities and opportunities amongst individuals. One who tries to survive by one's own labour has to be encouraged because for want of opportunity destitution may disturb the conscience of the society. Here are persons carrying on some paltry trade in an open space in the scorching heat of Delhi sun, freezing cold or torrential rain. They are being denied CA (AT) No. 302-315 of 2019 16 continuance at that place under the specious plea that they constitute an obstruction to easy access to hospitals. A little more space in the access to the hospital may be welcomed but not at the cost of someone being deprived of his very source of livelihood so as to swell the rank of the fast growing unemployed. As far as possible this should be avoided which we propose to do by this short order."
This indeed was a very noble sentiment but incapable of being implemented in a fast growing city like the Metropolitan City of Delhi where public streets are overcrowded and the pavement squatters create a hazard to the vehicular traffic and cause obstruction to the pedestrians on the pavement".
29. By way of referring to the aforesaid paragraphs of the Judgment of Hon'ble Supreme Court Ld. Sr. Counsel for the Appellant submits that admittedly order dated 10.09.2018 was a consent order and as such no benefit can be granted to the Respondents in view of the said order. On aforesaid grounds it has been argued that the order impugned is liable to be set aside.
30. Besides herein the Ld. Counsel for the parties we have minutely examined the materials available on record. It is not in dispute that Appellant had accepted deposits from the Respondents which were treated as Fixed Deposits with a condition to repay the amount with interest @ 12/12.5% on maturity. It is also not in dispute that even after date of maturity payments were not made immediately to the depositors particularly the Respondents herein. Now only two points are required to be examined in the present appeal as to whether Ld. NCLT has committed error in entertaining petition filed under Section 73(4) of the Companies Act by the Respondent, and whether the NCLT has committed error in issuing direction to make payment of interest even after the date of maturity till the date of actual payment. Before proceeding it would be appropriate to CA (AT) No. 302-315 of 2019 17 reproduce Section 73 of the Companies Act, 2013 under which provision petitions were filed before the NCLT which is as follows:
Section 73: Prohibition on acceptance of deposits from public.
(1) On and after the commencement of this Act, no company shall invite, accept or renew deposits under this Act from the public except in a manner provided under this Chapter:
Provided that nothing in this sub-section shall apply to a banking company and non-banking financial company as defined in the Reserve Bank of India Act, 1934 (2 of 1934) and to such other company as the Central Government may, after consultation with the Reserve Bank of India, specify in this behalf.
(2) A company may, subject to the passing of a resolution in general meeting and subject to such rules as may be prescribed in consultation with the Reserve Bank of India, accept deposits from its members on such terms and conditions, including the provision of security, if any, or for the repayment of such deposits with interest, as may be agreed upon between the company and its members, subject to the fulfilment of the following conditions, namely:--
(a) issuance of a circular to its members including therein a statement showing the financial position of the company, the credit rating obtained, the total number of depositors and the amount due towards deposits in respect of any previous deposits accepted by the company and such other particulars in such form and in such manner as may be prescribed;
(b) filing a copy of the circular along with such statement with the Registrar within thirty days before the date of issue of the circular;
1[(c) depositing, on or before the thirtieth day of April each year, such sum which shall not be less than twenty per cent. of the amount of its deposits maturing during the following financial year and kept in a scheduled bank in a separate bank account to be called deposit repayment reserve account;]
(d) 2[***]
(e) certifying that the company has not committed any default in the repayment of deposits accepted either before or after the commencement of this Act or payment of interest CA (AT) No. 302-315 of 2019 18 on 3[such deposits and where a default had occurred, the company made good the default and a period of five years had lapsed since the date of making good the default;] and
(f) Providing security, if any for the due repayment of the amount of deposit or the interest thereon including the creation of such charge on the property or assets of the company:
Provided that in case where a company does not secure the deposits or secures such deposits partially, then, the deposits shall be termed as ''unsecured deposits'' and shall be so quoted in every circular, form, advertisement or in any document related to invitation or acceptance of deposits. (3) Every deposit accepted by a company under sub-section (2) shall be repaid with interest in accordance with the terms and conditions of the agreement referred to in that sub- section.
(4) Where a company fails to repay the deposit or part thereof or any interest thereon under sub-section (3), the depositor concerned may apply to the Tribunal for an order directing the company to pay the sum due or for any loss or damage incurred by him as a result of such non-payment and for such other orders as the Tribunal may deem fit. (5) The deposit repayment reserve account referred to in clause (c) of sub-section (2) shall not be used by the company for any purpose other than repayment of deposits".
31. The applicability of Section 73 was clarified subsequently by a circular issued by the Government of India which has already been quoted herein above. On perusal of the aforesaid circular there is no reason to record a different finding that to record a finding that application under Section 73 was applicable and Ld. NCLT has committed no error in entertaining petitions filed by the Respondents.
32. So far as ground taken by Mr. Dutta, Ld. Sr. Counsel for the Appellant that after final adjudication in a petition filed under Section 74 of the Companies Act, 2013 whether Ld. NCLT was entitled to entertain Petition under Section 73 is concerned, we are of the opinion that such objections are required to be CA (AT) No. 302-315 of 2019 19 noticed for its rejection. The Petition which was filed by the Appellant before the NCLT was filed under Section 74 of the Act. By virtue of Section 74 some privilege has been granted to the companies accepting deposits to seek for extension of time in respect of repayment of deposits accepted prior to cut-off date i.e. 01.04.2014. It has not been disputed by Mr. Dutta, Ld. Sr. Counsel that in the petition filed before the NCLT under Section 74 there were no other Respondents. It was only appellant before NCLT and Appellant had sought for extension of time which was granted by NCLT. Merely filing of such Petition for extension of time by the NCLT for clearing payment, does not debar the depositors from claiming interest or even claiming maturity amount from the Appellant. The Section 74 Petition was filed by the Appellants due to the reason that they had defaulted in making payment as per maturity date. Of course it has been argued on behalf of the Appellant that Section 74(3) is applicable in case of default in not making payment despite extension but fact remains that in the present case no payment was made as per the date of maturity. Accordingly, there was no connection of Petition filed by the Respondent under Section 73 and Petition filed by the Appellant under Section 74. Both are on different footings and as such the plea of Ld. Sr. Counsel that pendency of petition filed by the appellant under Section 74 of the Act entertaining was a bar to Petition under Section 73 (4) of the Act before the NCLT, appears to have no force. It would be better to reproduce Section 74 of the Companies Act, 2013 as follows:
Section 74: Repayment of deposits, etc., accepted before commencement of this Act.
CA (AT) No. 302-315 of 2019 20 (1) Where in respect of any deposit accepted by a company before the commencement of this Act, the amount of such deposit or part thereof or any interest due thereon remains unpaid on such commencement or becomes due at any time thereafter, the company shall--
(a) file, within a period of three months from such commencement or from the date on which such payments, are due, with the Registrar a statement of all the deposits accepted by the company and sums remaining unpaid on such amount with the interest payable thereon along with 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; and [(b) repay within three years from such commencement or on or before expiry of the period for which the deposits were accepted, whichever is earlier:
Provided that renewal of any such deposits shall be done in accordance with the provisions of Chapter V and the rules made thereunder.] (2) The Tribunal may on an application made by the company, after considering the financial condition of the company, the amount of deposit or part thereof and the interest payable thereon and such other matters, allow further time as considered reasonable to the company to repay the deposit.
(3) If a company fails to repay the deposit or part thereof or any interest thereon within the time specified in sub-section (1) or such further time as may be allowed 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".
CA (AT) No. 302-315 of 2019 21
33. On examination of Section 74 it is very much clear that by such provision an additional privilege was granted to company accepting deposit to request the tribunal for extension of time in case of default in payment within the maturity time.
34. So far as, order of Hon'ble Supreme Court i.e. order dated 10.09.2018 is concerned we are conscious of the fact that the said order was passed on consent given by the Ld. Counsel for the Appellant before the Hon'ble Supreme Court, even thereafter we are of the opinion that once in a case of some of the depositors as per the order of the Hon'ble Supreme Court they were granted liberty to get interest till the date of actual payment, if we pass a different order it will amount to passing a discriminatory order. We may not place reliance on the said order but fact remains that in respect of the same Appellant some of the depositors had received payment of interest till the date of actual payment.
35. Even otherwise if a person who accepts deposits fails to make payment after maturity and delay is on the part of the person accepting deposit, in that event such person would be liable to make payment of interest till the actual payment.
CA (AT) No. 302-315 of 2019 22
36. In view of the aforesaid facts and circumstances, we are of the opinion that Ld. NCLT has committed no error in passing the impugned order. We don't find any error in the order.
37. The Appeal stands dismissed.
[Justice Rakesh Kumar] Member (Judicial) [Dr. Ashok Kumar Mishra] Member (Technical) sr/gc CA (AT) No. 302-315 of 2019