Allahabad High Court
Incan Employees Welfare Association vs Incan Group Of Companies on 15 January, 2003
Equivalent citations: III(2003)BC407, [2006]129COMPCAS962(ALL), [2003]43SCL130(ALL)
Author: Bhanwar Singh
Bench: Bhanwar Singh
ORDER Bhanwar Singh, J.
1. These company petitions have been filed under Section 433(b), (d), (e) and (f) of the Companies Act, 1956 for winding up of the company known as M/s. Incan Mutual Fund Benefit Limited and Incan Group of Companies (Incan Fertilizers and Chemicals Limited; Ratan Micronutrients Limited; Vinayak Trading Pvt. Limited; Incan Construction Limited; Incan Consultancy Services Limited; Deva Investment & Leasing Limited; Incan Mutual Benefit Limited; and Incan International Limited) having their registered office at Incan Bhawan, B-1/37, Sector F, Kapoorthala, Aliganj, Lucknow.
2. The petitioners' case is that the petitioner No. 1, namely, Incan Employees Welfare Association, is the Registered Association duly registered with the Registrar of Firms and Societies at Punjab, Chandigarh and the other petitioners are either office bearers of the association or the individual investors. The members of the association deposited different amounts of money with M/s. Incan Mutual Fund Benefit Limited, which is the sister concern of M/s. Incan Group of Companies. The total of the sums invested by the members of the association in Chandigarh, Jalandhar and Ludhiana is approximately Rs. 51.99 crores. M/s. Incan Group of Companies with its above named sister concerns by way of lucrative offers collected lot of money from individual investors with a positive assurance that they will get very good returns. The company had opened many branches in the States of Uttar Pradesh, Haryana, Punjab, Himachal Pradesh and Union Territory Chandigarh. The main object of M/s. Incan Mutual Fund Benefit Limited was lending and borrowing to and from its members and the investments were made in fertilizers, real estate as well as agro pharma plantations. The opposite-party No. 1 as on 31-12-1998 had deposits worth Rs. 7,200 lakhs and the maturity amount was approximately Rs. 8,200 lakhs. The opposite-party Nos. 1 and 2 purchased many properties across the country including a plot of 18,900 sq. ft. at 5, Lal Bahadur Shastri Marg, South Avenue, Under Havelock Road Scheme at Baraf Khana, Lucknow. The money, which the company received from the investors, was utilised in purchase of the said plot. There are certain other properties earned by the company. A few of them may be referred to as land measuring 36000 sq. ft. near Dalibagh Colony; 53 Bigha Farm House in village Kumrawan P.S. Itaunja; 22 Bigha land near Negoha Lucknow Raibareilly Road; 14 Bigha land in Kundanganj and 8 Bigha land in village Kankaha Mohan Lal Ganj. These companies accepted deposits from the investors under various schemes, such as 'High Premium Fixed Deposit Scheme'; 'Monthly Recurring Deposit Scheme'; 'Recurring Deposit Scheme'; 'Short Term Deposit'; 'Daily Deposit Scheme' and Saving Account. It is noteworthy that the opposite-parties 1 and 2 committed default in making repayment to its depositors/members the amounts deposited by them. According to a Valuation Report prepared on 30-6-1998 by a registered chartered Engineers, Adjusters and Valuers, the opposite-party No. 1 as Chairman of the Incan Group of Companies own many other establishments, which are its sister concerns. A detailed list of such Incan Group of Companies is as follows :--
(a) Incan Fertilizers and Chemicals Limited;
(b) Ratan Micronutrients Limited;
(c) Vinayak Trading Pvt. Limited;
(d) Incan Construction Limited;
(e) Incan Consultancy Services Limited;
(f) Deva Investment & Leasing Limited;
(g) Incan Mutual Benefit Limited;
(h) Incan International Limited; and
(i) Merit Pharmaceuticals Limited.
3. The opposite-party Nos. 1 and 2 collected, by floating lucrative offers, huge deposits amounting to the tune of Rs. 7,760 lakhs but on demand by the depositors failed to repay their money. They, however, issued an advertisement, published in a local Hindi Daily on 25th October, 1999, giving a notice for the public that some executives were misrepresenting themselves for their own benefit as agents of the Incan Group of Companies. Thereafter, having ill intentions and evil designs, the said opposite-parties issued a letter on February 1, 1999 through Col. B.M. Bhagi (Retired), Vice-Chairman, thereby framing a scheme for repayment of the investors' money. However, when the depositors approached the Branch Managers for encashment of their Fixed Deposit Certificates, they could not find anyone in the offices as all such offices were closed. In the meantime, the opposite-party No. 2 through its Managing Director executed term loans to its different sister concerns but they made no efforts to recover such loan amounts from them and pay the same back to the investors. The directions issued by the Company Law Board in accordance with the Scheme submitted by the company were also not carried out by the opposite-party Nos. 1 and 2. The opposite-party No. 9, namely, the Reserve Bank of India also failed to keep a check upon the opposite-parties 1 and 2 while issuing them the certificate of non-banking financial company and in this way, the officers of the Reserve Bank of India were equally responsible for the act committed by the opposite-parties 1 to 8. All efforts of the investors including the petitioners in getting their money back went futile and even a notice served upon the opposite-party Nos. 1 and 2 through the petitioners' association under Section 434 of the Companies Act did not yield any result. The opposite-party Nos. 4 to 6 have executed a guarantee of Rs. 1,100 lakhs in favour of the opposite-party No. 2 with the assurance that if the opposite-party No. 2 failed to make payment to the investors, the opposite-party Nos. 4 to 6 will make repayment to the tune of Rs. 110 lakhs. In these circumstances, since the company has failed to make payment of the matured amount in accordance with the provisions of Section 434 of the Companies Act, 1956, it is liable to be wound up.
4. The petitioners have learnt from reliable sources that the opposite-party Nos. 1 to 8 want to withdraw their money from their bank accounts and dispose of their properties with a view to escape their liability which they owe to the investors. In these circumstances, the petitioners having been left with no efficacious remedy, approached this Court praying for directions to the opposite-parties 1 and 2, to implement the orders passed by the Company Law Board and pay the money of the investors along with maturity value including interest, to collect the records of investors lying in the Branch Offices of the opposite-party Nos. 1 and 2, to pay the debts to the members of the petitioners' association along with interest and pass appropriate orders under Section 433(b), (d), (e) and (f) of the Companies Act, 1956 for winding up M/s. Incan Group of Companies and M/s. Incan Mutual Fund Benefit Limited. They have also prayed for a relief restraining the opposite-party Nos. 1 and 2 from selling or alienating the properties of the company. Also a prayer has been made for an inquiry by the C.B.I. into the functioning of the opposite-party Nos. 1 and 2 and utilization of the funds amounting to Rs. 8,200 lakhs collected by them from about 55,000 members.
5. Mr. Manjit Singh Aujla filed counter-affidavit on behalf of opposite-party No. 1 with the allegations that he has not been furnished a copy of the Certificate of Registration of Incan Employees Welfare Association and he was not the Chairman of any such company and, therefore, he deserves his right to reply about the said certification of the Welfare Association at the later stage. As a matter of fact, M/s. Incan Group of Companies is a misnomer and therefore, such a company has no legal entity. The opposite-party No. 2 mobilised deposits from its members in accordance with the terms and conditions of the various schemes. The said company was established in 1992 and it successfully carried out its operations by making timely payments to its members/depositors. It was only in 1998 that this company suffered the wrath of the depositors. As there was a run on the deposits, the company was put in a precarious condition. Due to severe liquidity crunch, the opposite-party No. 2 could not fulfil its commitment towards its members and on account of the compelling circumstances, it filed a petition for re-schedulement of payment before the Company Law Board, Northern Bench, New Delhi. Mr. Aujla submitted further that he has no concern with the Incan Mutual Fund Benefit Limited, as he ceased to be the Director of the said company on March 31, 1997. He was not a party to the framing of the scheme floated by the company. As regards the properties, Mr. Aujla asserted that the properties, referred to in para 9 of the petition, do not belong to M/s. Incan Mutual Fund Benefit Limited, as these properties were not purchased out of the funds of the said company. As regards M/s. Incan Fertilizers and Chemicals Limited is concerned, it is a separate and independent legal authority and has no concern with the Incan Mutual Fund Benefit Limited. The opposite-party No. 1 filed an application for classification and/or modification of Company Law Board's Order dated August 31, 1999 under Section 58A(9) of Companies Act, 1956 and Section 45QA(2) of Reserve Bank of India Act, 1934. Besides that, it also filed an application under Section 186 of the Companies Act before the Company Law Board. However, the Board rejected the said application under Section 45QA(2) of Reserve Bank of India Act, 1934 by virtue of the Order dated 30th June, 2000. The opposite-party No. 1 then challenged the said order of June 30, 2000 by filing a C.M. (M) 536/2000 before Delhi High Court in the said petition, on being admitted, is pending adjudication. The Company Law Board allowed the application under Section 186 of the Companies Act vide Order dated June 30, 2000 and in pursuance of the said Order, Mr, Justice S.N. Sapra, Retired Judge of Delhi High Court, has already taken initiative for holding a meeting of Shareholders for the purpose of formulating the scheme regarding the payment of deposits. Mr. Justice Sapra asked for a certified copy of Shareholders but the Registrar of Companies, Kanpur failed to carry out the compliance. As the Company Law Board vide its Order of August 31, 1999 altered the terms and conditions of deposits in terms of Section 45QA(2) of the Reserve Bank of India Act, 1934 read with Section 58 of the Companies Act, 1956, the petitioners/depositors as well as the company are under obligation to follow the said terms and conditions. By virtue of the said order, the terms, on which the deposits were made, were superseded. As a consequence, the company will now make payments to the depositors in pursuance of the said order with further modified terms as laid in the order of June 30, 2000 of the Company Law Board. Since the issue relating to the payment of deposits has already been adjudicated by the Company Law Board, the present petition is not maintainable nor the petitioner's notice under Section 434 of the Companies Act is legal and valid. Further, it was also alleged that the petitioners failed to establish a cause of action for winding up of M/s. Incan Group of Companies, as such, the petitioner is liable to be dismissed.
6. Short counter-affidavit on behalf of opposite-party No. 2 was filed by Sri Bhagwan Das Sharma. According to him, he has been appointed as Director of the opposite-party No. 2, namely, M/s. Incan Mutual Fund Benefit Limited. New Board of Directors under the Chairmanship of Mr. Justice Ujjagar Singh (Retd.) has now been constituted. The Board has authorized him to conduct pairvi on behalf of the opposite-party No. 2. Previously, the opposite-party No. 2 was a Mutual Benefit Company, which was notified by the Government as Nidhi Company under Section 620A of Companies Act. Due to mismanagement and some other reasons, the Incan Mutual Benefit Company Limited could not function properly and as a consequence, the company committed default in repayment of the amounts deposited by the members/shareholders/depositors. A large number of members/shareholders/depositors filed petitions before the Company Law Board, New Delhi in which the Company Law Board passed an Order dated August 31, 1999 and thereby framed a scheme for repayment of deposits. A copy of the said order is Annexure No. CA-2 on record. However, neither the Board of Directors nor anyone else on behalf of the company took any interest to implement the scheme for repayment. The Company Law Board then exercising powers under Section 186 of the Act appointed vide its Order of June 30, 2000 Mr. Justice Sapra (Retd.) as Chairman of the Company. The Company Law Board had instructed the Chairman to convene a General Meeting of Shareholders and finalize agenda including the appointment of new directors. However, Mr. Justice Sapra expressed his inability to act as Chairman of the Company, whereupon the Company Law Board was obliged vide its order dated 8th December, 2000 to appoint Mr. Justice Ujjagar Singh (Retd.) as Chairman of the Company. Then, Mr. Justice Ujjagar Singh called a special meeting of shareholders and members of the company on March 27, 2001, public notice of which with details of venue and time of the meeting, was published in the newspapers. A large number of shareholders/members/depositors attended the meeting on the aforesaid date and under the Chairmanship of Mr. Justice Ujjagar Singh, the names of the Directors as proposed in the Order dated June 30, 2000 and December 8, 2000 were put to vote, but out of three, only one Director was elected. From amongst the shareholders/members present in the meeting, two directors, namely, Lt. Col. H.S. Sidhu and Sri C.S. Parmar were elected with their consent as Directors of the Company. Proceedings and Minutes of the meeting were duly recorded and sent to the Company Law Board. A copy of the said record is Annexure CA-6. Again a meeting was held on April 24, 2001 with a view to assess the assets and liabilities of the company and also to appoint two more Directors from Ludhiana in Punjab and the State of Uttar Pradesh. In that meeting, Sri Amar Jeet Singh from Ludhiana and the answering respondent from Uttar Pradesh were appointed as Directors of the Company to represent the members/ shareholders/depositors of the respective regions. In the same meeting, the Chairman directed all the Directors of the reconstituted Board to furnish details regarding assets and liabilities of the Company so that the Order of August 31, 1999 passed by the Company Law Board could be implemented. The information regarding rcconstitution of the new Board of Directors was also given to the Registrar of the Companies on the prescribed form along with the requisite fee. The Chairman of the company moved an application to the Postmaster, G.P.O., New Delhi praying for allotment of Post Box of biggest size to facilitate the postal address to the members/shareholders/depositors. In response to the said request, the Postmaster allotted a Post Box with Bag No. 455 in the name of the Company. The Chairman, then, issued a public notice on 1st July, 2001 directing the shareholders/member; of company to send photocopies of their holdings to the company so that the repayment may be made at the earliest. In pursuance of the said public notice, a large number of shareholders/members furnished the information regarding their holdings. In this way, the reconstituted Board of Directors is making all efforts to implement the Company Law Board's Order dated 31st August, 1999 and 30th June, 2000. However, it is pertinent to note, as pleaded further, that the petitioners have wrongly impleaded Incan Group of Companies as opposite-party No. 1 as it is not a legal entity. In accordance with the legal provisions of the Companies Act, a particular company can be sought to be wound up. In the present case, other companies have neither been arrayed as opposite-parties nor they have been heard.
7. Mr. B.D. Sharma also raised a legal issue regarding the maintainability of all these petitions with the averment that the depositors/members/ shareholders of the company have not yet challenged the Company Law Board's Order dated August 31, 1999 and June 30, 2000 by filing an appeal, hence, all these petitions are not maintainable. Further, since these petitioners agreed for reconstitution of the Board of Directors and also for implementation of the aforesaid orders of the Company Law Board, the interim Order dated 1st December, 2000 passed by this Court is liable to be vacated.
8. Also it was submitted by Mr. B.D. Sharma that after publication of notice dated July 1, 2001, as many as 9000 depositors/members/shareholders including the petitioners sent their holdings and expressed their faith in the independent Chairman and the reconstituted Board of Directors. Some of the depositors sought for extension of time to submit their holdings. Such requests were granted by the Chairman of the Board of Directors and thereby time to deposit holdings was extended up to August 31, 2001.
9. In the Rejoinder Affidavit, Col. Daljeet Singh stated that the scheme for payment was in fact not evolved by the Company Law Board, but the opposite-party No. 2 in consultation with opposite-party No. 1 had framed the scheme. In spite of the fact that the said scheme was approved by the Company Law Board, the opposite-party No. 2 deliberately failed to fulfil its commitment. It was also wiong on the part of the opposite-party No. 2 to assert that necessary steps for implementation of the Company Law Board's Order dated 31-8-1999 were taken by its Chairman. As a matter of fact, all exercises, including constituting the Board of Directors and then revising its constitution, were nothing but to mislead the depositors and keep them under dark so that they might not pursue their legal cause. Now since the Official Liquidator has already been appointed by this Court, the assets in his charge and other properties of the opposite-party No. 2, which may be entrusted with him, may be auctioned to meet the petitioners' demand as also to comply with the Company Law Board's Order. As reported by the Official Liquidator, a sum of about Rs. 60 lakhs is under control of the Districi Magistrate, Raibareilly. The said sum can cater the requirement of the petitioner's claim to some extent. The opposite-party No. 2 failed to carry out with the Company Law Board's Order and even the Reserve Bank of India had not taken any action against the Chairman or Directors of the Board in pursuance of the Board's Order dated 31-8-1999. Even the newly appointed Directors of the Board are interested in winding up of the Company as is evident from their Affidavits (Annexure No. RA-2). Since the investors' money has been siphoned off to various other sister concerns of the opposite-party No. 1, their assets are liable to be auctioned and it would be more so necessary because the opposite-party No. 2 is now left with no assets nor it has any liquid money with them to discharge their liability vis-a-vis the petitioners/depositors.
10. The crucial question, which arises for determination, is as to whether the company M/s. Incan Group of Companies and M/s. Incan Mutual Fund Benefit Limited are liable to be wound up under the provisions of Section 434 of the Companies Act. Another point to be decided is as to whether the petitioners are entitled to recover their money along with interest from the opposite-parties or their assets.
11. Before proceeding to discuss the merit of this case, it would be appropriate to discuss the preliminary objections raised by the opposite-party No. 2 regarding maintainability of this petition. The first such objection asserted by the contesting opposite-party No. 2 is that since the petitioners have sought for winding up of a group of companies, which is not a legal entity, this petition is not maintainable. The petitioners have impleaded in the array of opposite-parties, M/s. Incan Group of Companies, Incan Bhawan, B-1/37, Sector-F, Kapoorthala, Aliganj, Lucknow through its Chairman Manjit Singh Aujla. As a matter of fact, the petitioners deposited their money in the account of M/s. Incan Mutual Fund Benefit Limited and since the Head Office of this company is accommodated in the Incan Bhawan, B-l/37, Sector-F, Kapoorthala, Aliganj, Lucknow and further since M/s. Incan Group of Companies have floated as many as eight other companies with the investment of the funds collected by the Incan Mutual Fund Benefit Limited, the petitioners have depicted M/s. Incan Group of Companies as the leading company having its assets and liabilities with other companies including M/s. Incan Mutual Fund Benefit Limited. Mr. Manjit Singh Aujla was the Managing Director of M/s. Incan Mutual Fund Benefit Limited and the Director of other companies. Mr. B.D. Sharma, who is the representative of the M/s. Incan Group of Companies, has also published notice in newspapers under the title and heading of M/s. Incan Group of Companies, as is evident from a public notice advertised in 'Dainik Jagran' a local Hindi Newspaper of October 25, 1999 (Copy Annexure 6). Mr. B.D. Sharma clearly indicates by virtue of the said notice that the Incan Group of Companies shall not be responsible for the individual decision of senior executives of the Incan Group of Companies, who had been mischievously misrepresenting for their own benefit. Though the Incan Group of Companies is comprised of Incan Fertilizers and Chemicals Limited, Ratan Micronutrients Limited, Vinayak Trading Pvt. Limited, Incan Construction Limited, Incan Consultancy Services Limited, Deva Investments & Leasing Limited, Incan International Limited, Merit Pharmaceuticals Limited and Incan Mutual Benefit Limited, the petitioners have claimed relief against the opposite-party No. 2 with whom they had invested their money. As admittedly, the opposite-party No. 1 M/s. Incan Group of Companies is not a legal entity, the question of any relief being granted against it or its winding up would not arise at all. Learned Counsel appearing on behalf of the petitioners has during the course of arguments dropped the petitioners' prayer for any relief or winding up proceedings against the opposite-party No. 1. As a matter of fact, the petitioners and other investors, as supplemented further by the petitioners' counsel, were mislead by the publicity, which was made on behalf of M/s. Incan Group of Companies that this company was managing the affairs of all the abovementioned nine companies. Therefore, the relief in view of the prayer clause of the petitioners' petition shall remain confined to the liabilities of M/s. Incan Mutual Fund Benefit Limited only. In view of this, the contention pressed into service on behalf of the opposite-party No. 2 that the petition is not maintainable stands rejected.
12. The next submission advanced on behalf of the opposite-party No. 2 that since the proceedings under Section 186 of the Companies Act were pending before the Company Law Board, this petition should not be kept alive as some of the petitioners have participated in the proceedings pending before the Company Law Board. In this context, it may be observed that Section 186 is no bar to a petition that may be filed under Section 434 of the Act. A perusal of the provisions of Section 186 would reveal that the Company Law Board can issue appropriate directions for a meeting of the company to be convened if it is established that for any reason it is impracticable to call a meeting of the company, other than an annual general meeting. The provisions of this section do not call for any embargo upon the High Court's power conferred upon it by the provisions of Sections 433(e) and 434 of the Act. Section 433(e) clearly postulates that if the company is unable to pay its debts or the Court is of opinion that it is just and equitable to wind up a company, the Court can proceed in the manner as provided under Section 434 of the Act. These two sections also do not have any provision that such winding up proceedings shall be subject to any proceeding pending before the Company Law Board. As a matter of fact, the powers of the Company Law Board under Section 186 are very limited and the powers of the High Court under the provisions of Sections 433 and 434 are very wide. There is no clash or any sort of conflict between the two proceedings and the two can go on together, as eventually, it is the interest of the creditors, which is to be protected. Therefore, I am of the opinion that this submission too forwarded by the opposite-party No. 2 is devoid of merit, hence rejected.
13. Similarly, the contention that the petition is not maintainable in view of the alternative remedy to the petitioners under Section 443(2) of the Act is of no merit and deserves to be rejected. The alternative remedy on the basis of which this argument has been advanced is the same-to wit, the proceedings pending before the Company Law Board and the directions issued by it. In this context, it may be noteworthy that whatever the directions were issued by the Company Law Board have not yet been carried out by the Director, Incan Mutual Fund Benefit Limited. The payment schedule, which was initially submitted on behalf of the Company, was not honoured by its Directors. The appointment of Mr. Justice S.N. Sapra did not yield any result as he expressed his inability to shoulder the responsibility of the Chairman. Now Mr. Justice Ujjagar Singh, newly appointed Chairman, is proceeding to issue notices and inviting information about the creditors' holdings but despite lapse of a period of more than 1 1/2 years, the Chairman has not been able to disburse even a single penny to the creditors. Obviously, therefore, the plea of alternative remedy is misconceived and as observed earlier, such an inadequate alternative remedy cannot operate as an impediment to the winding up proceedings of a company.
14. Now arises the question for determination as to whether the company known as M/s. Incan Mutual Fund Benefit Limited is liable to be wound up?
15. The petitioners have submitted that the main object of M/s. Incan Mutual Fund Benefit Limited (hereinafter referred to as 'the company') was lending and borrowing to and from its members. The company made huge investments in Fertilizer, Real Estate and Agro Firm Plantation and up to 31st December, 1998, it had collected a sum of Rs. 7,200 lakhs. Although the company appears to own total assets of Rs. 14,036 lakhs (Annexure 4) and the liability as on 30-6-1998 does not seem to exceed Rs. 7,760 lakhs, the company can repay to all its investors including the petitioners their dues. But the mismanagement, under which the company sailed and faced a rough weather, is responsible for its debacle. Mr. Manjit Singh Aujla, who was the Chairman of M/s. Incan Group of Companies and was the Director of M/s. Incan Mutual Fund Benefit Limited, clearly admitted that the said company mobilised the deposits from its members in accordance with the terms and conditions of the various schemes and it successfully carried out its operations by making timely payment to its members/depositors, but it was in 1998 that this company suffered the wrath of the depositors. He conceded further that as there was a run on the deposits, the company was put in a precarious condition and due to severe liquidity crunch, the company could not fulfil its commitment towards its members. This admission of Mr. Manjit Singh Aujla is enough to hold that since the company failed to pay its debt, it is liable to be wound up under Section 433(e) of the Companies Act. It may be observed that Mr. Manjit Singh Aujla will not be allowed to run from his liabilities simply because he manipulated to have submitted his resignation from the Directorship of the Company sometime in the year 1997. As a matter of fact, he was the active Director involved in the management of the business of the company from 1992 until the alleged financial crunch cropped up. He is the man, who is responsible for the mismanagement of the company. Of course, other Directors also cannot escape from their liabilities and they are equally liable under the Act. Further, it is significant to note that the company published a Brochure, a copy of which is Annexure 5 on record, indicating therein its business, names of the Board of Directors and the business activities to be undertaken recourse to. A perusal of the said Brochure shows that the company proposed to open 123 branches with five lakh members employing over 1000 people in the State of Himachal Pradesh and Jammu and Kashmir and perhaps in all the major States of India and abroad. Knowing all these lucrative offers floated by the company, the poor investors were attracted, although they could not anticipate that they were investing their money in a company which would be having mala fides and would run away with their money. In other words, the investors including the petitioners were enchanted with the handsome offer of interest, without peeping into the mala fides of its Directors, to refuse to pay back their amount on maturity.
16. It is noteworthy that the company issued a Circular dated February 1, 1999 informing its Members that they could collect in November 1998 their deposits on maturity up to 30% of their maturity amount along with the up-to-date interest at the stipulated rate and the balance amount of 7096 had to be reinvested for a period of six months. The same circular letter recited further that the members, whose deposits had maturity in December 1998 could contact their branches for payment after 15th March, 1999 and members, whose deposits were to mature in January 1999 were requested to collect their dues after 15th April, 1999. In the sequence, the members, whose deposits were to mature in February 1999, were asked to take their payment after 15th March, 1999. There were certain other directions for the depositors, the details of which need not be referred to. What is important to mention here is that the aforesaid payment - plan proved to be a total flop and what is further pertinent to make a mention of is that the company has not paid even to those petitioners/creditors, whose credit balance in the Savings Bank Account was even less than Rs. 500. The company had earlier undertaken to refund the dues of all members, whose deposits were less than Rs. 500 in toto. Obviously, in these circumstances, the company cannot be believed to have bona fides regarding payment of the dues of its investors. The company was dealing with the business of finance and invited deposits from the general public at large with repeated assurances that their dues would be duly refunded on maturity with higher rates of interest and it was on the assurances and inducements made by the Branch Managers of the Company that the petitioners had deposited their savings in various schemes of the company. After collecting huge amounts, the company transferred lots of money, by way of loan agreements, to its 'sister concerns', Some of the loan agreements have been brought on record as Annexure 8. The company has not been able, till date, to recover all its dues on account of loans to its 'sister concerns'. Neither Mr. Manjit Singh Aujla nor the opposite-party No. 2 has in their reply stated that the loan amounts advanced to some of its eight 'sister concerns' were realized. As a consequence, the matter had to be referred to the Company Law Board and the Board, vide its Order of August 31, 1999, issued directions to the company to make payments in terms of the Scheme submitted by the Company itself. The Order of the Company Law Board is contained in Annexure 9. It is apparent from the perusal of this order that it was passed by the Company Law Board exercising its suo motu power and an officer to be duly authorized by the Reserve Bank of India under Section 58(e) of the Reserve Bank of India Act had to take an appropriate action in the matter of repayment of the creditors' dues. A scheme was formulated regarding the payment of creditors' money with interest. According to the said scheme, all deposits up to Rs. 10,000 were to be paid within 12 months from the date of maturity. While all deposits in the range of Rs. 10,001 to Rs. 25,000 were to be repaid @ 2596 in the first year, 30% in the second year and the balance 45% in the third year. The deposits of Rs. 25,001 to 50,000 were to o be repaid @ 20% in the first year, 30% in the second year and the balance 50% in the third year. The deposits over Rs. 50,001 were directed to be paid @ 20% in the first year, 40% in the second year and the balance 40% in the third year. The period of payment was to be reckoned from the date of maturity. Some guidelines were also issued and a compliance report was sought for from the company. In spite of this, no fruitful results could be achieved and the depositors were kept on groping in the dark. The aforesaid scheme of the Company Law Board has not been implemented till date and the main reason for the company's failure to do so was that it could not recover back the amount of its loans advanced to M/s. Incan Fertilizers and Chemicals Limited, M/s. Ratan Micro Nutrients Limited and M/s. Incan Construction Limited, although all these 'sister concerns' stood guarantee to the tune of Rs. 1,100 lakhs. It was, in such circumstances, that this Court had appointed the official liquidator with a direction to him to take charge of all the assets of M/s. Incan Mutual Fund Benefit Limited. He was authorized to exercise all his powers of an official liquidator and submit his report within six weeks. It was on the basis of his report that the District Magistrate, Rai Bareilly had been instructed to keep Rs. 59,95,000 intact until further orders of this Court. The Official Liquidator had taken over in his charge the properties situated at 5-A and B, Lal Bahadur Shastri Marg, Lucknow. But he could not lay his hands upon the properties situated at Rajpura in Punjab State.
17. The assurances given by the newly appointed Chairman have also not achieved any result. As a matter of fact, it appears that formalities like inviting details of holdings from the creditors, giving this notice and that and floating proforma for repayment are all futile exercises being tactfully undertaken with a view to while away the time. The public at large and the creditors in particular are being misled by all such exercises. All the investors including the petitioners are still craving for refund of their money. Merely because thousands of creditors have expressed their faith in the Chairman and reconstituted Board of Directors (appointed by the Company Law Board) is not enough to stay or keep in abeyance the winding up proceedings. The newly appointed Chairman Mr. Justice Ujjagar Singh has not yet concluded the repayment procedure, although he is seized of the matter for the last more than 1 1/2 years. Also he has not sent any report either to this Court or the Company Law Board or the Official Liquidator of this Court. Therefore, an inference can be drawn that the company is neither in a position to repay the debt of its creditors nor it has maintained its credibility to sustain the investors. As per report of the Official Liquidator, Mr. S.K. Saxena, almost all the 'sister concerns' of M/s. Incan Group of Companies are in liquidation and M/s. incan Greens has already been ordered to be wound up.
18. Keeping in view the discussions made above, I am of the decisive opinion that all these petitions deserve to be allowed and the company known as M/s. Incan Mutual Fund Benefit Limited is liable to be wound up.
19. All these petitions are allowed with costs. The Company, M/s. Incan Mutual Fund Benefit Limited, is wound up under Section 433(e) of the Companies Act. The Official Liquidator is appointed as Liquidator of this company. He shall immediately proceed to exercise his powers as envisaged under Section 457 of the Companies Act. He shall take into his custody all the movable and immovable properties, including the cash in custody with the District Magistrate, Rai Bareilly, under Section 456(1) of the Act. He shall submit the statement of accounts and other necessary statements, within three months from today and also shall chalk out a plan for repayment of the petitioners/creditors' dues in a just and reasonable manner.
20. As palpably, it appears to be a case of cheating and misappropriation of the public funds with evil designs and further since large sums collected on behalf of M/s. Incan Mutual Fund Benefit Limited have been siphoned off by the Directors, by way of loans or otherwise, such evil designs need to be probed by the Central Bureau of Investigation.
21. Let, therefore, the Director, Central Bureau of Investigation and the Additional/Joint Directors, Central Bureau of Investigation stationed at Lucknow register a case for investigation and submission of a report in accordance with law.