TMI Blog2001 (6) TMI 767X X X X Extracts X X X X X X X X Extracts X X X X ..... posit or part thereof in accordance with the terms and conditions of such deposit if it is satisfied that it is necessary so to do to safeguard the interest of the company, the depositors or the public in general. Upon consideration of the applications received by the Board, it has in terms of an order dated 21-3-2000, issued directions to the company for repayment of the deposits in accordance with the guidelines and the scheme formulated by it. 2. Aggrieved by the said directions, United Western Bank Ltd., a secured creditor of the company, has filed MFA No. 1530 of 2000 while the company has preferred MFA No. 2030 of 2000 challenging the said order on a variety of grounds. OSA No. 2 of 2000 filed by the Reserve Bank of India, in turn assails the correctness of an order dated 14-6-2000, made by the company judge, in Company Petition No. 2 of 2000 and Company Application Nos. 3 and 307 of 2000, whereby proceedings in Company Petition No. 2 of 2000 filed by the Reserve Bank of India for winding up of Kirloskar Investments and Finance Ltd. ( KIF Ltd. ) have been stayed and Company Application No. 3 for appointment of a provisional liquida- tor and Company Application No. 307 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancial company has failed to repay any deposit or part thereof in accordance with the terms and conditions of such deposit, the Company Law Board constituted under section 10E of the Companies Act, 1956 (1 of 1956) may, if it is satisfied, either on its own motion or on an application of the depositor, that it is necessary so to do to safeguard the interests of the company, the depositors or in public interest, direct, by order, the non-banking financial company to make repayment of such deposit or part thereof forthwith or within such time and subject to such conditions as may be specified in the order : Provided that the Company Law Board may, before making any order under this sub-section, give a reasonable opportunity of being heard to the non-banking financial company and the other persons interested in the matter." 5. A plain reading of the above would show that the same enjoins a duty upon every non-banking financial company to repay every deposit accepted by it in accordance with the terms and conditions of such deposit. In the event of the failure of a non-banking financial company to discharge that obligation, the CLB is in terms of sub-section (2) empowered to issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the banks interest appears to us to be premature, for the Tribunal has not expressed any final opinion on the subject so far. Needless to say that in case the Tribunal declines to exercise its powers, it shall be open to the appellant- bank to seek appropriate remedy against the same in appropriate proceedings and before the appropriate forum. MFA No. 1530 of 2000 is in the light of the above, without any merit and shall have to be dismissed. 7. In MFA No. 2030 of 2000, the company has assailed the order made by the Board on several grounds and prayed for modification of the said order to the extent indicated in para. 18 of the memo of appeal. A preliminary objection to the maintainability of this appeal was raised on behalf of the respondents. It was argued that an appeal under section 10F of the Companies Act, 1956 was maintainable only on a question of law arising out of the order under challenge and not otherwise. No question of law, argued counsel for the respondents, arose from out of the impugned order so as to warrant interference by this Court. 8. Section 10F of the Companies Act reads as under : " Appeals against the orders of the Company Law Board . Any per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by perversity or irrationality of any kind. The challenge is not based even on the ground that the order is without any evidence or material in support of the same. The substance of the grievance against the order as is evident from a reading of the grounds urged in the memo of appeal is that the scheme formulated by the Board for repayment of the deposits is unrealistic and incapable of implementation. The appellant s case appears to be that while it is genuinely interested in repaying the deposits it is incapable of doing so on account of its limitations, arising from adverse business conditions and the losses suffered by it generally due to a slump in the real estate market and a general industrial recession. This ground, we are afraid, cannot possibly be construed as giving rise to a question of law so as to entitle the appellant-company to maintain the appeal or justify interference with the repayment schedule as drawn up by the Board. Whether or not the cash flow anticipated by the company would suffice for repayment of the deposits and whether or not the company s financial position justified a direction for repayment within the time-frame stipulated by the Board, or matters ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iction, law or other infirmity so as to warrant interference with the same. Consequently MFA No. 2030 of 2000 also has to fail and be dismissed accordingly. 11. That brings us to OSA No. 2 of 2000 filed by the RBI against an order made by the learned company judge in Company Petition No. 2 of 2000 and CAs Nos. 3 of 2000 and 307 of 2000. The said appeals arise in the following circumstances. 12. Consequent upon the amendment of the Reserve Bank of India (Amendment) Act, 1997, KIF Ltd. made an application for the grant of a certificate of registration as required under section 45-IA. While the said application was pending consideration the bank passed an order dated 13-8-1999, under section 45MB(1), prohibiting the company from accepting fresh deposits and from alienating its assets. The bank also in terms of another order dated 1-9-1999, appointed a special officer to oversee the activities of the company and ensure compliance with the statutory provisions. The application moved by the company for registration was eventually rejected by the bank by an order dated 21-9-1999, which was assailed by the company in an appeal before the prescribed appellate authority. Shortly ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order being in force for more than three months, clause ( c ) of section 45MC(1) is also satisfied. Therefore, the petitioner has decided to apply for winding up of the respondent-company in exercise of the powers conferred on it under section 45MC of the Act. It is respectfully submitted that under the circumstances mentioned above, it is just, proper, equitable, in public interest and in the interest of justice that the respondent-company be wound up by this honourable court." 15. The learned company judge was of the view that since the order passed by the bank rejecting the company s application for grant of registration had been challenged before the appellate authority, the said order could not be said to have attained finality. The company court felt that if the appeal was allowed by the appellate authority, none of the grounds raised by the bank for winding up of the company would be available to it. It was of the opinion that since proceedings under section 45QA were also pending before the CLB, in which no final orders had been passed by the Board, it was not in the interest of the parties or the public to proceed further with the company petition. Proceedings in C.P. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company s financial position and its capacity to carry on its business in a satisfactory manner. Such being the position, the proceedings in Company Petition No. 2 of 2000 would not be stayed only because of pendency of the appeal against refusal of registration or the pendency of the proceedings before the CLB under section 45QA. The appellant-bank having considered the relevant factors and come to the conclusion that the company is unable to pay its debts and had been prohibited from receiving deposits for a period of not less than three months was entitled to maintain a petition for winding up of the company and take the same to its logical conclusion. We have, therefore, no hesitation in holding that the order of stay of the proceedings passed by the learned company judge was even on the merits unsustainable. We however find no reason to interfere with the order under challenge to the extent the same declined the appointment of a provisional liquidator, for, in the words of the learned company judge no case was made out for appointment of a provisional liquidator at this stage . 18. Mr. Naik next argued that it was necessary to issue certain consequen-tial directions rega ..... X X X X Extracts X X X X X X X X Extracts X X X X
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