TMI Blog2014 (7) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of Section 117C of the Act. - application filed by the applicants under section 117C of the Act is considered to be maintainable and according the respondent company is hereby directed to redeem the debentures covered by this application by payment of the principal amount and interest due thereon as per the terms and and conditions of issue of such debentures within 3(three) months of issue of such order - Decided in favour of appellant. - C.P. No. 423(117C)/KB/2011 - - - Dated:- 20-3-2014 - A. Bandopadhyay, J. For the Appellant : Pallav Samajdar and Amir Safique Molla. For the Respondent : Anirban Ray and Samrat Sen Gupta. ORDER:- 1. In this order, I am considering the application under Section 117C of the Companies Act, 1956 (the Act), Filed by Shri Vijay Kumar Jalan and Smt. Kavita Devi Jalan (joint holders), holding 1,000 Convertible Debentures in M/s. Bharat Hydro Power Corporation Limited (the company), the details of which are given in Annexure-A forming part of this order The brief averments and pleadings made by the applicants are mentioned as under: (i) On 03.04.1995, the company issued 1,000 Convertible Debentures of Rs. 200/- each t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certificates from the company towards payment of interest on debentures for the financial years 1996-97, 1997 98 and 1998-99, but in reality, the applicants neither received any such payment nor any response from the company. (ix) The applicants, through their advocate, issued a letter dated 19.07.2010 to the company requesting redemption of 1,000 Convertible Debentures of Rs. 200/- each along with interest @ 14% per annum, in spite of receipt of such letter from the Advocate of the applicants, the company neither made any payment to the applicants nor did it reply lo the said letter of the Advocate. Based on the above facts, the applicants have urged this Bench to pass an order directing the company to make repayment of the Convertible Debentures along with interest thereon in accordance with the terms and condition of the issue of debentures and pass such further orders as the Company Law Board may deem fit having regard to the facts and circumstances of the case. 2. As against the above averments of the applicants, the reply arguments of the respondent company, in brief, are as under: (i) The application is not maintainable and is not maintainable are is li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the observation that the present respondents do not have any right to seek relief beyond the scope of the said Act of 1996. Being aggrieved by the aforesaid order of Hon'ble High Court at Guwahati, on or about 11.02.2012, the respondent was constrained to move the Hon'ble Supreme Court by filing a Special Leave Petition being SLP (C) No.5691/2012, inter alia, praying for setting aside of the aforesaid order of Hon'ble High Court at Guwahati which is pending adjudication. (vi) Since the company was formed with the sole purpose enumerated above and subsequently being subjected to vesting and transfer and otherwise, did not receive adequate compensation for the act of the State, the company is not in a position to make good to its debtors. (vii) The aforesaid debentures are to be governed by Companies (Acceptance of Deposits) Rules, 1975, and as such, any alleged failure to repay the debts accrued thereof is to be subjected before a forum duly authorized by law in this regard and for such reason, the subject-matter falls beyond the purview of jurisdiction of this Hon'ble Board. The purported debentures, at this point of time, cannot be redeemed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eholders. As regards the contention of the respondent that the debentures are governed by Companies (Acceptance of Deposits] Rules, 1975, it has been submitted that the public deposits and redeemable debentures are separate aspect in the Act and dealt with in different sections of the Act. The TDS certificates were sent with ulterior motive and to mislead the facts and figures of the matter as no payment was made to the applicants against their debenture certificates. The applicants have denied and disputed all the allegations made in the reply affidavit by the company that the application is not maintainable or is barred by limitation or the subject matter of the application is beyond jurisdiction of this Hon'ble Board. 4. In support of their contentions, the applicants have relied upon the decisions in Dr. Deepak jain Ors. -Vs- M/s. vijaya Leasinq Limited,/reported in 119 comp.cas.986 (CLB) wherein it was held that a Debenture Redemption Reserve (DRR) is required to be created for debentures issued prior to 13-12-2000 and pending redemption, the Company Law Board will have a jurisdiction in respect of such debentures also . It was also held that the provisions of Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id not respond to such letters nor did make any payments to the applicants on account of redemption of such debentures. 6. The applicants had received three TDS certificates in Form No. 16A from the company for the financial years ending 31.03.1997, 31.03,1998 and 31.03.1999 declaring amount paid/credited on account of interest on debentures of Rs. 28,000/- each for the above years and 10% TDS amounting to Rs. 2,800/- was deducted on such interest paid of Rs. 28,000/-for each year and deposited to Central Government. Thus, the respondent company has acknowledged the due on account of debentureholders till 31.03.1999 against which interest has been shown to have been paid to such debentureholders, but in reality, the applicants have not received any interest on such debentures till date as per the averments made in the application by both of them. Finally, the applicants, through their Advocate, issued a letter dated 19.07.2010 to the company requesting redemption of 1000 Convertible Debentures of Rs. 200/- each along with interest @ 14% per annum. In spite of receipt of such letter, the company had neither given any reply to the said letter nor made any payment to the applicants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dy indicated by the applicants, it is evident that the applicants lodged the debenture certificate in original vide letter dated 09.03,1996 which was duly received by the company on 11.03.1996 and requested for redemption of debentures and payment of redemption amount together with interest @ 14% per annum. Thereafter, after expiry of 2 years' lock-in period from the date of allotment being 03.04.1995, the applicants vide letter dated 21.04.1997 requested the respondent company to redeem the debentures along with interest according to terms and conditions of issue of such debentures. Subsequently, reminder letters dated 09.09.1998, 06.04.1999 and 18.05.2010 were issued to the company, but the company did not bother to respond to such letters or make payments to the applicants on account of redemption of such debentures. Thus, the applicants within the period of limitation have duly lodged their claim to the respondent company for redemption of the debentures and the self-imposed hibernation with mala fide intention not to react to the genuine claim of the applicants cannot absolve the respondent company from entertaining such claim of the applicants. Reference to the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17C will apply to debentures issued and pending to be redeemed and as such DRR is required to be created for debentures issued prior to 13.12.2000 and pending redemption subject to clarifications issued herein. Further, it has been held in the said direction of CLB quoted supra, that the provisions of Section 117C(4) being analogous to Section 58A(9) and 45QA(2) are beneficial provisions intended to protect the interest of debentureholders. Such a provision, in my view, should be exercised in favour of aggrieved investors. The above view taken by CLB cannot be lost sight of and the interest of the aggrieved debentureholders deserves to be protected by invoking the provisions of Section 117C(4) of the Act. 10. From the above pleadings, it appears that the respondent company is hel-bent on refusing the right of the applicants to get relief under Section 117C of the Act on frivolous grounds either by resorting to limitation act or faulty application affirmed by one of the applicants or non-eligibility of the application for redemption of impugned debentures under the provisions of Section 117C of the Act. 11. To sum up, the application filed by the applicants under section 1 ..... 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