TMI Blog2015 (7) TMI 1389X X X X Extracts X X X X X X X X Extracts X X X X ..... date on which the details are submitted to the Corporation, the Corporation has to make payment to the above extent either to the depositors directly or to them through the Official Liquidator. As per the above-referred Scheme, each depositor, including each original petitioner, must have received ₹ 1 lakh from the Official Liquidator. Initially, upon the bank being ordered to be wound-up, the original petitioners and other depositors had a right to recover ₹ 1 lakh or the amount deposited, whichever was less, from the Official Liquidator and the said amount must had been paid to them when the petitions were filed. Regulation 22 also provides that the Official Liquidator, after making necessary provision for the expenses in relation to the liquidation proceedings and for declaration of dividend, as prescribed in the Regulations, has to make payment to the Corporation - the High Court should not have given the direction which, if complied with, would run contrary to the statutory provisions incorporated in the Act. Even if one looks at the entire issue from different point of view, one would believe that all the depositors have by and large equal right. If the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred to as the Corporation ). The function of the Corporation is to insure deposits made by depositors with the banking companies and the said Corporation has been constituted under the provisions of Section 3(1) of the Deposit Insurance and Credit Guarantee Corporation Act, 1961 (hereinafter referred to as the Act ). The Act had been enacted with a very laudable purpose. Normally a person deposits his savings or invests his money by way of a saving bank account or a fixed deposit with banking companies, including cooperative banks, without taking much care of ascertaining financial condition of the bank, possibly because of the trust reposed by him in the Reserve Bank of India, which regulates the banking business in the country. 4. In the event of any financial difficulty faced by the banking company, the depositors would generally lose substantial amount of their deposits, in whichever form made, because normally at the end of the winding-up proceedings, the unsecured creditors get very little amount. So as to safeguard the interest of such small depositors or investors, who have parked their funds with banking companies, the Act had been enacted to insure the amount dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the bank, were not paid the amount to the extent to which their deposits exceeded ₹ 1 lakh. 11. In the aforestated background, Writ Petition Nos.6768 and 7372 of 2005 had been filed in the Madurai Bench of the Madras High Court by some of the depositors praying that the amount which had remained unpaid on their fixed deposits be directed to be paid to them by the Joint Registrar of the Co-operative Societies, who had been appointed as the Official Liquidator. In the said petitions, the aforestated officer, i.e. the Official Liquidator as well as the Special Officer, Theni Co-operative Urban Bank Ltd. were impleaded as respondents. After hearing the concerned parties, by an order dated 27th July, 2005, the learned Single Judge was pleased to direct the Special Officer to pay the amount deposited by the depositors with accrued interest thereon within 8 weeks from the date of receipt of a copy of the said order by the Special Officer. Upon perusal of the said order, it appears that the said petitions had been disposed of at an admission stage and even before any reply was filed on behalf of the Official Liquidator. 12. Be that as it may, the said order was challenged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment of winding up expenditure, dividend to be paid as per the provisions of Section 21 of the Act, the depositors could not have been given any further amount. Any payment to depositors at that stage would be contrary to the provisions of the Act and by virtue of the orders passed by the High Court, the Official Liquidator was directed to act contrary to the provisions of the Act. 15. It had been submitted by the learned counsel that the High Court did not consider any of the provisions of the Act or the provisions of the Banking Regulations Act, 1949 before passing the impugned order. According to him, once each depositor is paid the amount deposited or ₹ 1 lakh, whichever is less, the Official Liquidator of the Bank should have given the amount to the Corporation as per the provisions of Section 21 of the Act. In view of the aforestated legal position, the High Court committed an error by giving a direction to the Official Liquidator that the amount which he had, should be distributed among the depositors. Doing so would be absolutely contrary to the Scheme and spirit of the Act. The learned counsel had narrated the object with which the Act had been enacted and the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , as per the provisions of Section 16(1) of the Act, a sum of ₹ 1 lakh is being insured or guaranteed in respect of each depositor. So a depositor is safe and he has not to wash his hands off his deposit if the amount deposited by him is less than ₹ 1 lakh. The Official Liquidator, as per the provisions of the Act, has to give details about the depositors and the amount deposited by them in a prescribed form within three months from the date on which the liquidation order is passed or from the day on which he takes charge, whichever is later and within two months from the date on which the details are submitted to the Corporation, the Corporation has to make payment to the above extent either to the depositors directly or to them through the Official Liquidator. 21. Thus, as per the above-referred Scheme, each depositor, including each original petitioner, must have received ₹ 1 lakh from the Official Liquidator. Initially, upon the bank being ordered to be wound-up, the original petitioners and other depositors had a right to recover ₹ 1 lakh or the amount deposited, whichever was less, from the Official Liquidator and the said amount must had been paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icial Liquidator to repay the said amount to the Corporation, but it also clarifies that there shall not be any other preferential creditor who would be getting any amount from the Official Liquidator till the amount payable under Section 21 of the Act is paid to the Corporation. 26. In view of the aforestated clear legal position, in our opinion, the High Court was not right when it directed the Official Liquidator to determine the mode of payment by ignoring the aforestated statutory provision. 27. The Corporation was not represented before the learned Single Judge, but at least before the Division Bench, the learned counsel appearing for the Official Liquidator had drawn attention of the Bench to the aforestated legal provisions of the Act. Moreover, provisions of Regulation 22 of the Deposit Insurance and Credit Guarantee Corporation General Regulations, 1961 (hereinafter referred to as the Regulations ) had also been referred to by the learned counsel. The said Regulation 22 reads as under : 22. The amounts repayable to the Corporation under sub-section (2) of section 21 of the Act shall be paid from time to time by, - (a) the liquidator as soon as the realisatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Liquidator and the Special Officer to act in accordance with the statutory provisions. 32. The appeal is, accordingly, allowed with no order as to costs. CIVIL APPEAL NOS.1116, 1923, 1924, 1925, 1926, 1927, 1928, 1929, 1930, 1931, 1932, 1934 AND 1935 OF 2009 33. So far as Appeal No.1116 of 2009 and similar matters are concerned, we record the fact that they have been filed at an interlocutory stage and therefore, the said appeals are disposed of with a direction to the High Court to decide the matters, which are pending before it, in the light of the law laid down hereinabove. CIVIL APPEAL NOS.5333, 5334, 5335, 5336 AND 5337-5339 OF 2012 34. In all the aforestated appeals, some compromise had been arrived at among the parties before the learned Single Judge, but the same had been challenged before the Division Bench. The Division Bench had quashed and set aside the order, whereby the litigants had entered into a compromise and the matters had been remanded to the learned Single Judge. We dismiss the aforestated appeals as the matters have been remanded to the learned Single Judge. However, we direct that the present appellant shall be impleaded as a party-respond ..... X X X X Extracts X X X X X X X X Extracts X X X X
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