AI Structured Summary
Not yet generated for this judgment
Judgment
JUSTICE RAKESH KUMAR, MEMBER (JUDICIAL)
The appellant, Ansal Housing Ltd, was initially incorporated and was granted certificate of incorporation by the Registrar of Companies in the year 1983. It was incorporated in the name of Ansal Housing Finance and Leasing Company Ltd. Subsequently the said company changed its name as Ansal Housing and Construction Ltd on issuance of certificate of incorporation by the Registrar of Companies, New Delhi and Haryana with effect from 31.05.1990. However, during the pendency of petition filed by the appellant, Ansal Housing Ltd, under Section 74(2) of the Companies Act, 2013, (hereinafter referred to as Companies Act) again it changed its name as Ansal Housing Ltd. This change name was effected from 18.12.2018 during the pendency of the proceeding under Section 74(2) of the Companies Act before NCLT.
The present appeal has been preferred under Section 421 of the Companies Act, 2013 against an order dated 21.08.2022 passed by National Company Law Tribunal, New Delhi Bench(hereinafter referred to as NCLT) in CA No.435/ND/2021 in CP No.109/(ND)/2016.
In the appeal the appellant has sought for following reliefs:
Allow the present appeal and set aside the impugned order dated 21.09.2022 qua prayer (a) and (d) of Company Application No.435 of 2021 in CP No.109/ND/2016 passed by the Hon’ble National Company Law Tribunal, New Delhi Bench.
Waive the short payment made by the Appellant during the period of February, 2020 in August, 2021.
Allow the Appellant to repay the entire remaining amount of fixed deposits over a period of next 4 years by paying the monthly amount (including the payment towards the interest and the hardship cases) as detailed in para 7.27 above.
Pass such other and further reliefs that this Hon’ble Appellate Tribunal may deem fit and proper in the facts and circumstances of the present case.
Since the appeal was filed belatedly an application vide IA No.4458/2022 has been filed for condonation of delay of 4 days in filing the appeal. The reason for 4 days delay in filing the appeal has been explained in the IA. We have perused the petition and in view of submission of Mr. Gaurav Mitra, learned counsel for the appellant, we are satisfied with the reason. Accordingly the delay in filing the appeal stands condoned and IA is allowed.
Mr. Mitra, learned counsel for the appellant on merit of the appeal tried to persuade the Court that since the appellant company was endeavouring to make payment of deposits, the learned Tribunal was not justified in rejecting the application for extension of time for liquidating the dues. He submits that the appellant company had earlier accepted deposits. On maturity the steps were taken for repayment of the same. However, due to the reasons which were beyond the control of the appellant it was not possible to make repayment as per the schedule. He further submits that since the year 2016 the appellant stopped accepting any deposit. Only deposits which were accepted prior to the aforesaid date were required to be repaid on its maturity. The appellant company with a specific proposal for liquidating the dues in the year 2016 itself filed an application before NCLT which was registered as CP No.109/2016. The said company petition was filed under Section 74 (2) of the Companies Act. After filing of the same by order dated 3.10.2016 the proposal of the appellant company for enhancement of time for repayment of matured deposits in phased manner was accepted by the NCLT. Thereafter, from time to time it was extended. However, finally by the impugned order the petition filed for enhancement of the time for liquidating deposit has been rejected. Mr Mitra, learned counsel for the appellant has drawn our attention to statement made in para 7.27 of the Memo of Appeal which is reproduced hereinbelow:
“7.27.It is submitted that taking into consideration the above facts, the Appellant had re-worked its cash flow statement for next 4 years and worked out the following scheme of repayment of entire dues to the fixed depositors covering the payment towards the principal and interest. The new proposed scheme for re-payment, as submitted for approval of Ltd. Tribunal vide CA No.435/2021, is as follows:
| PERIOD | AMOUNT OF PROPOSED DISBURSALS (INCLUDING INTEREST AND HARDSHIP PAYMENTS) PER MONTH |
| April 2022-March 2023 | Rs.50 lakhs |
| April 2023-March 2024 | Rs.60 lakhs |
| April 2024-March 2025 | Rs.75 lakhs |
| April 2025-March 2026 | Rs.75 lakhs. |
He further submits that past record of the appellant also makes it clear that the appellant had diligently made maximum payment which is evident from statement made in para 7.31 which is quoted hereinbelow:
“7.31.It is pertinent to mention herein that the Appellant has been diligently making maximum payments as per his financial condition since the filing of Application bearing CA No.435 of 2021. The tabular representation of month payments is herein below:
| MONTH | AMOUNT DISBURSED (IN LAKHS) |
| September, 2021 | Rs.42.39 |
| October, 2021 | Rs.44.41 |
| November, 2021 | Rs.46.34 |
| December, 2021 | Rs.46.25 |
| January, 2022 | Rs.40.64 |
| February, 2022 | Rs.44.75 |
| March, 2022 | Rs.40.18 |
| April, 2022 | Rs.50.91 |
| May, 2022 | Rs.49.98 |
| June, 2022 | Rs.51.51 |
| July, 2022 | Rs.50.43 |
| August 2022 | Rs.50.16 |
| September, 2022 | Rs.51.82 |
Learned counsel for the appellant by referring to amounts mentioned in the aforesaid table submits that the appellant is taking sincere efforts in the light of repayment of all the deposits taken by the company and this was the reason that the appellant honestly had proposed to repay all the deposits in phased manner from April, 2022 to March, 2026. According to Mr. Mitra, learned counsel for the appellant the Learned NCLT was required to take lenient view in the matter and order impugned is fit to be interfered with and appellant is entitled for the relief which has been sought for in the present appeal.
In the present appeal the appellant has not even bothered to array either of the depositors as party/respondent from whom the appellant company accepted deposits, of course prior to enforcement of the new Companies Act and admittedly till date of filing of the application under Section 74(2) of the Companies Act payment was not made for which extension of time was sought for by the appellant.
Besides hearing Mr. Gaurav Mitra, learned counsel for the appellant we have carefully examined the materials available on record and also certain relevant provisions particularly Section 73 and 74 of the Companies Act in the present case.
The short fact of the case as revealed from Memo of Appeal is that the appellant company with its earlier name namely Ansal Housing Finance and Leasing Company Ltd had accepted deposits prior to 1.4.2016. However, thereafter due to non-availability of deposit insurance and non-extension of time beyond 31.3.2016 for providing deposit insurance by Govt of India as stipulated under Section 73(2)(d) of the Companies Act (Sub-Section (d) from Section 73(2) was subsequently deleted) read with Rule 5 of Companies Act (Acceptance of Deposits) Rules (Rule 5 was subsequently deleted).
On 08.07.2016 the appellant with changed name i.e. Ansal Housing and Construction Ltd, which was changed w.e.f. 31.05.1990 on 09.07.2016 filed petition under Section 74(2) of the Companies Act, which was registered as Company Petition No.109/ND/2016. The said company petition was filed before the NCLT seeking enhancement of time for liquidating its liability under the fixed deposits accepted by it. Learned NCLT by its order dated 03.10.2016 accepted the proposal for enhancement but it was accepted in a phased manner for a period of 24 months. It is apt to reproduce the paragraph 5 of the order dated 3.10.2016, which is at running page 96 as follows:
“5.The aforesaid proposal of the petitioner company for enhancement of time for repayment of the matured deposits in a phased manner over a period of 24 months from the due date is being accepted in principle only in view of their past track record. However, it is also subject to their adherence to the schedule submitted in Court. It, therefore, becomes imperative to review and accord extension quarterly in terms of the above.”
Thereafter periodically extension was granted and on perusal of the record it appears that while extending time learned NCLT overlooked the first order i.e. order dated 3.10.2016 whereby the extension of time was granted for 24 months. Even though 24 months time expired in the month of October, 2018 the Learned NCLT after expiry of the said date on 20.12.2018 extended the scheme for further one month. Thereafter on examination of order dated 21.09.2019 which is at running page 115 and 116 of the Memo of Appeal it is evident that the appellant filed an application for recording the change of the name of the applicant company from Ansal Housing and Construction Ltd to Ansal Housing Ltd, which is the name of the appellant in the present appeal. The said prayer was accepted and also in view of certain steps shown by the appellant another one month time was extended by Learned NCLT. Again the same Bench of the NCLT extended the time till 15th March, 2019. The time was further extended by same Bench of Learned NCLT for one month by order dated 25.4.2019. Thereafter on an application filed by the appellant vide CA No.22/2019 whereby modification of repayment schedule was filed with certain new proposal, a Division Bench of NCLT by its order dated 11.7.2019 oblivious of the fact that NCLT under the NCLT Act was not empowered to modify/review/revise its order allowed the prayer for discharging liability by 31.03.2022. It would be appropriate to reproduce operative portion of the order dated 11.07.2018 passed by NCLT as below which is at running Page 121 and 122 of the Memo of Appeal as follows.
“It is noted that as per the initial proposal sanctioned by this Bench the entire liability towards the fixed depositors was undertaken to be liquidated by 31st March, 2021. By the present proposal, they seek to discharge this liability by 31st March, 2022. Given the fact that re-payment is a better option for fixed depositor as well as in the interest of the company, this prayer is being permitted. However, the scheme shall be reviewed, every month. Statement of amount disbursed per month to various depositors has been annexed alongwith, duly corroborated by the bank statement. The effect of the modified scheme of repayment towards various depositors shall be given in detail to this Bench and also be unloaded on their website alongwith this order. This is necessitated to ensure that every depositor knows when they are likely to receive their principal/instalments thereof and the interest due and payable thereon in the interim period. There should be no default in the payment of interest to every depositor. Any complaint of non-payment shall be viewed stringently.
It is also being made amply clear that should the company default in adhering to the plan, part from not granting further extension, it shall also give rist to consequential penal provisions under the Act.
After extending time beyond the earlier time fixed i.e. 24 month finally by order dated 9.1.2020 while extending the scheme by another one month time disposed off the said company application. The order dated 9.1.2020 at running page 123 is reproduced as under:
“An application has been filed by the applicant company praying for extension of the scheme for repayment of the Fixed Deposit. It is submitted that in terms of the order dated 11.07.2019 the scheme had been modified enabling the applicant to disburse a sum of Rs.75 lakhs per month for the period of 01.06.2019 to 31.03.2020. They have been adhering to the same. A table has been annexed alongwith detail of the amounts to be disbursed. It is submitted that the interest on the fixed deposit is being served regularly and there have been no complaint. The disbursals and the details of further disbursement have also been posted on the website of the company. The application is duly annexed with the certificate of CS. Mr. S. Nagesh. In view of the aforesaid it would be expedient and the interest of justice to extend the scheme by another month. To come up on 20th February, 2020 for a status report. CA stand disposed off in terms of the above.”
Even prior to order dated 9.1.2020 one another application vide CA No.22/2019 was filed which petition was signed on 11.06.2019 as reflected in the bottom of the petition running at page 136 of the Memo of Appeal. The said petition has been brought on record as Annexure 6 which is contained in running page 124 to 136. Thereafter yet another IA was filed in CP No.109/2016 which was numbered as 696 of 2020 with following reliefs, Page 160
“A) Waive of the short payment made by the Applicant Company during the months of February, 2020 to September, 2020 as detailed in Para 19 above.
B) approve proposal of the Applicant company for release of:
i)an amount of Rs.25 lakhs (including interest and hardship payments) per month for the period October, 2020 to December, 2020.
ii) Rs.40 lakhs (including interest and hardship payments) per month for the period January, 2021 to March, 2021 and;
C) Allow the Applicant company to file a proposal in the month of March, 2021 for approval of repayment scheduled for the financial year 2021-22 considering the status of pandemic and market conditions of real estate sector prevailing at that time;
D) Any other order or orders or relief or reliefs as this Hon’ble tribunal deems fit and proper, under the circumstances of the whole case, may also be allowed.”
Finally NCLT vide impugned order i.e. order dated 21.9.2022 rejected the prayer for extension of time for repayment to the depositors. The operative portion of the impugned order is reproduced hereinbelow,
“32.Heard, record has been thoroughly perused. Before going into merits of the present case, we observe that this Tribunal vide its order dated 23.09.2021 had allowed the prayer (b) i.e., Allow the Applicant Company to release an amount of Rs.40 lakhs per month during the period September 2021 to March 2022, thereby allowing the applicant company to release the amount of Rs.40,00,000/- per month from September, 2021 to March, 2022. Further the prayer (c) i.e. Dispense with/waive off the requirement of maintenance of statutory margin money as liquid assets in the Deposit Redemption Reserve till 31st March, 2023 was partly allowed vide the order dated 23.09.2021 by this Tribunal by waiving the requirement of maintenance of statutory margin money as liquid assets in the Deposit Redemption Reserve till 31st March, 2022. Considering that prayer (b) and (c) as sought in the instant applications, already stood disposed of vide order dated 23.09.2021, therefore, is absolutely not tenable.”
On examination of aforesaid facts before further proceeding it would be appropriate to reproduce Section 73 and Section 74 of the Act as follows:
“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 nonbanking 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;
(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 scheduled bank in a separate bank account to be called deposit repayment reserve account;
(*****)
(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 on 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 subsection (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.
74. Repayment of deposits, etc., accepted before
commencement of this Act.—(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.”
Admittedly the appellant in the year 2016 had filed petition for extension of time for repayment to the depositors. In view of Section 74(1) any deposit accepted prior to the coming of Companies Act, 2013 which was notified on 30th August, 2013 immediately deposits on its maturity was required to be repaid. As per Section 74(1)(b) repayment was to be done within three years from commencement or on or before expiry of the period for which deposits were accepted. Even if in a case of non-clearance of the deposits under Section 74(2) the Tribunal has been granted discretion to extend the time. In Sub-section (2) categorically it has been mention that the Tribunal may on an application allow further time. The word “shall” has not been used and as such it was discretionary jurisdiction of the tribunal to extend the time. It is also clear that purport of Section 74 is to enable a company accepting deposit to grant some breathing time for repayment of the deposits. On examination of the provision it is also clear that the Tribunal has not been granted discretionary power to exercise the same in discreet manner. We are of the opinion that if Tribunal is approached for extension, extension may be granted once and not repeated extension can be inferred from the aforesaid provision. This is the reason that a stringent and panel provision has been incorporated in sub-section (3) of Section 74 of the Act. It makes it clear that if on grant of such further time payment of the deposit is not made one may be punished with fine which shall not be less than Rs. 1 crore and it can extend upto Rs.10 crore. In this sub-section further a strict condition has been imposed i.e. in default every officer of the company shall be punishable with imprisonment which may extend to 7 years or with fine which shall not less than Rs. 25 lakhs and may extend to Rs.2 crores or with both.
Admittedly in the present case despite regular extension deposits have not been cleared by the appellant. In the present case the prayer of the appellant for modification of earlier order and extension of liquidating dues both has been rejected primarily on the ground that on earlier occasions twice extension was granted. Of course, in the Memo of Appeal as well as during arguments it was argued that detail reasons has not been assigned by the NCLT, but on examination of the impugned order it is evident that NCLT has discussed all the facts with regard to earlier prayer and extension and finally it has rejected the prayer of the appellant. We do not find any ground to interfere with the impugned order. However, we propose to remit back the matter to the NCLT to take consequential steps in terms of Section 74(3) of the Act expeditiously.
Accordingly while approving the impugned order we remit back the matter to the NCLT to take appropriate steps in accordance with law.
The Registry is directed to communicate this order to the NCLT, Principal Bench, New Delhi forthwith.