JUDGMENT
S.U. Kamdar, J.
1. This petition for winding up of the company was filed by the original petitioner for recovery of amount of Rs.3,75,00,000/- which was advanced to the respondent company as and by way of fixed deposit for a period of three years. The said deposit was carrying interest at the rate of 18% per annum. By an order dated 21.11.2003 this court directed the company to deposit the amount of Rs.3,75,00,000/- together with interest at the rate of 18% in court failing which the said company petition to be admitted and if deposit is made as directed then the petitioner was directed to file a suit. Admittedly no such deposit was made. Thus the petition stood admitted by the said order. In the present company petition the application was moved being No. 233 of 2004 on behalf of various creditors and small fixed deposit holders inter-alia seeking relief that in place of winding of the company it is in the interest of small fixed deposit holders that a scheme should be framed for return of the money to the small fixed deposit holders. It was contended that the small fixed deposit holders have put in their hard earned money with a view to secure their future in these kind of financial companies because at the relevant time they were offering an attractive rate of interest. It was further contended that if the company is wound-up then no persons are likely to receive any amount. However it is in the interest of justice that small fixed deposit holders be protected by this court by framing a scheme and that payment to small fixed deposit holders should be made under the scheme. This application was heard by the learned single judge (Khanwilkar, J) on 12.3.2004 and by consent of the various parties an order came to be passed appointing a committee constituting of retired judge of this court V.R. Datar, J as its chairman and retired officer S.C. Malhotra a retired DGP of Gujarat and one Mr. P.K. Bansal as members of the said committee. The said committee was appointed to manage the affairs of the company and to formulate a scheme for the repayment of the amount of the small fixed deposit holders. It was further provided in the said minutes that the committee will be at freedom to negotiate with a view to arrive at out of court settlement with the secured creditors keeping in mind the object of the small fixed deposit holders and that their interest should be protected. The company also joined in the said minutes of order passed by this Court.
2. Thereafter on 12.3.2004 a further order was passed modifying the order dated 12.3.2004. By the said order dated 12.3.2004 it is provided that the management of day to day affairs of the company shall vest in the formal directors of the company while a special committee of directors and that the Company Secretary will be under the superintendence of the Special Committee. It was provided by the order dated 12.4.2004 that the said committee is authorised to take all actions on behalf and in the name of the company to recover all outstanding dues from the companies/debtors/borrowers. It was also provided that the Economic Offence Wing should extend all support to the said committee for recovery and realising the dues payable to the said committee. By Clause-4 and 5 of the said order dated 12.3.2004 all civil and criminal cases filed by the creditors against the company and Directors were stayed. By a further order dated 16.7.2004 it is provided that the stay granted of civil and criminal proceedings against the company and the directors shall also be availaible as against the members of the said committee. It was also provided that the said order will also include the proceedings which may be filed thereafter.
3. Thus the special committee has been constituted by this court and is functioning under the orders passed from time to time as narrated herein above. The special committee has made various report. Three of such reports which are before me for consideration. Pursuant to the said orders the committee has submitted a report dated 3.8.20004 inter-alia putting forward a scheme for repayment of few of the fixed deposit holders who have advanced the amount of less than Rs.5,000/-. The committee has therefore proposed 1) that out of the total recoveries a sum of Rs.20 lacs can be made availaible per month for repayment of the small fixed deposit holders and the said committee is of the opinion that all depositors upto Rs.5,000/-can be paid off gradually and certain guide-lines have been given by the committee in para-5 of the said report. It is also proposed that after the category of depositors up to Rs.5,000/-is paid, the special committee will prepare another scheme for payment to the depositors up to Rs.10,000/-. This report dated 3.8.2004 seeks an approval from this court to implement the said scheme with a view to pay off the said small fixed deposit holders. By another report dated 24.7.2004 the committee is seeking direction for initiating the contempt proceedings against one Mr. Baleshwar Prasad Gupta advocate, for initiating the proceedings before the Judicial Magistrate First Class, Patna inspite of the said order of this court dated 12.4.2004 and 16.7.2004 staying proceedings against the Company and the committee. By the third report the committee is seeking direction that insofar as one of the properties of the company is concerned namely the office premises admeasuring 5000 sq.ft. situated at Laxmi Finance and Leasing Companies Commercial Premises Co-operative Society Ltd,. be disposed of and the sale proceeds thereof be realised which would result in reducing the liability of the company and release of already blocked amount in the said premises. The company had only deposited Rs.27.50 lacs and there is an outstanding consideration amount still payable of Rs,.1,12,35,000/-. In view thereof the committee is of the opinion that the said premises can be disposed of and the money deposited can be realised. Thus the committee is seeking the permission of this Hon’ble High Court in respect of the disposal of the said premises by the third report dated 3.8.2004.
4. Apart from these three reports I am also required to dispose of various company applications which have been taken out by the secured creditors and a modification of the order dated 12.4.1004 and 16.7.2004 is sought by which all the civil and criminal proceedings against the company, directors and members of the committee have been stayed. According to the secured creditors the blanket stay granted by this court prevents them from prosecuting their own proceedings which are pending in different courts including DRT and that this unnecessarily obstructs the interest of the secured creditors. According to the secured creditors they are entitled to initiate and prosecute the various proceedings for realisation of their claim and it is neither fair and justified nor permissible in law that the secured creditors cannot realise the amount whereas the small fixed deposit holders who are infact unsecured creditors gets priority in their payment. It is thus contended by the secured creditors that the said order should be modified and or vacated and the court should permit them to prosecute their respective proceedings as available in law. These proceedings are taken out by Federal Bank of India and supported by various secured creditors of the company. The answer to both these issues are interdependent on each other. If the permission is granted to the secured creditors to prosecute their own proceedings then the scheme must fail. It is because the scheme is totally dependent upon the lease rent recovered in respect of the lease hold properties held by various clients of the respondent company. If the lease hold properties are permitted to be sold by secured creditors in execution of any orders which is likely to be passed in a proceedings initiated by them then the lease rent could never be recovered and consequently therefore the scheme must fail. I am of the opinion that having constituted the committee for a particular purpose by the various earlier orders passed by this court it is not appropriate for me to frustrate the said object by rejecting the scheme as proposed by the committee in their report dated 3.8.2004.
I am also further of the opinion that it is now well known fact that various small fixed deposit investors have invested a large amount of money on inducements by the finance companies as well as various other companies for high returns. It is this gullible investors who have staked their life earnings in these companies and therefore their interest must be protected by the court. It is undoubtedly true that the protection of their interest would obviously sacrifice the interest of secured creditors to a great extent. However, I am of the opinion that this court cannot ignore the plight of the small investors whose life savings are invested by way of small fixed deposits with these companies. Even the company law board and RBI has passed orders in the present case to protect the interest of the depositers and a scheme to pay them of as quickly as possible. In the present case on 27.2.1999 the RBI passed an order appointing a special officer with a view to repay the small fixed deposit holders. In the said order dated 27.2.99 the RBI has provided as under :
“(g). the funds received by the Company out of realization of its dues or sale of its assets shall be utilised only for repayment of matured public deposits and interest thereon.”
5. The Company law board has similarly passed an order on 22.12.2000 once again providing repayment of the fixed deposit holders for a small amount. This orders were passed against the respondent company in public interest. Apart from the same, under Chapter-IIIB of the RBI Act, 1934 the special provisions are provided for in respect of the non banking financial institutions and particularly in respect of deposits they recover from the small investors. The said provisions of Chapter-IIIB infact provides under section 45Q that the provision of the said chapter would have overriding effect notwithstanding anything inconsistent contained in any other law for the time being in force or any instrument having effect in law or any instrument having effect by virtue of any such law. In my view therefore it is not possible to reject the said report dated 3.8.2004 containing the said scheme. However I am of the opinion that the scheme should not be accepted as it is. I am therefore of the opinion that the scheme needs some modification. I have also suggested a modification. The learned counsel appearing for the special committee has accepted the said modifications after taking instructions from the committee. In the aforesaid circumstances I pass the following order on the report dated 3.8.2004.
“1. Scheme no.1 for the repayment of depositors (below Rs.5,000/-) of the Company Lloyds Finance Ltd., as proposed by the Committee appointed by this Court and annexed to its report dated 3 August 2004 is approved, with the following modifications.
2. Clause 3 of the scheme is deleted and will be substituted by the following :
“3. The scheme is based on the estimated gross monthly income of Rs.40 lakhs that is expected to be available to the Company for meeting its operating expenses and for repayments, 37.5% of all such amounts that become available to the company will be used to meet its monthly operating expenses, 37.5% will be used to repay the deposit holders upto Rs.5,000/- and the balance 25% will be used to repay the secured creditors of the company”.
3. The Committee shall decide the basis on which the above-mentioned amount will be disbursed to the secured creditors of the company, trying as far as possible to make the disbursements proportionate to the amounts at which the dues of each secured creditor have been settled by the Committee.
4. The Committee to negotiate with the secured creditors of the Company for a one time settlement of their dues. All the secured creditors appearing before this Hon’ble court agree to co-operate with and appear before the Committee for this purpose.
5. Once the said depositors are fully paid, the Committee shall repay the depositors whose deposit exceed Rs.5,000/- but are below Rs.10,000/-.
6. All parties shall be at liberty to apply for further directions in this regard, as and when necessary.”
6. This takes me to the next report dated 31.8.2004. By this report the committee is seeking the disposal of one of the office premises of the respondent company. The said premisses admeasuring 5000 sq.ft. of Laxmi finance & Leasing Companies Commercial premises Co-operative Society Ltd has been sought to be purchased by the respondent company and an advance deposit of Rs.27.50 lacs has been paid. However the possession of the premises is yet not handed over to the company because due to the financial stringency the said company could not make payment of the balance consideration of Rs.1,12,35,000/-towards the purchase price of the said premises. Thus without possession of the said premises being handed over to the company, the company is made liable to make payment of the society charges towards the maintenance and other charges in respect of the said premises. Thus the said amount of expenses is a futile expense which is being incurred. Further on the facts of the present case it is clear that the company has no fund to make payment of the balance amount towards the consideration and thus it is not possible to direct the committee to make payment of the balance of Rs.1,12,35,000/ towards the balance purchase price and take possession of the said premises. However the committee has suggested that the said premises can be disposed of with a view to achieve two objects first to prevent the expenses which is unnecessarily incurred towards the maintenance and society charges and secondly the blocked amount of Rs. 27.50 lacs can be realised and if possible an additional profit can be obtained, if it is permitted to be sold. I find that the request of the committee is valid and reasonable. However, the said premises is a security of the secured creditors and therefore while permitting to dispose of the said premises, it is further directed that the amount received from the sale of the said premises by the respondent company are to be separately deposited in a separate account with the State Bank of India and that amount should not be used either towards day to day expenses of the committee. or towards the day to day expenses for managing and running the business of the respondent company or towards discharge of any of the liabilities of the fixed deposit holders. The committee shall keep the said amount deposited as it is, in case settlement is arrived at with any of the secured creditors then the said amount will be utilized for re-payment of the secured creditors liability in accordance with further directions which may be given by the court at that stage. I am informed by Mr. Kambhatta the learned counsel appearing for the committee that there is an interim injunction order operative in one of the proceedings of the DRT which has been initiated by the fixed deposit holders and Dhanlaxmi bank. The said order has been passed in Application No.. 615 of 2001 and 11 of 2002 by the DRT, Mumbai. I empower the committee to move necessary application before the DRT for vacating the said interim orders passed in the said application being 615 of 2001 and 11 of 2002. If such an application is made then the DRT is directed to consider the same on merits and in accordance with law. The committee will be entitled to dispose of the said premises subject to the order passed by the DRT in the application to be initiated by the said committee. Thus I dispose of the second report of the committee dated 31.8.2004 with the aforesaid directions.
7. This leads me to the last report dated 24.7.2004. By this report the committee is seeking the initiation of a contempt proceedings against the Advocate, Mr. Baleshwar Prasad Gupta.
8. Some of the material facts of the report are as under :
10. As indicated above by order dated 12.4.2004 and 16.7.2004 all the civil and criminal proceedings against the company directors and the members of the company have been stayed. Further one Mr. Baleshwar Gupta claiming to be Senior Advocate of the Patna High Court issued a notice on 1.5.2004 which was received by the company on 5.5.2004. The said notice was also issued to the members of the said committee claiming payment towards the last instalment of the fixed deposits standing in his favour and his wife’s favour. In the said notice he has threatened to lodge criminal prosecution against the company, the directors and members of the said committee if the amount is not paid immediately. The notice was replied by the company informing the said advocate that the said committee is considering all the aspects and it is in the process of formulation of a scheme regarding repayment which will be filed before the Bombay High Court. However despite the aforesaid position Mr. Baleshwar Prasad Gupta filed a criminal case bearing Criminal Case Complaint no. 124/(C)/2004 in the court of Chief Judicial Magistrate, Patna. The complaint copies were forwarded to the committee and to the members of the said committee alongwith summonses dated 29.6.2004. Thereafter the summons were served on the committee appointed by the court and thereafter threats of arrest were given to the chairman of the said committee. The said chairman of the committee was required to file a proceedings in the Patna High Court for quashing the said criminal proceedings under section 482 of the Cr.P.C. The aforesaid act of Baleshwar Prasad Gupta is contrary to the orders passed from time to time and in interference with the administration and management of the said committee which is directly appointed by this court and is functioning under the directons of this court. At present there is a stay granted of the said criminal proceedings by the Patna High Court and the committee is prosecuting the same. In the aforesaid light of the case the committee seeks that necessary action should be initiated for interfereing with the administration of justice by this Court. I have perused the said report. Prima-facie I am of the opinion that a case is made out for issue of a show cause notice against Baleshwar Prasad Gupta for contempt of this court. In my opinion the aforesaid acts of Baleshwar Prasad Gupta even after pointing out that there is court appointed committee and a scheme is in formulation for recovery of dues, then to file a proceedings and even include the members of the said committee amounts to direct interference with the administration of justice by this court. I accordingly direct the Registrar General to issue notice of contempt to the said Advocate, Baleshwar Prasad Gupta at Patna under section 2(b) read with section 15 of the Contempt of Court act and also in exercise of power under Article 215 of the Constitution of India calling upon the said Advocate, Baleshwar Prasad Gupta to show cause as to why action for contempt should not be taken against him. With the aforesaid directions I dispose of the said report dated 24.7.2004 filed by the committee.
9. This leads me to the application made by the Federal bank for vacating the stay granted to the various proceedings in different courts initiated by the secured creditors. This application is supported by various creditors. I have heard the counsels for the various secured creditors. None of the counsels have come forward before me with an alternate scheme under which any payment can be effected to the fixed deposit holders. By my present order I have in modification of the scheme put forward by the committee tried to provide for a small measurement of relief even to the secured creditors. I am conscious of the fact that the same is not effective and sufficient looking at the amounts outstanding by the company in favour of the secured creditors. I am however, of the view that to permit the secured creditors to proceed and prosecute various legal proceedings initiated by them would result in total frustration of the said scheme. Infact as stated above the scheme is operative only on the basis of the lease rent recovered from the lease hold properties which is held by the various customers. Once the customers are depreived of the said lease hold properties by the orders which may be passed in favour of the secured creditors because these properties are their securities, then in that even the whole scheme will frustrate as there will be no income generated from where small time fixed deposit holder can be paid off. However I am impressed with the contention of Mr. Rao, learned counsel for the Federal Bank that the guarantor who are the directors of the company should not be left scort-free and their assets should be subject to the recovery proceedings. I have heard Mr. Dwarkadas appearing for the company he has also filed an affidavit of one Mr. Madan Gopal Jalan, Senior Vice President-Legal and Company Secretary of the respondent company in which he has given undertaking that all the directors present or past who have executed guarantees on behalf of the respondent company Llyods Finance Ltd. and/or their legal heirs or representatives to the extent of estate come to their hands, will disclose on oath to the committee all their personal assets. I accordingly direct the said guarantors present or past and who were the directors of the company to disclose such assets within a period of four weeks from today. The said committee has also been authorised to negotiate with the secured creditors all their outstanding dues as will be payable by the company on the basis of one time settlement under the various guide-lines of RBI. The committee will be authorised to negotiate with the secured creditors and all the secured creditors are giving me an assurance in the court that they will co-operate with the said committee for arriving at such one time settlement. It is made clear that if any such one time settlement is arrived at then the committee will make thereafter a necessary report to this court for disbursement of the amount providing for disposal of some of the assets of the Company. I am unable to vacate the stay order which is already passed by this court on 12.4.2004 and 16.7.2004 in the light of the aforesaid circumstances which I have explained in detail. However I am of the opinion that at this stage the secured creditors can be protected only to the extent which is provided herein before in this order. I thus dispose of the said Judges summons initiated by the Fixed deposit holders in terms of the aforesaid order and the directions as contained herein above. These directions also shall be applicable to other secured creditors who have sought similar relief though only by oral application. I dispose off the said three reports and the Judges Summons (L) no. 704 of 2004 accordingly. However there shall be no order as to costs.