In the High Court of Judicature at Madras
Dated: 20.04.2010
Coram:
The Hon'ble Mr.Justice D.MURUGESAN
AND
The Hon'ble Mr.Justice M.SATHYANARAYANAN
ORIGINAL SIDE APPEAL No.421 of 2008
A.M.O.Harihareswara Rao,
Director, Thiru-vi-ka Nagar Benefit Fund Ltd.,
3/B-87, Periyar Nagar 6th Street,
Chennai-600 082.
(Previously at 15, II Street,
Andal Avenue, Near Thiru-vi-ka
Nagar Bus Terminus, Chennai-600 082. ... Appellant
Versus
1. K.Jayavelu
2. L.Subba Rao,
3. Jayabalan Raju,
4. V.R.Parthasarathy,
5. Thiru-vi-ka Nagar Benefit Fund Ltd.,
Rep. by the Official Liquidator, Madras High Court,
Corporate Bhavan 2nd Floor,
29, Rajaji Salai, Chennai-1.
(Previously Rep. by its Commissioner
Appointed by this Court).
6. A.M.O.Sreshty,
7. A.M.O.Gurunarayana Rao.
8. G.V.Srinivasulu.
9. Mrs.A.M.Sarojini Devi.
10. Mrs.R.K.Geetha Rajan
11. Mrs.A.M.H.Umamaheswri
12. M.G.Bharathi
13. Rangan N.Kannan
14. The Official Liquidator,
Madras High Court,
Corporate Bhavan 2nd Floor,
29,Rajaji Salai, Chennai-1. ... Respondents
Original Side Appeal filed under Section 483 of the Companies Act, 1956 r/w Clause 15 of the Letters Patent Read with Order XXXVI Rule 1 of O.S.Rules against the order dated 24.10.2008, made in C.P.No.216 of 2002.
For Appellant .. Mr.Guru for
M/s. Anitha & Associates.
For Respondents .. Mr.S.Chandrasekaran for R1 to R4.
Ms.Latha Parimalavadana for R5.
R6 to R13 given up.
JUDGMENT
M.Sathyanarayanan, J
The appellant is the third Respondent in C.P.No.216 of 2002 and aggrieved by the order of winding up dated 24.10.2008, the present appeal is filed.
2. The Respondents 1 to 4 herein filed C.P.No.216 of 2002 against the Respondents 5 to 13 stating that the 5th Respondent herein viz., Thiru-Vi-Ka Nagar Benefit Fund Limited is a Public Company in the cadre of a Nidhi Company notified as Nidhi/Mutual Benefit Society by the Central Government in exercise of the power conferred under Section 620-A of the Companies Act 1956 and declared as a company specified in Schedule-I as Nidhi and Mutual Benefit Society. The nominal capital of the Company is 5,00,000 Equity Shares of Re.1 each, 2,50,000 of 15,000 Non-Cumulative Redeemable Preference Share of Rs.10/- each, out of which, the Company has issued/subscribed 1,91,618 of Equity Shares of Re.1/- each and 1,21,250 of 15% Non-Cumulative Redeemable Preference Shares of Rs.10/- each. It is further averred in the said petition that the 5th Respondent Benefit Fund has to follow the Special Provisions of the Companies Act in respect of Nidhis and as per the notifications issued under Section 637-A of the Companies Act, the 5th Respondent is bound to have transaction only with its members and it can take deposit only from its members and it has no powers either to take deposit of money from or to any body corporate and it cannot give any new loans or advances without a security in the form of Fixed Deposit or Recurring Deposits or gold silver jewellery or immovable property. It is also averred that the first Respondent herein has deposited a sum of Rs.80,000/- the second Respondent deposited Rs.1,25,500/-, the third Respondent deposited a sum of Rs.50,000/- and 4th Respondent deposited a sum of Rs.26,000/-. The 5th Respondent Benefit Fund has defaulted in payment of matured amount to them. The Respondents 5 to 9 had circulated pamphlet dated 6.10.1999, stating that the 5th Respondent is unable to pay the debts and therefore certain measures to become operational were introduced on 7.10.1999. It is further stated in the said pamphlet that no foreclosure of deposit would be permitted and loans against deposits also would not be permitted.
3. It is further averred that since the 5th Respondent has defaulted in payment of money to more than 10,000 depositors and halted its operations, the Central Government has appointed a Special Officer viz., Mr.A.M.Swaminathan, vide proceedings dated 27.1.2000 and the Central Government has also passed an order to inspect all books of accounts and other records of the company.
4. Writ Petition in W.P.No.1560 of 2000 was also filed for issuance of mandamus directing the Reserve Bank of India to appoint a fit and proper person as custodian for taking over management of the company etc., and this Court vide order dated 20.4.2000 made in W.P.M.P.No.2363 and 2364 of 2000 in W.P.No.1560 of 2000, has appointed Honble Mr.Justice A.Abdul Hadi a retired Judge of this Court and Mr.S.Vijaya Rangan, retired District Judge as Commissioners to take over the management of the company.
5. Subsequently, the Honble Mr.Justice A.Abdul Hadi not inclined to accept the said assignment and Mr.Vijayarangan, retired District Judge was appointed as Commissioner/in charge of the Company.
6. The Commissioner on verification of the materials found that the Respondents by illegal actions, mis-management and breach of trust, have made the company sick and unviable. Therefore, the Respondents 1 to 4 averred that since the subtractum of the 5th Respondent had already been lost and the Companys assets are so meager, it became impossible to satisfy the depositors and other creditors of the company and therefore they sought for winding up of the 5th Respondent and for other consequential reliefs.
7. The 3rd, 4th, 6th and 9th Respondents in the above said Company Petition, had filed a common counter stating among other things that the company has substantial receivables which are sufficient to satisfy the depositors and the company is capable of being revived. Therefore, they prayed for the dismissal of the Company Petition.
8. The learned Judge while disposing of C.P.No.216 of 2002, has taken note of the fact that the Official Liquidator was appointed as the Provisional Liquidator of the 5th Respondent company as early as on 5.8.2008 and publication was also effected as per the orders passed by the Court. The learned Judge taking into consideration the materials available on record, had appointed the Provisional Liquidator as the Liquidator of the 5th Respondent company and directed the Official Liquidator to effect Publication calling for the claims of all the creditors in one English news daily and a vernacular daily. The 4th Respondent aggrieved by the same, has preferred this appeal.
9. The Official Liquidator was directed to file his report and accordingly a report dated 25.3.2009 was filed. The Official Liquidator in the said report has stated that the valuation of the movable and immovable assets and liquidated assets like cash investment etc., is Rs.1,35,24,000/- .
10. It is further averred that the Ex-Directors have not furnished complete facts regarding the claim, whereas they themselves stated that the total reliable value of Rs.1.35 Crores and the amount payable to the depositors are to the tune of Rs. 7.50 Crores. It is further averred by the Official Liquidator taking into consideration the said aspects also, the Provisional Liquidator was appointed as the Official Liquidator with a direction to take further and necessary steps.
The appellant herein filed a reply to the report of the Official Liquidator reiterating the stand taken in the counter affidavit filed to the Company Petition.
11. We have carefully considered the submissions made by the learned counsel appearing for the appellant and the Official Liquidator and also perused the materials available on record.
12. The Official Liquidator has taken over the possession of movable and immovable properties belonging to the 5th Respondent company on 2.8.2006 and this Court by an order dated 20.11.2006, has appointed M/s. T.V.Rao Associates to audit the books of accounts of the 5th Respondent Company and file a report of the affairs of the company.
13. The Official Liquidator on taking into consideration the said report and on perusal of the relevant materials has filed a detailed report stating that the amount payable to the depositors would be around Rs.10.63 Crores and the value of the assets of the 5th Respondent company is far less than the amount to be payable to the depositors.
14. It is to be noted at this juncture that the Administrator appointed by this Court viz., Thiru.N.Vijaya Rangan, retired District Judge, has taken great pains and collected amount from the depositors and realized some assets to the company and he has also paid around Rs.6500 creditors at the rate of 37.5 paise per Rupee as dividend. The Provisional Liquidator took possession of the 5th Respondent premises and subsequently came to be appointed as the Liquidator vide impugned order dated 5.8.2008. The business operation of the company came to be grinding halt even during 1999 and even though the appellant claims that the net worth of the assets of the company is more than the liability, there is no material available evidencing the same. It is to be noted at this juncture that the Ex-Directors of the 5th Respondent company yet to file their statement of affairs so as to enable the Official Liquidator to take further steps.
15. We, on an independent application of mind to the materials made available before us, are of the considered opinion that there is no error or infirmity in the impugned order and therefore, the present appeal is liable to be dismissed.
16. In the result, the OSA 421 of 2008 is dismissed. The order dated 24.10.2008 made in C.P.No.216 of 2002 is confirmed. But in the circumstances, there will be no order as to costs. Consequently, connected Miscellaneous Petitions are closed.
gr