ORDER
C.R. Das, Member
1. By an order dated 9th July, 2001 issued under Section 58A(9) of the Companies Act,
1956, M/s. Cable Corporation of India Limited were granted permission for repayment of
deposits amounting to Rs. 1953.86 lacs in a phased manner over a period of 4 1/2 years effective
from 1.7.2001, subject to certain conditions listed therein. One of the condition stipulated in the
said order, interalia, was that the Company shall file an affidavit of compliance on the state of
repayment of deposits within 10 days from the date of making payment as per the scheme
approved by this Bench and the first one affidavit was required to be filed by the Company in
respect of first instalment on 1.7.2002.
2. In compliance with the above directions of the Company Law Board, Shri Girish D.
Bhingarkar, Whole time Director of the Company has filed an affidavit dated 11.6.2002 with this
Bench affirming that as per the scheme approved by this Bench, the Company was required to
make repayment of deposits amounting to Rs. 295.75 lacs towards the first instalment under
various categories of deposits. The Company has, however, made payments of deposits to the
tune of Rs. 19.01 lacs under various categories of deposits and thus is short by 276.24 lacs
towards payment of 1st instalment to depositors under various categories of deposits. The reasons
due to which the Company could not make repayment of entire amount of deposits relating to
various categories in respect of first instalment, as stated in the affidavit referred to above are as
under:-
(a) At the time of approval of the scheme, the Company projected to make repayment
of deposits to deposit holders under various categories of deposits in respect of first
instalment out of Capital receipts generated out of sale of surplus land. The same,
however, could not be materialised as scheduled and the same resulted in accute financial
crunch resulting in continuous cash losses and liquidity mismatch.
(b) The Company has been incurring cash losses for the past three years. Although
the Company has undertaken various steps to restructure its operations and reduce costs
but continued economic slow down and depressed market condition have adversely
affected the Company’s performance. High interest cost on borrowings and accute
shortage of working capital has affected the turnover and profitability. Although the
Company has on hand pending orders approx. 35-40 crores but the Company is not in a
position to execute the same due to paucity of working capital.
3. The whole time Director of the Company in his affidavit has further affirmed that the
Company has been trying its best to infuse the funds into its operations through the sale of its
surplus assets. The Company has surplus land at its Borivali plant which it is trying to exploit
commercially and use the proceeds to fund its working capital needs and pay its creditors and
Fixed deposit holders. The Company has already executed an Memorandum of Understanding
with a developer in December 2001 for transfer of Development Rights in respect of a part of the
property. As per the terms of MOU, the entire consideration of Rs. 1900 lacs is payable over a
period of 18 months from the date of MOU. However, the said land is charged to the institutions,
namely IDBI and UTI as security for financial assistance granted by them. The Company has
submitted the restructuring proposals to the institutions and urged them to release the charge at
the earliest. IDBI is willing to consider release of the charge provided UTI agrees. The Company
has been vigorously following up with UTI for the release of charge which would enable the
company to meet its various financial commitments including its depositors.
In view of the difficulties faced by the Company in repayment of 1st instalment to deposit
holder and the steps taken by the Company towards repayment of the same. The Whole time
Director in his affidavit has prayed that the Company may be given at least 9 months time i.e.
upto 31st March, 2003 for the payment of 1st instalment to fixed deposit holders. In the said
affidavit, it has also been affirmed by Whole time Director that for the payment of remaining
instalments including the 2nd instalment which is due for repayment upto 30.6.2003, the
Company will not seek any further extension of time.
4. Keeping in view the difficulties explained by the Company, the steps taken by it to infuse
the funds through the sale of its surplus assets and the undertaking given by the Whole time
Director of the Company in his affidavit dated 11.6.2002 to the effect that the Company will not
seek further extension of time in repayment of remaining instalments, the Company vide this
Bench’s letter dated 14.6.2002 was directed to:-
(a) Send notices to 500 depositors intimating them about the gist of the scheme seeking
extension of time by another 9 months i.e. upto 31.3.2003 for repayment of first
instalment of deposit to depositors under various categories of deposits as per the scheme
approved by this Bench vide order dated 9.7.2001.
(b) To advertise the same in English and in vernacular language in two newspapers; and
(c) To file an affidavit of compliance by 25.6.2002.
5. In compliance with the above directions of this Bench, Shri G.D. Bhingarkar, Whole
time Director of the Company has filed an affidavit dated 21.6.2002 affirming that:-
(a) The Company has issued an advertisement in two newspapers viz. Free Press Journal and
Nav Shakti on 18th June and 21st June, 2002 respectively; and
(b) It has sent notices to 512 depositors under U.P.C. intimating them about the intention of
the Company in seeking extension of time by another 9 months in repayment of 1st
instalment.
6. For considering the above request of the Company, a hearing was held on 23.7.2002
wherein besides the authorised representatives of the Company, 71 depositors either in person or
through their relatives were also present. In the said hearing Shri Milind G. Rege, Company
Secretary of the Company while reiterating the submissions made by the Company in its
application which necessitated the Company for seeking further extension of time by another 9
months towards repayment of 1st instalment as per the schedule approved by this Bench vide
order dated 9.7.2001, also explained the various steps taken by the Company towards infusion of
funds through the sale of its surplus land. He also submitted that the funds so collected by the
Company will be utilised for meeting working capital requirements of the Company and
payment to its creditors and fixed deposit holders. The Company is seeking extension of time for
further 9 months only in respect of repayment of 1st instalment. The remaining instalments shall
be paid by the Company as per the time bound schedule approved by this Bench vide order dated
9.7.2001. He assured that in future the Company will not seek further extension of time for
making payment in respect of remaining instalments.
Among the depositors present either in person or through their relatives, some of them were
of the view that the request of the Company for further extension of time by another nine months
for payment of 1st instalment as per schedule approved by this Bench need not be acceded to.
The depositors requested that since they have put in their hard earned money and now they are in
urgent need of funds, the Company may be directed to make repayment of their deposits along
with interest at an early date.
7. In the said hearing, keeping in view the difficulties explained by the depositors present in
person or through their relatives, although I directed the Authorised Representative of the
Company to make repayment of deposits upto Rs. 10,000 within one month and beyond Rs.
10,000 within two months alongwith interest to depositors present in person or through their
relatives but having regard to the fact that the repayment of entire amount of deposit alongwith
interest to all the deposits present in person or through their relatives will tantamount to
deviation from the scheme which has been approved by this Bench vide order dated 9.7.2001 and
will also lead to discrimination to depositors who are not present at the time of hearing. Further
the proposed sale of land is yet to be effected and at present the Company is also facing accute
shortage of funds. Even if the order is passed for repayment of entire amount of deposit
alongwith interest in respect of depositors present in person or through their relative at the time
of hearing, the Company will not be in a position to comply with said order.
Therefore it would be appropriate to direct the Company to make repayment of 1st instalment
to applicant depositors who are present at the time of hearing with in one month from the date of
passing of the order. The Whole Time Director of the Company vide affidavit dt. 1.8.2002 has
also given an undertaking to this effect that the Company will pay the first instalment to all the
fixed depositors who were present at the time of hearing held on 23.7.2002 on verification of
their signatures, within a period of one month from the date of order.
8. Taking into consideration the difficulties explained by the Authorised Representative of
the Company in repayment of 1st instalment to deposits under various categories as per
schedule approved by this Bench vide order dated 9.7.2001, the interest of the depositors and the
public at large and pursuant to the provisions of Section 58A (9) of the Companies Act, 1956,
M/s. Cable Corporation of India Limited is directed as under:-
(a) Time is extended by another 9 months i.e. upto 31.3.2003 for repayment of 1st instalment
to depositors under various categories as per schedule approved by this Bench vide order
dated 9.7.2001.
(b) In respect of repayment of 1st instalment, the Managing Director of the Company shall
file an affidavit of compliance on 7.4.2003 with the Registrar of Companies, Maharashtra
with a copy to Bench officer of this Bench.
(c) The Company shall not seek in future any extension of time for making repayment of
deposits in respect of remaining instalments of deposits as approved vide this Bench’s
order dated 9.7.2001 and
(d) The Company shall make the repayment of 1st instalment of deposit to depositors present
in person at the time of hearing within one months from the date of receipt of this order
and shall file an affidavit of compliance within one week thereafter with the Registrar of
Companies, Maharashtra with a copy to Bench officer of this Bench.
(e) A copy of this order should be forwarded by the Company to all the depositors with in 15
days from the date of receipt of this order and file the affidavit of compliance within one
week thereafter with the Registrar of Companies, Maharashtra with a copy to Bench
officer of this Bench.
(f) The other terms and conditions stipulated in this Bench’s order dated 9.7.2001 shall
remain unchanged.
Ordered Accordingly.
