ORDER
K.C. Ganjwal, Member
1. M/s Shamken Spinners Limited (hereinafter called “the Company”) was incorporated on 28th day of December, 1990 with the Registrar of Companies, Uttar Pradesh.
2. The Registered Office of the Company is situated at 94 KM Stone, Delhi-Mathura Road, Khasra No. 316 & 318, Village Kotwan, Disstt. Mathura, (U.P) and the Corporate Office of the Company is situated at Shamken House, B-1/A-20, Mohan Co-operative Industrial Estate, Mathura Road, New Delhi – 110 044.
3. The main objects of the Company for which it was established are :
a. To carry on the business as traders, dealers, wholesalers, retailers, combers, finishers, spinners, weavers, knitters, dyers and manufacturers of filament yarns, textured twisted and other synthetic, yarns and fabric synthetic, cotton, silk, rayon, nylon, wool and other natural, synthetic and/or fibrous substances including staple fibre, polysters, polyacry-lonitrile, polyvinyl, acetate elastomers and resins of all types, grades and copolymer formulation and form of as processed goods including polythene.
4. M/s Shamken Spinners Limited, which has collected public deposits under Section 58A of the Companies Act, 1956 started defaulting in repayment of the deposits on maturity due to acute shortage of funds for the working capital requirements of the company and high rate of interest on Loans availed by the company from various banks and institutions. Both this resulted in mismatch of funds and therefore the company was not able to meet its liabilities.
5. The company has invited deposits since 1997 from public to meet its long-term working capital requirement. The company has repaid the matured deposits all October 2003. It is further mentioned that out of total deposits of Rs. 253.01 lakhs as on 31st March 2004 accepted by the Company, a sum of Rs. 89.51 lakhs are already matured and a sum of Rs. 163.50 lakhs are yet to be matured. The details are as under:-
6. The position of deposits as on 31/03/2004 are as follows :-
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Category> No. of Cases Amount (in Rs. /lacs)
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0-5000 77 4.35 5001-10000 285 28.14 10001-20000 454 77.13 20001-25000 172 42.71 25001-50000 241 83.88 50001 & above 15 16.80
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Total 1244 253.01
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7. Position of Deposits yet to be matured as on 31st March 2004 :
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Category No. of Cases Amount (in Rs. /Lacs) 0-5000 39 1.95 5001-10000 186 18.24 10001-20000 306 51.99 20001-25000 112 27.80 25001-50000 166 57.82 50001 & above 6 5.70
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Total 813 163.50
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8. Position of Matured Deposits as on 31st March 2004
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Category No. of Cases Amount (in Rs. /Lacs) 0-5000 38 2.40 5001-10000 101 9.90 10001-20000 148 25.14 20001-25000 60 14.91 25001-50000 75 26.06 50001 & above 9 11.10
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Total 431 89.51
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9. Thus, the outstanding position of the fixed deposits as on 31.03.2004 is Rs. 253.01 lakhs and the numbers of depositors are 1244. The Company on its own stopped accepting deposits from public w.e.f. October 2003.
10. Since there was a default in payment of Fixed Deposits. The company has filed an application to the Company Law Board under the provisions of Section 58 A of the Companies Act 1956 praying for approval of the scheme of repayment of all the deposits matured or yet to be matured in near future. The Company Law Board has also received complaints for non-payment of fixed deposit. The company has furnished the reasons for default and also its plan of action to clear all the matured deposits and also its proposal to pay off deposits which would mature for repayment in future.
11. Several hearings were held from time to time. In the hearing held on 17th May 2004 the following options furnished by the Company were discussed. These options are as under :-
OPTION -I
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Repayment No. of Total Within Within Within Within
Cases Amount 24 36 48 60
Months Months Months Months
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0-5000 77 4.35 100% - - - 5001-10000 285 28.14 50% 50% - - 10001-20000 454 77.13 30% 30% 40% - 20001-25000 172 42.71 25% 25% 25% 25% 25001-50000 241 83.88 20% 20% 30% 30% 50001 & above 15 16.80 10% 15% 25% 50%
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Note:-
1. Interest upto the date of maturity will be paid at the contracted rate and interest after the date of maturity till the date of actual payment will be @ 4% per annum.
2. Interest upto the date of maturity and till the date of actual payment will be paid alongwith the last instalment.
3. Hard-ship cases like old age, marriage of the daughter, hospitalization etc. will be Rs. 4.00 lacs per quarter.
OPTION – II
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Repayment No. of Total Within Within Within Within
Cases Amount 24 36 48 60
Months Months Months Months
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0-5000 77 4.35 100% - - - - 5001-10000 285 28.14 50% 50% - - - 10001-20000 454 77.13 20% 20% 30% 30% - 20001-25000 172 42.71 20% 20% 20% 20% 20% 25001-50000 241 83.88 15% 15% 20% 25% 25% 50001 & above 15 16.80 10% 15% 20% 25% 30%
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Note:-
1. Interest upto the date of maturity will be paid at the contracted rate and interest after the date of maturity till the date of actual payment will be @ 4% per annum.
2. Interest upto the date of maturity and till the date of actual payment will be paid alongwith the last instalment.
3. Hard-ship cases like old age, marriage of the daughter, hospitalization etc. will be Rs. 1.50 lacs per month.
12. The company was directed to re-draw the scheme for three years and also indicate how much money they has asked from financial institutions (Total restructuring package).
13. In the hearing held on 6th July, 2004, the Company representative submitted a revised scheme for 3 years which is as under :-
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Repayment Repayment Repayment Repayment Amount(Rs.) Ist year IInd year IIIrd year
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0-5000 50% 50% - 5001-10000 25% 35% 40% 10001-20000 25% 35% 40% 20001-25000 25% 30% 45% 25001-50000 25% 30% 45% 50001 & Above 20% 30% 50%
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Note:-
1. Interest upto the date of maturity will be paid at contracted rate and interest after the date of maturity till the date of actual payment will be @ 4% per
annum.
2. Interest upto the date of maturity and till the date of actual payment will be paid along with the last instalment.
3. Hard-ship cases like old age, marriage of daughter, hospitalization etc. will be Rs. 6 lakhs per quarter.
14. The above three years scheme was discussed detail and the company was directed to publish the Repayment Schedule Scheme indicating their parameters mentioned above and publish the gist in the two leading news papers in the place where the registered office of the company is situated, one in English and other in Hindi language. The details of the scheme are as under:-
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Repayment Repayment Repayment Repayment Amount (Rs.) 1st Year 2nd Year 3rd Year
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0-5000 50% 50% - 5001-10000 25% 35% 40% 10001-20000 25% 35% 40% 20001-25000 25% 30% 45% 25001-50000 25% 30% 45% 50001 & above 20% 30% 50%
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The interest shall be paid at the contracted rate up to the date of maturity and thereafter @ 4% p.a. on the principal amount outstanding. The interest, both pre and post maturity period will be paid along with the last installment. An amount of Rs. 6.00 lacs per quarter will be kept for hardship cases like Old age, Marriage of daughter, hospitalization etc.
15. In compliance to the above directions the Company has published the gist of scheme in the following two newspapers on 14.07.2004.
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S.No. Name of the Newspaper Edition Place
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01 The Pioneer English Lucknow 02 Swatantra Bharat Hindi Lucknow
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16. The company in its affidavit dated 21st September 2004 has stated that it had received 8 replies in response to the advertisement. All the 8 depositors have given their consent to the scheme.
17. It is stated by the Company that the total liability of the company towards fixed deposits is to the tune of Rs. 253.01 lakhs. According to the company, high interest cost on the credit facilities given to the company by various Banks and institutions and acute shortage of working capital has resulted in mismatch of funds and therefore the company was not able to meet its liabilities. Therefore, according to the Company, it is not only capable of repaying all the deposits, it is also interested in discharging its liability towards fixed deposits. However, in view of the foregoing reasons, such repayment would be possible over a period of time and not on immediate basis and as and when the deposits matured for repayment. Accordingly, prayed that a scheme should be sanctioned to enable the Company to pay the deposits in a phased manner, over a period of time.
18. On 6th September, 2004, a hearing was held to discuss the scheme and to consider the objections/suggestions received. After detailed discussions the representative of the company was directed to file affidavit of Managing Director by 20th September 2004 stating that-
(i) the interest will be paid with each instalment
(ii) Interest after maturity to be @ 5% per annum
(iii) Hard-ship cases amount Rs. 3 lakhs per month
(iv) scheme to start from 1st November 2004.
Shri H.B. Chaturvedi, Managing Director of the company has filed an affidavit agreeing to the above conditions and have prayed to sanction the scheme at an early date.
19. I have considered the submissions made by the representative of the company. Having regard to the interest of the Company, the interest of the depositors and also public interest at large, I order as follows :-
(i) The interest payable will be the contracted rate upto the date of maturity and at 5% per annum after the date of maturity.
(ii) All deposits upto Rs. 5000/- payment will be made within two years of maturity at 50% in the first year and 50% in the second year. The interest for both pre and post maturity period be paid along with each installment.
(iii) All deposits of Rs. 5001/- to Rs. 10000/- shall be paid within three years from the date of maturity at 25% in the first year, 35% in the second year and balance 40% in the third year. The interest for both pre and post maturity period will be paid along with each installment.
(iv) All deposits of Rs. 10001/- to Rs. 20000/- shall be paid within three years from the date of maturity at 25% in the first year, 35% in the second year and balance 40% in the third year. The interest for both pre and post maturity period will be paid along with each installment.
(v) All deposits of Rs. 20001/- to Rs. 25000/- shall be paid within three years from the date of maturity at 25% in the first year, 30% in the second year and balance 45% in the third year. The interest for both pre and post maturity period will be paid along with each installment
(vi) All deposits of Rs. 25001/- to Rs. 50000/- shall be paid within three years from the date of maturity at 25% in the first year, 30% in the second year and balance 45% in the third year. The interest for both pre and post maturity period will be paid along with each installment.
(vii) All deposits of Rs. 50001/- and above shall be paid within three years from the date of maturity at 20% in the first year, 30% in the second year and balance 50% in the third year. The interest for both pre and post maturity will be paid along with each installment.
(viii) The above scheme will be applicable to all depositors whether over due or yet to mature and whether any application has been filed before the Company Law Board or not. (ix) The scheme shall be effective from the 1st Day of November, 2004.
20. The Company will adhere to the following guidelines in implementing the scheme :-
a) While repaying the deposits as per the scheme above, all individual deposits will be treated as such and shall not be clubbed if any depositor holds more than one deposit for the purpose of arriving at the amount as fixed in the scheme.
b) The payment shall be made in the order of date of maturity i.e. deposits which have matured earlier shall be paid before deposits maturing at a later date.
c) The repayments should be spread over all the months in each year.
d) Notwithstanding the aforesaid scheme, the company will be at liberty to make repayment of deposits along with the interest thereon before the stipulated time, if funds are available.
e) The Company shall make repayment of deposit and interest according to the above scheme by cheque/demand draft/pay order, which shall be sent by registered post/couriers/speed post to the respective depositors.
f) The Company will file an affidavit once in three months on the state of repayment deposits, the first on 1st February 2004 with Company Law Board, Northern Bench, New Delhi with copy to the Registrar of Companies, Uttar Pradesh & Uttranchal, Kanpur and also Department of Company Affairs (I.P. Cell), Shastri Bhawan, New Delhi.
g) During the hearing the Company had undertaken to keep a sum of Rs. 3.00 lakhs per month for payment towards hardship cases like old age, senior citizen, medical, marriage etc. in addition to the amount needed for repayment as per the schedule of repayment. To consider the hardship cases, I hereby appoint a committee consisting of Shri Amit Chaturvedi, Director of the Company or his nominee, Sh. K.L. Mangtani, Bench Officer, Company Law Board and Sh. D.D. Pandey, Advocate which will consider applications, received from depositors expressing hardships. This committee will meet every calendar month to consider such cases and the amount so decided by the Committee shall be disbursed within 21 days thereafter.
21. To ensure that this payment schedule is kept up, Sh. H.B. Chaturvedi, Managing Director shall file an affidavit of undertaking that the above scheme shall be implemented without fail, with a copy to the Registrar of Companies, Uttar Pradesh & Uttranchal, Kanpur and Department of Company Affairs (I.P. Cell), New Delhi within fifteen days from the receipt of this order.
22. Any failure to comply with this order shall attract penal provisions contained in Section 58A (10) of the Companies Act, 1956 and Section 274 (1) (g) of the Companies Act, 1956.
23. The Company shall within three weeks, of release of this order send a copy of the operative portion of this order to all the depositors and file an affidavit of compliance within one month.
24. A copy of this order shall be sent by the Bench Officer to the Secretary, Department of Company Affairs, New Delhi and I.P. Cell, Department of Company Affairs, New Delhi for information and necessary action.
25. A copy of this order shall be sent to the Registrar of Companies, Uttar Pradesh & Uttaranchal, Kanpur for taking necessary action in case of non-compliance of this order.
Signed on this 30th days of September 2004 at New Delhi.