RBI Act repayment powers limited to depositor deposits; secured bank dues, section 10F challenge, and winding-up stay issues

Section 45QA of the RBI Act applies only to repayment of deposits accepted by an NBFC, so directions issued under it could not extend to amounts due to consortium banks; the banks' secured creditor remedies were preserved. An appeal under section 10F of the Companies Act lies only on a genuine question of law, so a challenge based on the commercial terms, viability, interest rate or payment mode of a repayment scheme was not maintainable. A stay of winding-up proceedings under section 45MC was unsustainable where it rested only on pending connected proceedings that no longer had bearing on the statutory grounds for winding up; the refusal to appoint a provisional liquidator remained undisturbed.

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Issues: (i) Whether the Company Law Board, while acting under section 45QA of the Reserve Bank of India Act, 1934, could issue directions affecting the liability of the non-banking financial company towards its secured banks. (ii) Whether an appeal under section 10F of the Companies Act, 1956 could succeed on a challenge to the repayment scheme framed by the Company Law Board. (iii) Whether the stay of winding-up proceedings under section 45MC of the Reserve Bank of India Act, 1934 was justified.

Issue (i): Whether the Company Law Board, while acting under section 45QA of the Reserve Bank of India Act, 1934, could issue directions affecting the liability of the non-banking financial company towards its secured banks.

Analysis: Section 45QA empowers repayment directions only in respect of deposits accepted by a non-banking financial company. The term 'deposit' under section 45-I(bb) excludes amounts received from banks and specified financial institutions. Amounts advanced by the consortium banks were therefore outside the scope of section 45QA. The Board's order also preserved the banks' right to pursue remedies before the competent forum as secured creditors.

Conclusion: The repayment directions under section 45QA did not extend to the banks' dues, and the banks' secured rights were not unlawfully prejudiced.

Issue (ii): Whether an appeal under section 10F of the Companies Act, 1956 could succeed on a challenge to the repayment scheme framed by the Company Law Board.

Analysis: An appeal under section 10F lies only on a question of law arising out of the Company Law Board's order. A challenge directed merely to the commercial viability of the repayment schedule, the rate of interest, the mode of payment, or the financial ability of the company involves appreciation of facts and financial material, not a question of law. The order was neither shown to be perverse nor unsupported by material.

Conclusion: The challenge to the repayment scheme was not maintainable as a question of law, and the appeal on that ground failed.

Issue (iii): Whether the stay of winding-up proceedings under section 45MC of the Reserve Bank of India Act, 1934 was justified.

Analysis: The stay was founded only on the pendency of the registration appeal and the proceedings under section 45QA. Those matters had attained finality. In any event, a winding-up petition based also on inability to pay debts and public interest could not be kept in abeyance merely because allied proceedings were pending. The refusal to appoint a provisional liquidator was left undisturbed because no case for that relief was made out at that stage.

Conclusion: The order staying the winding-up proceedings was unsustainable and was set aside, while the refusal to appoint a provisional liquidator was maintained.

Final Conclusion: The challenge by the secured bank and the company failed, but the Reserve Bank succeeded in obtaining revival of the winding-up proceedings, with limited interim protection continued for the company's disbursements pending further orders.

Ratio Decidendi: Section 45QA is confined to repayment of depositor deposits and cannot be used to regulate a company's liability to banks, an appeal under section 10F lies only on a genuine question of law, and winding-up proceedings under section 45MC cannot be stayed merely because connected proceedings are pending once they have no bearing on the statutory grounds invoked.

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