Winding up of non-banking finance company justified where deposit restrictions, non-compliance, and inability to repay depositors were shown.

A non-banking financial company that was denotified from NIDHI status, lacked the required registration to continue its activity, and remained under a restraint on accepting deposits was found to have satisfied the conditions for winding up under section 45MC of the Reserve Bank of India Act, 1934. Persistent non-compliance with Reserve Bank directions, failure to repay depositors, numerous complaints, and an adverse mismatch between liabilities and assets supported the conclusion that continuance of the business was detrimental to public interest and the interests of depositors. The company's failure to file a counter-affidavit or disclose a credible repayment plan further confirmed the absence of bona fide intent to meet depositor claims, and winding up was ordered with the official liquidator appointed.

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Issues: Whether the respondent-company was liable to be wound up under section 45MC of the Reserve Bank of India Act, 1934 for statutory disqualification, prohibition on receiving deposits, inability to pay debts, and continuance being detrimental to public interest and the interest of depositors.

Analysis: The respondent-company had been denotified from NIDHI status, had not obtained the necessary registration to continue non-banking financial activity, and had been restrained by the Reserve Bank from accepting deposits for more than three months. The material before the Court also showed persistent non-compliance with the Reserve Bank directions, failure to repay depositors, numerous complaints from the public, and a large mismatch in liabilities and assets as reflected in the record. Despite repeated opportunities, the company did not file a counter-affidavit or place its proposed repayment scheme and asset particulars before the Court. The Court found that the respondent had deliberately avoided filing a reply and had no bona fide intention to disclose its financial position or meet depositor claims.

Conclusion: The statutory conditions for winding up were satisfied and the respondent-company was liable to be wound up.

Final Conclusion: The winding up petition was allowed, the company was ordered to be wound up, and the official liquidator was appointed to take charge of the company's assets and proceed in accordance with law.

Ratio Decidendi: Where a non-banking financial company is statutorily disqualified to carry on business, remains under a prohibitory order against accepting deposits, and fails to show a credible capacity or intention to repay depositors, winding up under section 45MC of the Reserve Bank of India Act, 1934 is justified in the public interest and in the interest of depositors.

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