Winding up of a non-banking finance company justified where repayment defaults, registration refusal, and deposit restrictions persist.

A non-banking financial company may be wound up under section 45MC of the Reserve Bank of India Act, 1934 where it persistently defaults in repaying matured deposits, fails to comply with repayment directions, and remains unable to meet liabilities. Refusal of registration under section 45-IA, coupled with a prohibition on accepting deposits, supports the finding that the company is disqualified from carrying on non-banking financial business. On these facts, the continued operation of the company was treated as detrimental to depositors and public interest, and winding up was held to be justified.

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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 on the grounds of inability to pay debts, disqualification to carry on non-banking financial business, prohibition on accepting deposits, and detriment to public interest or the interest of depositors.

Analysis: The respondent company had failed to comply with orders of the Company Law Board directing repayment of matured deposits, and only partial compliance was shown in respect of some depositors. Its application for registration under section 45-IA of the Reserve Bank of India Act, 1934 had been rejected, resulting in disqualification to continue the business of a non-banking financial institution. The record also showed that the company had been prohibited from accepting deposits, and the materials placed before the Court indicated persistent default and inability to meet liabilities. These circumstances brought the case within clauses (a), (b), (c) and (d) of section 45MC.

Conclusion: The conditions for winding up were satisfied and the petition was maintainable.

Ratio Decidendi: Where a non-banking financial company fails to comply with repayment directions, is refused registration under section 45-IA, is prohibited from accepting deposits, and its continuance is detrimental to depositors or public interest, winding up under section 45MC is justified.

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