2012 (5) TMI 1 - HC - Companies Law

Court dismisses application for interest and damages post-maturity under Companies Act

The court dismissed the application under Section 468 of the Companies Act, 1956, as it found no merit in the claims for interest on deposits after ... Company in liquidation - maturity of fixed deposits - interest on such FD - held that:- what is to be noticed is that the said deposit receipts are not issued in the name of the company-in-liquidation, but in the name of the second respondent. However there is no dispute with regard to the fact that the money for the purpose of deposit has been kept with the third respondent-bank by the company-in-liquidation. The deposit receipts were lodged with the second respondent as a compliance of the requirement for the purpose of issue of Money Lenders licence. In that circumstance, for the company-in-liquidation to carry on its business of money lending, licence should have been in force till the date of winding up. If that be the position, the company-in-liquidation was required to have the money lending licence in force till 13.03.2002, unless the company-in-liquidation had made any positive efforts to see that the company does not require the money lending licence as the activities had come to a standstill. Therefore, first or the second respondent cannot be held liable for negligence as on the date of maturity, more particularly in a circumstance when the second respondent has acted immediately on receiving the communication from the Official Liquidator pursuant to the statement of affairs which had been filed by the Directors and when the second respondent had addressed a letter dated 27.07.2009 seeking for return of the certificates. Considering that the deposits had matured much prior to the date of winding up, it is the persons who were in charge of the company as on that day who need to explain if there was any lapse in that regard and the respondents cannot be held liable. Hence, the first prayer already having satisfied by the return of the documents, the second prayer cannot be granted for the reasons stated above. - Application of official liquidator dismissed. Issues:1. Application under Section 468 of the Companies Act, 1956 for direction to surrender original Dhana Chakra deposit receipts and claim damages.2. Claim for interest on deposit after maturity and liability for damages.3. Dispute regarding liability of respondents and bank for interest and damages.4. Examination of liability of respondents in the context of deposit maturity and actions taken.5. Decision on the application's merit and dismissal.Analysis:1. The applicant sought direction under Section 468 of the Companies Act, 1956 to surrender original Dhana Chakra deposit receipts and claim damages. The first respondent handed over the original deposit receipts, rendering the first prayer infructuous. However, a memo was filed seeking interest on deposits' maturity date. The third respondent-bank objected to paying interest post-maturity due to no provision for automatic renewal, leading to a dispute on liability for interest and damages.2. The Official Liquidator argued that the company's money deposited with the third respondent-bank was in the second respondent's name for compliance purposes. The third respondent retained the amount post-maturity, leading to a claim for interest or damages against them. The Government Advocate for respondents No. 1 and 2 contended that actions predate the winding-up order, absolving them of liability.3. The third respondent-bank maintained that the deposit receipts were in the second respondent's name, binding only them contractually. The bank returned the maturity amount as per the contract, denying further liability. The court was tasked with determining the liability of respondents No. 1 and 2, or the third respondent, for interest and damages as sought by the applicant.4. The court examined Annexure-'A' detailing deposit dates and maturity periods, noting deposits were in the second respondent's name. The company-in-liquidation needed a valid money lending license till the winding-up date, necessitating deposit renewal efforts. The court found no negligence by respondents No. 1 and 2 at maturity, especially as the second respondent promptly acted on the Official Liquidator's communication.5. Ultimately, the court dismissed the application for lack of merit. With the first prayer fulfilled and no basis for holding respondents liable for interest or damages post-maturity, the court found no grounds to grant the relief sought. The judgment emphasized the need for responsible actions by company officials regarding deposit renewals and communication with relevant parties.This detailed analysis encapsulates the key legal issues, arguments presented by the parties, and the court's reasoning leading to the judgment's dismissal based on the lack of merit in the application.