Escrowed interest on unclaimed deposits must go to the statutory fund; RBI communications did not override Companies Act transfer rules.

The Court held that RBI communications issued in the context of inspection and pending litigation did not amount to binding directions conferring a right to retain interest on escrowed unclaimed matured deposits, and no real inconsistency was shown between Chapter IIIB of the RBI Act and the Companies Act transfer provisions. It further held that the interest accrued on the escrow account was payable to the Investor Education and Protection Fund, because the statutory scheme under the Companies Acts covers both the principal unclaimed deposits and the accrued interest. The writ petitions therefore failed, and the principal together with accrued interest was directed to be transferred to the statutory fund, subject to permissible court-related deductions.

---

---

Issues: (i) Whether the Reserve Bank of India's communications could be treated as binding directions governing the petitioner's right to retain interest earned on the escrowed deposits, and whether Chapter IIIB of the Reserve Bank of India Act, 1934 overrides the Companies Act provisions in the present context; (ii) Whether the interest accrued on the escrow account, maintained pursuant to the Court's order in respect of unclaimed matured deposits, was payable to the Investor Education and Protection Fund.

Issue (i): Whether the Reserve Bank of India's communications could be treated as binding directions governing the petitioner's right to retain interest earned on the escrowed deposits, and whether Chapter IIIB of the Reserve Bank of India Act, 1934 overrides the Companies Act provisions in the present context.

Analysis: The non obstante clause in Section 45Q of the Reserve Bank of India Act, 1934 gives Chapter IIIB overriding effect where there is real inconsistency, but the provisions relied upon do not deal with interest on escrowed amounts held under a judicial order for eventual transfer to another statutory fund. The communications issued by the Reserve Bank of India were treated as replies to queries in the context of inspection and the pending litigation, not as directions under Chapter IIIB determining the fate of the disputed interest. No statutory inconsistency was found between Chapter IIIB of the Reserve Bank of India Act, 1934 and the transfer provisions in the Companies Act.

Conclusion: The petitioner's plea that the Reserve Bank of India communications conferred a right to retain the disputed interest was rejected.

Issue (ii): Whether the interest accrued on the escrow account, maintained pursuant to the Court's order in respect of unclaimed matured deposits, was payable to the Investor Education and Protection Fund.

Analysis: Section 205C of the Companies Act, 1956 and Section 125 of the Companies Act, 2013 specifically cover matured deposits with companies and the interest accrued on such amounts. The Court held that the escrowed sum represented unclaimed amounts that had to be transferred along with the accrued interest, and that permitting the petitioner to retain the interest would amount to taking advantage of its own default in withholding sums due to the statutory fund. The statutory scheme also provides for refund to rightful claimants from the fund, which reinforces that the fund is the lawful repository of both principal and interest pending claim.

Conclusion: The interest accrued on the escrow account was held payable to the Investor Education and Protection Fund.

Final Conclusion: The writ petitions failed on merits, and the escrowed principal amount together with the entire accrued interest was directed to be transferred to the statutory fund, after permissible deductions for court-related charges, within the time fixed by the Court.

Ratio Decidendi: Where a statute expressly requires transfer of unclaimed matured deposits together with accrued interest to a statutory fund, a party cannot retain the interest on the basis of an administrative communication when no true inconsistency exists with any allegedly overriding regulatory statute.

---