TaxTMI 
TaxTMI 
1994 (5) TMI 165
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....he financial sector of economy. It is not only the trading concerns dealing exclusively in finance and investment but also basically trading and industrial con- cerns which need money and they allure the public to make deposits with them for the purpose of obtaining finance for their other activities. The gambit always is to make rosy promises of high yield on the deposit/ investments invited from the public with, apart from normal promised interest/dividend, various other incentives thrown in so as to give an attractive but dubious picture of the overall profit accruing to such investors. It is high time that the authorities concerned with the enforce- ment of relevant legal provisions take stringent and prompt action in the matter. 2. ....
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....of the Act, read with Regulation 51 of the MRTPC Regulations, 1991 was issued to the respondent. 3. In reply the respondent disputed the allegations of any unfair trade practice on its part on the basis of the said advertisement. It has been pleaded that by virtue of latest instructions of the Government vide Notification No. DFC (COC) 56/DG(O)-89, dated 28-3-1989 hire-purchase finance companies have been authorised to accept deposits for a period up to 5 years and, thus, there is no violation of the Government instruc- tions in the matter; that under the latest instructions such companies have been authorised to pay interest at the rate of 15 per cent per annum at quarterly rests and the effective rate of interest on that basis works ou....
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....ice under the aforesaid provision of law. Some of the important questions asked by the Director General in the probe letter Ex.A-2 and respective answers given by the respondent in their letter Ex.A-3 alongwith annexures are extracted below to clear the factual matrix. Questions :(iv) A detailed statement, showing the computation of inter-est in your 'Balvikas Scheme' which gives a return of 129 per cent per annum to the depositors; (v) Since your company was incorporated on 12-2-1991, please furnish total deposits collected by you from the public under your each deposit scheme; (vi) Is the company entitled to accept deposits for 25 years ? Please give details with reference to the rules for accep-ta....
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....ew the deposit at periodic intervals. The same has been done in our press advertisement for the 'BALVIKAS SCHEME'." Answer to Q. (vii ) "No specific arrangements have been made by our company with the specific intention to repay the amount of deposit. The normal statutory measures such as maintenance of a reserve of 15 per cent of the deposits by way of liquid deposits is being adhered to. As is the normal business practice in any finance company there are adequate internal control procedures to ensure that all mature deposits are repaid promptly." 7. It is clear from the above that both in fact and in law the respondent is not entitled to keep the deposit for a continuous period of 25 years. Again there is n....
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.... or for the provisions of any services, adopts any unfair method or unfair or deceptive practice including any of the following practices, namely :- (1) The practice of making any statement, whether orally or in writing or by visible representation which,- (i)to (iii)****** (iv)represents that the goods or services have sponsorship, approval, performance, characteristics, accessories, uses or benefits which such goods or services do not have;" 8. There is little dispute that the representation in question which provides financial service with a given type of performance, uses or benefits, does not actually have such performance, uses or benefits. It is clearly prejudicial to public interest in the absence of any guarantee or ass....