TaxTMI 
TaxTMI 
2006 (12) TMI 241
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....rised share capital of Rs. 3 crores divided into equity shares of Rs. 100 each. 3. The capital clause of the memorandum of association of the company provides that it shall be a non-banking financial loan company conducting higher purchase business subject to the directions issued by the RBI but shall not carry on any banking business as defined in the Banking Regulation Act, 1949. 4. A team of RBI officers inspected the books of account of the company in July, 1996, with reference to its financial position as on 31-3-1995 and noticed that the company had accepted deposits to the tune of Rs. 692.84 lakhs at the relevant time under various schemes, i.e., daily/monthly/ recurring and fixed deposit scheme but had invested only a sum of R....
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.... National Bank, South Gandhi Maidan, Patna, has been nominated as the company's banker where certificates are to be kept for safe custody. The explanation for delayed submission of balance-sheet together with the balance-sheet up to the financial year 1995, was submitted and request was made to grant further time to comply with the 1987 Directions. The RBI considered the contents of the aforesaid letter dated 17-9-1996, annexure B to the counter affidavit but was not satisfied with the explanation contained therein. For failure to comply with the 1987 Directions the RBI issued show-cause notice dated 31-10-1996, annexure C to the counter affidavit calling upon the company to show cause within 15 days of its receipt as to why the company sho....
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....d by the company dated 6/17-12-1996, passed prohibitory order dated 15-7-1997, annexure 3 restraining the company from accepting deposit with immediate effect from any person, including the existing depositors in any form whether by way of subscription/instalment to any scheme floated by the company or by way of renewals under any such schemes/deposits or otherwise as the investment of the company in approved Government securities was only to the extent of 12.41 per cent of deposit liability as on 31-3-1996, against the required 70 per cent to be maintained under the 1987 Directions. 7. Having received the restraint order dated 15-7-1997, annexure 3, the company filed representations dated 21/25-7-1997, annexures G and G/1 to the counter....
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....der the Act. (ii)Realizable value of assets was Rs. 2,710.34 lakhs as against the total outstanding liabilities of Rs. 3,419.01 lakhs. (iii)Public deposits were Rs. 3,220 lakhs as on 31-3-1997. (iv)Company violated the provisions of 1987 Directions as the company invested Rs. 377.90 lakhs in its group companies. (v)Company continued to disobey the directions contained in prohibitory order dated 15-7-1997, as it failed to submit its return. 9. In the light of the aforesaid findings of the inspection team of the RBI a show-cause notice dated 23-6-1998, was served on the company calling upon them to show cause as to why their application for registration dated 3-7-1997, filed under section 45-IA be not rejected. It appears, no r....
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....d by the inspection team of the RBI when they examined the books of account of the company with their bankers, Punjab National Bank, South Gandhi Maidan, Patna. The paragraph 7 of the company petition read with balance-sheet of the company, annexure 1/A to the main petition itself indicated that the financial condition of the company was not sound, as net owned fund of the company was negative at Rs. 708.67 lakhs. 10. Although the company has filed counter affidavit but has not been able to dispel the aforesaid assertions of the RBI regarding its financial position as also the fact that it could not comply with the directions/scheme formulated by the Company Law Board, Calcutta, for repayment to its depositors together with the fact that....
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....ted that the manner in which the company has calculated its net owned fund as Rs. 29.89 lakhs is wholly contrary to the statutory provisions as also the RBI Directions including the manner in which net owned fund is required to be calculated. It is further submitted that there has been no reply on behalf of the company to the assertion of the RBI that after inspection of the bank accounts, 1,160 instances of bouncing of cheques issued by the company was noticed by the inspection team of the RBI within a short span of two months and thus there should be no difficulty to conclude that the company is in a financial mess and it is in public interest that it should be wound up at an early date as it has already been prohibited by the RBI from re....