Friday, May 29, 2015

CLB grants 30 days’ time to ‘Unitech Ltd.’ for repayment of deposits; appoints committee to monitor repayment


Companies Act: Where Unitech Ltd. failed to repay matured FDs despite making profits yet it wanted to reschedule payment thereof, it was to be directed to repay the deposits as rescheduling of deposits was not allowed under new Companies Act, 2013 and, accordingly, directed the ‘Unitech Ltd’ to repay deposits within 30 days.

Facts:


Unitech Ltd. defaulted in repaying matured fixed deposits even when it had made profits. It made no serious effort in clearing the deposits of though it wanted to reschedule the repayment. It approached Company Law Board to grant extension of time for repayment of deposits.

The Company Law Board held as under:

Companies Act, 2013 mandates repayment of all deposits collected within the ambit of repealed Companies Act, 1956 on or before 01.04.2015, notwithstanding the fact whether they have matured or premature. 30 days’ time was to be granted to Unitech Ltd. to clear all matured deposits alongwith interest @ 12%.

Further, Committee would be appointed to ascertain progress of the company in making repayment to the depositors.- UNITECH LTD., IN RE [2015] 57 TAXMANN.COM 423 (CLB - NEW DELHI)

Editor’s comment:

The Companies Act, 2013 (‘the Act’) was enforced with effect from April 1, 2014. A company which has accepted deposits prior to commencement of Companies Act, 2013 has to repay the same within one year from the commencement of the Act, i.e., upto 31.03.2015 or on the due date of such payments, whichever is earlier.

Any company failing to repay the deposit within aforesaid time-limit shall be liable to pay minimum fine of one crore rupees which may be extended upto ten crores. Every officer of the company who is in default shall be liable to imprisonment which may be extended upto 7 years plus a fine of upto 2 Crores.

However, Company Law Board, after considering the financial position of the Company, may grant extension of time for repayment of deposits. In case of Jaiprakash Associates Ltd., [2015] 56 taxmann.com 212 (CLB - New Delhi) the CLB had given 30 days’ time to the applicant-company to repay all deposits as company was making bona fide efforts in making repayments to the depositors. In the instant case applicant (Unitech Ltd.) wanted to reschedule the repayment of deposits but under the Act there is no provision to reschedule repayment of deposits.
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