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The Bimal kothari v. Unitech Ltd. case came into the picture when the interest of the depositors was under the stake because the financial health of the company was in the doldrums. The case was presented by the petitioners for asking the forum to ask the respondent company to pay off their money as soon as possible whereas the respondent company files an application for the enhancement of time for paying off the money stating that these depositors do not fall under the definition of depositors as per the Companies Act, 2013. Therefore, the court opined that every deposit accepted under either new or old Companies Act falls within the definition of deposit. The court in Bimal kothari v. Unitech Ltd. reiterated that the new Companies Act does not supersede the old Companies Act; however, it provides more tooth and power to the old Act.
Facts of the case
The petition in the Bimal Kothari v. Unitech Ltd. case is filed on the behalf of various applications (more than 300) received from various depositors under Section 73(4) of the Companies Act, 2013. The deposits received from the public are matured and are needed to be paid back by the respondent company. At the time of repayment, the respondent company denies the repayment stating that it is facing a lack of funds. The respondents initially approached the Company Law Board under Section 74(2) of Companies Act, 2013 for the extension of time to repay. Petitioners alleged before the tribunal that respondents are not paying back their money and living a life full of luxuries. Most of the depositors are either senior citizens or facing a problem of the financial crisis, therefore, they are approaching the forum for the speedy recovery of their money along with the interest.
- Whether the depositors whose deposits are made under Companies Act, 1956 have a right for raising the grievances before NCLT under Section 73(4) of Companies Act, 2013? / Whether the petitioners fall under the definition of ‘depositors’ as per Companies Act, 2013.
- Whether the respondent company should be provided extension of time for the repayment of the money.
- Whether the new Companies Act of 2013 supersedes the old Companies Act of 1956.
- Whether the NCLT has the inherent power to deal with the issue or it should be presented before the Civil Courts.
- Whether respondent company is liable under Section 420 of the Indian Penal Code, 1860.
Contentions from both the sides
- The learned counsel for the petitioner contended that the respondent’s application for dismissal on the basis of maintainability is not a valid ground.
- He also contended that the new Companies Act of 2013 does not supersedes the old Companies Act of 1956.
- The learned counsel for respondent contended that the doors of the NCLT are closed for all those depositors who have made their investment under the Companies Act, 1956 and not invited, accepted or renewed any deposit on the basis of new Companies Act of 2013.
- The counsel further contended that these depositors do not fall under the definition of “depositors” under Companies (Acceptance of Deposits) Rules, 2014.
- He also asks to seek remedy to respondent company for the enhancement of time for the repayment of money because the financial health of the company is at stake.
Summary of the Judgement
The NCLT in Bimal Kothari v. Unitech Ltd.is of the opinion that there was no merit in respondent’s application and a petition presented by the aggrieved depositors is valid and maintainable. The court allowed all the petitions under Section 73(4) and asked the respondent company to pay off all the dues of the investors along with the interest. The forum agrees with the contention of the counsel for the petitioner that the term every deposit would mean and include all previous deposits accepted by the company. The court asked the respondent company to sell their six parcels of land in Kochi, Hyderabad, Chennai, and Maharashtra and clear all the dues of the investors. The court ordered the office of ROC to take appropriate steps so that no investor can leave the boundaries of the country till the time they pay the entire amount along with the interest to the depositors. The forum is further of the opinion that the counsel for respondents is trying to complicate the case through a web of legal complexities and the NCLT has equitable jurisdiction for hearing the case and is vested with adjudicatory rights. The forum agrees with the respondent’s counsel that no case of Section 420 Indian Penal Code, 1860 arises because the respondent company never intended to cheat the depositors. Therefore, the respondent’s application is dismissed with costs of Rs. 25,000/- paid to Prime Minister’s Relief Fund.
The decision laid down by NCLT was justified with appropriate reasoning that coming up of the new Companies Act does not fully revoke the old Companies Act however it provides more power to the old act and every deposit accepted before or after the commencement of Companies Act, 2013 is taken into consideration. The court did justification by not keeping the interests of the poor investors at stake and ordered the respondent company to pay back their money immediately. The decision by the NCLT was in uniformity with several other cases in the same regard. Although Section 73 regulates the invitation, acceptance, and renewal of deposits after the commencement of Companies Act, 2013 but Section 73(4) assigns the power to approach the tribunal if the company fails to repay the deposit.
In the present case, the honourable court is of the opinion that the term “every deposit” comprises of all new and old deposits accepted by the company. The sustainability of the petition pursuant to Section 73(4) for failure to repay public deposits after the date of maturity cannot be challenged on the grounds that the term ‘deposits’ means ‘deposits’ under the Companies Act, 2013. Any company accepting deposits shall work under the preview of both old and new Companies Act specifically in the context of deposits.