S. N. Variava, J. - (1.) This Appeal is against the Judgment dated 23rd August, 1995 passed by the Calcutta High Court.
(2.) Briefly stated the facts are as follows: The Respondents are an Investment Company. The Reserve Bank of India had issued certain directions to them. The Respondents had challenged the authority and power of the Reserve Bank of India to issue such directions. That challenge ultimately culminated in this Court. By the Judgment reported in (1992) 2 SCC 343 Peerless General Finance and Investment Co. Limited vs. Reserves Bank of India this Court held that the Reserve Bank of India had authority and power to issue direction in order to provide stable, identifiable and monitorable method of operation. This Court held that such directions would ensure security to the depositors at all times and also make the account of the company accurate, accountable and easy to monitor. This Court held that the directions given by the Reserve Bank of India were just, fair and reasonable not only to the depositors but, in the long run, to the very existence of the Respondent- Company and its continued business itself. One of the directions was that the depositors monies must be shown, in their balance sheets, as a "liability" instead of "income" as had been done by the Respondent-Company. As this Court held that the directions issued by the Reserve Bank of India were valid the Respondents became liable to transfer Rs. 217.34 crores to the Depositors A/c by debiting the Profit and Loss A/c with Rs. 217.34 crores. The Reserve Bank of India had, by a letter dated 11th March, 1992, called upon the Respondents to prepare its Balance Sheet in conformity with its earlier directions. It seems that the Respondent-Company did not immediately comply with this direction but instead took a long period to show the Depositors money as liability.
(3.) The Respondent-Company issued a notice calling for an A.G.M. to consider increasing the share capital of the company from Rs. 3 crores divided into 3,00,000 Equity Shares of Rs.100/- each to Rs. 35 crores divided into 35,00,000 Equity Shares of Rs.100/- each. The Notice also provided as follows: "RESOLVED" (a) That pursuant to the provisions of Article 182(1) of the Articles of Association of the Company, a sum of Rs. 31,08,36,000/- out of Rs. 73,82,87,261.60p. standing to the credit of Revaluation Reserve as per the Audited Accounts for the financial year ending on 31st March, 1994, be capitalized and accordingly, the Directors of the Company be and are hereby authorized and directed to appropriate the said sum of Rs. 31,08,36,000/- to and amongst the members of the Company whose names shall appear on its Register of Members on 7th November, 1994 being the Record Date for this purpose (hereinafter called "the said date") in proportion to the Equity Shares held by them respectively in the Company as on the said date and to apply the said sum of Rs. 31,08,36,000/- in paying up in full of the un-issued Equity Shares of the Company of Rs.100/- each at par, such shares (hereinafter referred to as the "Bonus Shares") be allotted, distributed and credited as fully paid up to and amongst such members in proportion of 15 (Fifteen) Bonus Shares for every existing Equity Share held by them respectively as on the said date and that the Bonus Shares so distributed shall, for all purposes be treated as an increase in the nominal amount of the Capital of the Company held by each such member and not as income. (b) That the Bonus Shares so allotted shall always be subject to the terms and conditions contained in the Memorandum and Articles of Association of the Company and the Guidelines for Bonus Shares issued by SEBI. (c) That such allotment of Bonus Shares to non-resident shareholders of the Company shall be subject to the approval of the Reserve Bank of India under the Foreign Exchange Regulation Act, 1973, if any. (d) That the Bonus Shares so allotted pursuant to this resolution shall rank in all respects pari passu with the existing fully paid Equity Shares of the Company and shall also be entitled for the dividend in respect of the financial year ending on 31st March, 1995. ********** ;