V SRINIVAS Vs. MACHINES MACHINE TOOLS P LTD

JUDGEMENT

(1.) THE applicants have filed these applications under Section 58A(9) of the Companies Act, 1956 ('the Act') against Machines & Machine Tools (P.) Ltd. ('the company') for non-repayment of the unsecured loans aggregating Rs. 6,02,000 and interest from November, 2000. THE applications came up for hearing from time to time and finally on 22-10-2001.

(2.) The facts, in brief, as reiterated by Shri Y. Mallikharjuna Rao authorised representative of the applicants are that the applicants have lent to the company amounts by way of unsecured loan aggregating Rs. 6,02,000 (Rs. 4,92,000 by the applicant in CA No. 1 of 2001 and Rs. 1,10,000 by the applicant in CA No. 2 of 2001), which are repayable with interest at the rate of 18 per cent per annum within one month from the date of demand made by the applicants. The applicants have deducted tax at source under Section 203 of the Income-tax Act, 1961 and paid interest up to 31 10-2000. In spite of repeated demands and the legal notice, the company has failed to pay the principal amount and balance of the interest from 1-11-2000. By virtue of Rule 2(b) of the Companies (Acceptance of Deposit) Rules, 1975, the unsecured loans are deposits for the purpose of Section 58A of the Act and hence these applications.

(3.) SHRI Mallikharjuna Rao in his reply has pointed out that the company's paid-up capital has exceeded Rs. 25 lakhs; that the total amount of deposits accepted by the company exceeded Rs. 20 lakhs and that the company has invested amounts in excess of Rs. 60 lakhs in plant and machinery. For these reasons, the company cannot seek exemption under notification dated 2-2-1996 stated supra.