B BHARATHI Vs. ROCKLAND LEASING LIMITED

JUDGEMENT

(1.) THE Northern Region Bench of the Company Law Board has been receiving complaints from depositors of non-repayment against Rockland Leasing Limited (hereinafter called "the company") from the latter half of 1997. In order to enquire into the complaints, the Bench office had been issuing notices for hearing and called for relevant information with regard to the outstanding position of deposits. At the initial stage, the company had been raising technical objections challenging the relevant provisions under which notices were sent. At the initial hearings till April, 1998, no authorised person was present on behalf of the company. THE information called for from the company was also not forthcoming due to these technical objections. THE Bench office had to collect whatever little information was possible from the Registrar of Companies regarding the particulars of the company.

(2.) The company also took a stand vide its letter dated March 3, 1998, that the Reserve Bank of India, vide its notification dated January 31, 1998, has directed that all outstanding excess deposits beyond permissible limits as on January 1, 1998, of non-banking finance companies should be reduced by repayment or otherwise not less than one-third by the end of December, each year and that the entire excess public deposits to be reduced by December 31, 2000. According to the company, since it is a non-banking finance company it is regulated only by the directions issued by the Reserve Bank of India from time to time.

(3.) AT the hearing on June 9, 1998, the managing director was personally present. AT this hearing, the managing director expressed the difficulties of the company due to dual authority under the Reserve Bank of India Act namely, the Reserve Bank of India (Non-Banking Finance Division) and the Company Law Board. He submitted that due to crisis in the non-banking finance sector, there is a mismatch between the inflow and outflow of cash and all non-banking finance companies are facing difficulties in repayment of fixed deposits. He sought time to make detailed written submissions for which the time was granted. However, on the same day the company had agreed to repay the deposits as per the Reserve Bank of India directions, over a period of three years.