MOREPEN FINANCE LTD Vs. RESERVE BANK OF INDIA

JUDGEMENT

(1.) RESERVE BANK OF INDIA (RBI), AS THE PETITIONER, FILED C.P.191/97 UNDER SECTION 45 MC 1(D) OF THE RESERVE BANK OF INDIA ACT FOR WINDING UP OF CRB CAPITAL MARKETS LTD (HEREINAFTER CALLED `THE COMPANY'). ALONG WITH THIS PETITION, RBI ALSO MOVED CA.552/97 FOR APPOINTMENT OF THE PROVISIONAL LIQUIDATOR UNDER SECTION 450 OF THE COMPANIES ACT,1956. THIS PETITION CAME UP FOR HEARING ON 22.5.1997 WHEN THE COURT APPOINTED THE OFFICIAL LIQUIDATOR ATTACHED TO THIS COURT AS THE PROVISIONAL LIQUIDATOR WITH DIRECTION TO HIM TO TAKE INTO CONTROL AND CUSTODY ALL THE ASSETS, PROPERTIES AND BOOKS OF ACCOUNTS OF THE COMPANY. SINCE THEN THE OFFICIAL LIQUIDATOR IS CONTROLLING THE AFFAIRS OF THE COMPANY. HOWEVER, IT MAY ALSO BE MENTIONED AT THIS STAGE THAT THE EX-DIRECTOR OF THE COMPANY HAS SUBMITTED THE APPLICATION FOR REVIVAL OF THE COMPANY IN WHICH ORDERS WERE PASSED ON 22.3.2002 DIRECTING TO CONVENE MEETINGS OF SECURED CREDITORS, UNSECURED CREDITORS AND SHARE HOLDERS. THE PROCEEDINGS IN THE COMPANY PETITION ARE GOING ON. THE SCHEME FOR REVIVAL HAS NOT YET BEEN APPROVED. HOWEVER, MANY CREDITORS HAVE COME FORWARD WHO HAVE LODGED THEIR CLAIMS.

(2.) THE APPLICANT IN THE PRESENT APPLICATION, NAMELY, M/S.MOREPEN FINANCE LTD. IS ONE OF THE CREDITORS. THE APPLICANT IS NOT LODGING ITS CLAIM WITH THE OFFICIAL LIQUIDATOR AS A CREDITOR. ITS CASE RESTS ON DIFFERENT FOOTING ALTOGETHER. ACCORDING TO THE APPLICANT IT HAD GIVEN AN INTER CORPORATE DEPOSIT (ICD)/LOAN TO THE TUNE OF RS.70 LACS TO THE COMPANY ON 15.1.1997. IT WAS REPAYABLE AFTER 90 DAYS WITH 24.5% INTEREST P.A. WHILE TAKING THIS ICD FROM THE APPLICANT, THE COMPANY HAD ENDORSED AND DELIVERED TO THE APPLICANT AN ICICI BOND (HEREINAFTER REFERRED TO AS `THE BOND') OF THE FACE VALUE OF RS.1 CRORE BY MAKING FOLLOWING ENDORSEMENT " PAY TO MOREPEN FINANCE LTD. OR ORDER". THE COMPANY HAD ALSO DELIVERED TWO POST DATED CHEQUES BOTH DATED 16.4.1997; ONE FOR RS.70 LACS (REPRESENTING PRINCIPAL) AND ANOTHER FOR RS.3,31,959/- (REPRESENTING INTEREST) IN FAVOUR OF THE APPLICANT ALONG WITH THE SAID BOND. MR.C.R.BHANSALI, DIRECTOR OF THE COMPANY ALSO GAVE LETTER DATED 15.1.1997 TO THE APPLICANT CONFIRMING THAT THE SAID BOND STOOD IN APPLICANT'S NAME AND ALSO STATED IN THE SAID LETTER THAT IN THE EVENT OF DISHONOUR OF AFORESAID TWO CHEQUES, THE APPLICANT WOULD BE ENTITLED TO GET THE SAID BOND TRANSFERRED IN HIS FAVOUR OR SELL THE SAME AND APPROPRIATE THE PROCEEDS THEREOF TO ITSELF. THE EXACT LANGUAGE APPEARING IN THE SAID LETTER, TO THIS EFFECT, IS AS UNDER:

(3.) ON 15.4.1997, BEFORE THE DUE DATES OF CHEQUES, THE RBI ISSUED A NOTIFICATION DATED 10.4.1997 UNDER SECTION 45 MB OF THE RBI (AMENDMENT) ACT,1997 THEREBY DIRECTING THE COMPANY NOT TO SELL, TRANSFER, CREATE CHARGE OR MORTGAGE OR DEAL IN ANY MANNER WITH ANY OF ITS PROPERTIES AND ASSETS WITHOUT THE PERMISSION OF THE BANK FOR A PERIOD OF SIX MONTHS FROM THE DATE OF SAID NOTIFICATION. IN VIEW OF THIS NOTIFICATION, AS THE BANK ACCOUNTS OF THE COMPANY STOOD FROZEN, THE INEVITABLE CONSEQUENCE THEREOF WAS THAT THE TWO POST DATED CHEQUES ISSUED BY THE COMPANY IN FAVOUR OF THE APPLICANT WERE RETURNED DISHONOURED BY THE BANK. THIS HAPPENED ON 19.4.1997.