Report No. 143
With reference to our letter dated 22nd March, 1991 addressed to M/s. Ambalal Sarabhai Enterprises Ltd., Baroda they had sought a meeting with me. I had informed the Hon'ble Chairman about it and obtained his oral instructions as to the stand I should take at the meeting.
2. The Company's Resident Director Shri N.J. Kikani and Resident Chief Executive Shri T.K. Aiyah met me on 9-4-1991. Our Asstt. Law Officer, Shri Santhok Singh was present during the meeting.
3. Shri T.K. Aiyah explained that their company had been in financial difficulties for some time but the Government of Gujarat had come to their rescue and they have now succeeded in obtaining financial credit from the Punjab National Bank. He stated that some reorganisation had been done in the company, and a new Managing Director had taken over. He further stated that the company would repay all the deposits with interest to the depositors, but this was said in a vague, non-committal manner.
4. Shri N.J. Kikani added that the company had at one stage outstanding deposits of over Rs. 6 crores but now this figure had been brought down to Rs. 2 crore. He indicated that the company had to meet certain statutory liabilities, and hence there was delay in repayment of the deposits.
5. I pointed out that the company had not yet furnished the information asked for by the Law Commission even though as many as 5 letters had been sent to it, and so it was not known to the Law Commission as to how much amount was outstanding repayment by the company and to how many depositors. From the meagre information given by the company in its letter dated 26-2-1991 that "only" Rs. 71.96 lakhs remained unpaid for a period of more than 60 days to 1,312 depositors, the Commission had noted that only small depositors were being made to suffer financial hardship by the company. 1 emphasised upon them that the Commission had taken serious note of the fact of non payment to small depositors by the Company and the reluctance shown by the company to furnish the basic data asked for.
6. The two representatives did not give any specific information about the small deposits with the company and when these would be repaid. They said that they would be writing to their Head Office to furnish the same to us.
7. I told them politely, but firmly, that mere furnishing of the data called for earlier would not be adequate response to the Commission's letter dated 22-3-91 at this stage, and that the Law Commission now expects from the company a positive response that the deposits would be repaid in accordance with the guideline indicated in that letter. I mentioned that their was a well known company and that they would not like their reputation to the sullied by with holding repayments to small depositors of amounts which would be insignificant compared to their large-scale financial transactions.
I made it clear to them that the Chairman of the Law Commission was very much exercised over the inordinate delay in making repayments to small depositors, and that a specific, definite assurance from their company that they would observe the guideline given by the Law Commission was what we expected from them.
8. The representatives replied that they would be informing their Head Office.
9. The talks were held in a smooth and courtious manner. For Information.
Consultant JS & LO