Report No. 143
2.9. M/s. Shree Vallabh Glass Works Ltd., Vithal Udyog Nagar-388121.-
The Commission received 13 complaints from the depositors whose invested amount is upto Rs. 11,000 and only one complaint from a depositor whose deposit exceeds Rs. 11,000. All these complaints were forwarded to the company in a normal course. The company vide its letter dated 26-2-1991 (Appendix 'M') informed the Commission that there are 6031 depositors and the amount involved is Rs. 253.13 lakhs. It also informed the Commission that as a consequence of losses incurred, the liquidity position of the company had substantially eroded.
The company was declared as a relief undertaking under the provisions of Bombay Relief Undertakings (Special Provisions) Act by the Government of Gujarat on 31-3-1984, to serve as measure of employment relief by different further declarations. The company was declared a sick industrial company on 27-8-1987 within the meaning of section 3(1)(o) of Sick Industrial Companies (Special Provisions) Act, 1985.
It may be noted that company formulated a scheme and circulated to all depositors with deposits upto Rs. 5,000 who need their deposits bock for urgent need on medical grounds and who are ready to waive the interest voluntarily shall be paid back the deposits.
The company informed the Commission that many of the depositors positively responded to the scheme and during 1989-90, 1641 depositors were paid back Rs. 69.50 lakhs. Company expressed the hope that during 1990-91, it will be repaying back to 1600 depositors of the same category approximately Rs. 70 lakhs.
The company stated in its letter dated 26-2-1991 that although company was a sick unit, realising the plight of small depositors, it had started paying back to small depositors their principal amount of deposits (without interest). The company vide this letter suggested to make repayment to 50 depositors whose deposit amount is Rs. 5,000 or less according to the directions which the Law Commission may give to it. Relevant paragraph of this letter is reproduced as under:-
"Such applicants upto 50 in number of the amount of Rs. 5,000 or less for whom you send directions for repayment without accumulated interest in full settlement and in case such applications are received with your directions for repayment on or before 15th March, 1991, all such directions in respect of 50 depositors shall be honoured and they shall be refunded the full principal amounts or deposits on or before 15th April, 1991. This is only to show our genuine desire to repay. All that has happened is most unfortunate but was only due to reasons entirely beyond our control."
The Commission did not accept this suggestion and called upon the company to make repayment to 100 small depositors in the first instance on the principle of the longest sufferers to be repaid earliest in point of time. The company did not respond to this request and maintained complete silence thereafter notwithstanding the reminder sent to it.
2.10. It is noteworthy that the plight of small depositors was of such a magnitude that some of them had agreed to the suggestion to waive the interest accrued on their deposits in order to secure repayment of their matured deposits.
The company agreed to make repayments to small depositors with deposits upto Rs. 5,000 only provided request for repayment was made on the ground of ill-health on medical grounds. In making deposits with the companies a depositor is mainly induced to do so in view of the promise to pay interest as agreed upon by the company and in view of the assurance that he would be receiving a larger amount on the date of maturity which he may possibly use for his anticipated contingencies.
The survey relating to this company shows that the depositors were first induced to make deposits with the company by a promise to pay interest and later on they were virtually compelled to forego the payment of interest as promised by the company earlier. Ultimately, the unilateral terms imposed by the company have prevailed and the small depositors who are, by and large, economically weak are under the compelling circumstances made to accept the terms of the company to accept whatever is being offered to them by the company.