Report No. 143
To solve the problem pertaining to the distress of the small depositors legislative protection needs to be extended in the manner indicated hereunder. As 86% of total dues are traceable to small depositors whose individual deposits are below 11,000 rupees, a case for special protection to this category is made out. The amendment of the relevant provisions may therefore be targeted at redressing the grievances of this category by according it a special treatment.
2.12. In the first place, the category of small depositors, may be defined.
2.13. The next step would be to ensure that they are not exploited by repaying the deposits of big depositors in preference to the deposits of the small depositors. And to ensure that they are not made to waive the interest earned by them.
2.14. This can be achieved by providing that once there has been a default it must be mentioned in future advertisements. If any of the depositors have been obliged to waive interest, future depositors may be apprised of the same. This will also operate as a deterrent to the company and serve as a warning to the intending unwary depositors in future.
2.15. Moreover, the suffering of small depositors is no small measure due to their helplessness as they cannot approach the court of the CLB by reason of the legal cost and time cost which for outweights the small amount of Rs. 5,000 or so at stake. It would amount to spending good money to recover the money in doldrums. This difficulty can be overcome by requiring the companies to apprise the CLB of such dues and requiring the CLB in its turn to act suo motu under section 58A(9) upon being so apprised.
2.16. With this end in view it is now proposed to formulate the recommendations on the aforesaid lines along with other appropriate proposals for amending the relevant provisions of law after setting out the provisions concerned. We proceed to do so in the next two Chapters.