Report No. 143

Appendix 'A'

No. 6(2)(11)/87/L.C.(LS)
Government of India
Ministry of Law and Justice
Law Commission

Shastri Bhavan, New Delhi,
Dated the............

To,

Subject: Non-refund of Company Deposits.

Sir,

The Commission in the course of an exercise undertaken by it has invited through media and newspapers all small depositors or their legal representatives or their nominees, whose deposits upto Rs. 11,000 were not refunded even after expiry of 90 days from date of maturity to furnish full particulars of their case mentioning the name and address of the Company, the amount of deposits, the date of maturity and the reasons, if any, mentioned by the Company for not refunding the deposits even after such time-lag.

2. In response thereto one Shri....................R/o.................has addressed to the Commission his application dated................ in this regard. We enclose herewith a Photocopy of the complaint which is self explanatory.

3. It is considered appropriate and necessary to impress upon you that the small depositors, particularly those whose deposits are in the range of Rs. 5,000 or less, cannot afford to take appropriate measures to enforce their rights by approaching the competent authority, such as, the Company Law Board or a civil court exercising summary jurisdiction.

They cannot afford to do so on account of the time-cost and the money-cost, both of which would be beyond their reach by reason by their lack of resources in the context of the smallness of the amount. In case they are obliged to initiate appropriate proceedings. You will also have to incur time-cost and money-cost which would possibly exceed the extent of the claim made against you.

4. Besides, whatever he your financial constraints, it certainly appears to be unconscionable to violate the trust reposed in your organisation particularly by the small depositors.

5. It is, therefore, expected that you would take immediate steps to repay the afore named complainant as also all the other depositors whose deposits range in the neighbourhood of Rs. 5,000 in the first instance at the earliest and then the claims of the other small depositors whose deposits range in the neighbourhood of Rs. 10,000 very soon thereafter. It would be expected that the repayment in the case of the former is made within a time-span of thirty days and in the case of the rest within a time-span of sixty days of the receipt of this letter.

6. It is hoped that you will appreciate the spirit in which this communication is being addressed will discharge your obligations as indicated hereinabove.

7. It is also essential for the Commission to get the detailed information on the under mentioned point with a view to equipping the Law Commission with relevant material in connection with the relevant project. The information sought for is of basic nature which can be supplied by you and you alone as it is available in your records:-

(i) Concrete factual information pertaining to the complaint of the said person and cause of delay.

(ii) Number of depositors and the total amount involved where the deposits have remained unrefunded for the period exceeding ninety days commencing from the date of maturity separately in respect of (a) deposits of less than Rs. 11,000 and (b) deposits of more than Rs. 11,000.

(iii) Reason(s) for the deposits remained unrefunded.

(iv) Number of cases pending in Courts/Company Law Board for the refund of the amount and the total amount involved in such cases.

8. You are requested to respond to this communication within 10 days.

Thanking you,

Yours faithfully,
Sd. /-
(Dr. Satish Chandra)
Additional Law Officer
Encl: As above.