Ansal Housing Limited vs None

The appellant, Ansal Housing Ltd, was initially incorporated

and was granted certificate of incorporation by the Registrar of

Companies in the year 1983. It was incorporated in the name of

Ansal Housing Finance and Leasing Company Ltd. Subsequently the

Company Appeal (AT) NO.215/2022 2

said company changed its name as Ansal Housing and Construction

Ltd on issuance of certificate of incorporation by the Registrar of

Companies, New Delhi and Haryana with effect from 31.05.1990.

However, during the pendency of petition filed by the appellant, Ansal

Housing Ltd, under Section 74(2) of the Companies Act, 2013,

(hereinafter referred to as Companies Act) again it changed its name

as Ansal Housing Ltd. This change name was effected from

18.12.2018 during the pendency of the proceeding under Section

74(2) of the Companies Act before NCLT.

2. The present appeal has been preferred under Section 421 of the

Companies Act, 2013 against an order dated 21.08.2022 passed by

National Company Law Tribunal, New Delhi Bench(hereinafter

referred to as NCLT) in CA No.435/ND/2021 in CP

No.109/(ND)/2016.

3. In the appeal the appellant has sought for following reliefs:

a) Allow the present appeal and set aside the impugned order

dated 21.09.2022 qua prayer (a) and (d) of Company

Application No.435 of 2021 in CP No.109/ND/2016 passed

Company Appeal (AT) NO.215/2022 3

by the Hon'ble National Company Law Tribunal, New Delhi

Bench.

b) Waive the short payment made by the Appellant during the

period of February, 2020 in August, 2021.

c) Allow the Appellant to repay the entire remaining amount of

fixed deposits over a period of next 4 years by paying the

monthly amount (including the payment towards the interest

and the hardship cases) as detailed in para 7.27 above.

d) Pass such other and further reliefs that this Hon'ble

Appellate Tribunal may deem fit and proper in the facts and

circumstances of the present case.

4. Since the appeal was filed belatedly an application vide IA

No.4458/2022 has been filed for condonation of delay of 4 days in

filing the appeal. The reason for 4 days delay in filing the appeal has

been explained in the IA. We have perused the petition and in view

of submission of Mr. Gaurav Mitra, learned counsel for the appellant,

we are satisfied with the reason. Accordingly the delay in filing the

appeal stands condoned and IA is allowed.

Company Appeal (AT) NO.215/2022 4

5. Mr. Mitra, learned counsel for the appellant on merit of the

appeal tried to persuade the Court that since the appellant company

was endeavouring to make payment of deposits, the learned Tribunal

was not justified in rejecting the application for extension of time for

liquidating the dues. He submits that the appellant company had

earlier accepted deposits. On maturity the steps were taken for

repayment of the same. However, due to the reasons which were

beyond the control of the appellant it was not possible to make

repayment as per the schedule. He further submits that since the

year 2016 the appellant stopped accepting any deposit. Only

deposits which were accepted prior to the aforesaid date were

required to be repaid on its maturity. The appellant company with a

specific proposal for liquidating the dues in the year 2016 itself filed

an application before NCLT which was registered as CP

No.109/2016. The said company petition was filed under Section 74

(2) of the Companies Act. After filing of the same by order dated

3.10.2016 the proposal of the appellant company for enhancement of

time for repayment of matured deposits in phased manner was

accepted by the NCLT. Thereafter, from time to time it was extended.

However, finally by the impugned order the petition filed for

Company Appeal (AT) NO.215/2022 5

enhancement of the time for liquidating deposit has been rejected.

Mr Mitra, learned counsel for the appellant has drawn our attention

to statement made in para 7.27 of the Memo of Appeal which is

reproduced hereinbelow:

"7.27. It is submitted that taking into consideration the above facts,

the Appellant had re-worked its cash flow statement for next 4 years

and worked out the following scheme of repayment of entire dues to

the fixed depositors covering the payment towards the principal and

interest. The new proposed scheme for re-payment, as submitted for

approval of Ltd. Tribunal vide CA No.435/2021, is as follows:

PERIOD AMOUNT OF

PROPOSED

DISBURSALS

(INCLUDING

INTEREST AND

HARDSHIP

PAYMENTS) PER

MONTH

April 2022-March 2023 Rs.50 lakhs

April 2023-March 2024 Rs.60 lakhs

Company Appeal (AT) NO.215/2022 6

April 2024-March 2025 Rs.75 lakhs

April 2025-March 2026 Rs.75 lakhs.

6. He further submits that past record of the appellant also makes

it clear that the appellant had diligently made maximum payment

which is evident from statement made in para 7.31 which is quoted

hereinbelow:

"7.31. It is pertinent to mention herein that the Appellant has been

diligently making maximum payments as per his financial condition

since the filing of Application bearing CA No.435 of 2021. The tabular

representation of month payments is herein below:

MONTH AMOUNT DISBURSED (IN

LAKHS)

September, 2021 Rs.42.39

October, 2021 Rs.44.41

November, 2021 Rs.46.34

December, 2021 Rs.46.25

January, 2022 Rs.40.64

Company Appeal (AT) NO.215/2022 7

February, 2022 Rs.44.75

March, 2022 Rs.40.18

April, 2022 Rs.50.91

May, 2022 Rs.49.98

June, 2022 Rs.51.51

July, 2022 Rs.50.43

August 2022 Rs.50.16

September, 2022 Rs.51.82

7. Learned counsel for the appellant by referring to amounts

mentioned in the aforesaid table submits that the appellant is taking

sincere efforts in the light of repayment of all the deposits taken by

the company and this was the reason that the appellant honestly had

proposed to repay all the deposits in phased manner from April, 2022

to March, 2026. According to Mr. Mitra, learned counsel for the

appellant the Learned NCLT was required to take lenient view in the

matter and order impugned is fit to be interfered with and appellant

Company Appeal (AT) NO.215/2022 8

is entitled for the relief which has been sought for in the present

appeal.

8. In the present appeal the appellant has not even bothered to

array either of the depositors as party/respondent from whom the

appellant company accepted deposits, of course prior to enforcement

of the new Companies Act and admittedly till date of filing of the

application under Section 74(2) of the Companies Act payment was

not made for which extension of time was sought for by the appellant.

9. Besides hearing Mr. Gaurav Mitra, learned counsel for the

appellant we have carefully examined the materials available on

record and also certain relevant provisions particularly Section 73

and 74 of the Companies Act in the present case.

10. The short fact of the case as revealed from Memo of Appeal is

that the appellant company with its earlier name namely Ansal

Housing Finance and Leasing Company Ltd had accepted deposits

prior to 1.4.2016. However, thereafter due to non-availability of

deposit insurance and non-extension of time beyond 31.3.2016 for

providing deposit insurance by Govt of India as stipulated under

Section 73(2)(d) of the Companies Act (Sub-Section (d) from Section

Company Appeal (AT) NO.215/2022 9

73(2) was subsequently deleted) read with Rule 5 of Companies Act

(Acceptance of Deposits) Rules (Rule 5 was subsequently deleted).

11. On 08.07.2016 the appellant with changed name i.e. Ansal

Housing and Construction Ltd, which was changed w.e.f. 31.05.1990

on 09.07.2016 filed petition under Section 74(2) of the Companies

Act, which was registered as Company Petition No.109/ND/2016.

The said company petition was filed before the NCLT seeking

enhancement of time for liquidating its liability under the fixed

deposits accepted by it. Learned NCLT by its order dated 03.10.2016

accepted the proposal for enhancement but it was accepted in a

phased manner for a period of 24 months. It is apt to reproduce the

paragraph 5 of the order dated 3.10.2016, which is at running page

96 as follows:

"5.The aforesaid proposal of the petitioner company for enhancement

of time for repayment of the matured deposits in a phased manner

over a period of 24 months from the due date is being accepted in

principle only in view of their past track record. However, it is also

subject to their adherence to the schedule submitted in Court. It,

therefore, becomes imperative to review and accord extension

quarterly in terms of the above."

Company Appeal (AT) NO.215/2022 10

12. Thereafter periodically extension was granted and on perusal of

the record it appears that while extending time learned NCLT

overlooked the first order i.e. order dated 3.10.2016 whereby the

extension of time was granted for 24 months. Even though 24

months time expired in the month of October, 2018 the Learned

NCLT after expiry of the said date on 20.12.2018 extended the

scheme for further one month. Thereafter on examination of order

dated 21.09.2019 which is at running page 115 and 116 of the Memo

of Appeal it is evident that the appellant filed an application for

recording the change of the name of the applicant company from

Ansal Housing and Construction Ltd to Ansal Housing Ltd, which is

the name of the appellant in the present appeal. The said prayer was

accepted and also in view of certain steps shown by the appellant

another one month time was extended by Learned NCLT. Again the

same Bench of the NCLT extended the time till 15th March, 2019. The

time was further extended by same Bench of Learned NCLT for one

month by order dated 25.4.2019. Thereafter on an application filed

by the appellant vide CA No.22/2019 whereby modification of

repayment schedule was filed with certain new proposal, a Division

Bench of NCLT by its order dated 11.7.2019 oblivious of the fact that

Company Appeal (AT) NO.215/2022 11

NCLT under the NCLT Act was not empowered to

modify/review/revise its order allowed the prayer for discharging

liability by 31.03.2022. It would be appropriate to reproduce

operative portion of the order dated 11.07.2018 passed by NCLT as

below which is at running Page 121 and 122 of the Memo of Appeal

as follows.

"It is noted that as per the initial proposal sanctioned by this Bench

the entire liability towards the fixed depositors was undertaken to be

liquidated by 31st March, 2021. By the present proposal, they seek

to discharge this liability by 31st March, 2022. Given the fact that re-

payment is a better option for fixed depositor as well as in the interest

of the company, this prayer is being permitted. However, the scheme

shall be reviewed, every month. Statement of amount disbursed per

month to various depositors has been annexed alongwith, duly

corroborated by the bank statement. The effect of the modified

scheme of repayment towards various depositors shall be given in

detail to this Bench and also be unloaded on their website alongwith

this order. This is necessitated to ensure that every depositor knows

when they are likely to receive their principal/instalments thereof and

the interest due and payable thereon in the interim period. There

should be no default in the payment of interest to every depositor.

Any complaint of non-payment shall be viewed stringently.

Company Appeal (AT) NO.215/2022 12

It is also being made amply clear that should the company default in adhering to

the plan, part from not granting further extension, it shall also give rist to

consequential penal provisions under the Act.

13. After extending time beyond the earlier time fixed i.e. 24 month

finally by order dated 9.1.2020 while extending the scheme by

another one month time disposed off the said company application.

The order dated 9.1.2020 at running page 123 is reproduced as

under:

"An application has been filed by the applicant company praying for

extension of the scheme for repayment of the Fixed Deposit. It is

submitted that in terms of the order dated 11.07.2019 the scheme

had been modified enabling the applicant to disburse a sum of Rs.75

lakhs per month for the period of 01.06.2019 to 31.03.2020. They

have been adhering to the same. A table has been annexed alongwith

detail of the amounts to be disbursed. It is submitted that the interest

on the fixed deposit is being served regularly and there have been no

complaint. The disbursals and the details of further disbursement

have also been posted on the website of the company. The application

is duly annexed with the certificate of CS. Mr. S. Nagesh. In view of

the aforesaid it would be expedient and the interest of justice to

extend the scheme by another month.

Company Appeal (AT) NO.215/2022 13

To come up on 20th February, 2020 for a status report.

CA stand disposed off in terms of the above."

14. Even prior to order dated 9.1.2020 one another application vide

CA No.22/2019 was filed which petition was signed on 11.06.2019

as reflected in the bottom of the petition running at page 136 of the

Memo of Appeal. The said petition has been brought on record as

Annexure 6 which is contained in running page 124 to 136.

Thereafter yet another IA was filed in CP No.109/2016 which was

numbered as 696 of 2020 with following reliefs, Page 160

"A) Waive of the short payment made by the Applicant Company

during the months of February, 2020 to September, 2020 as detailed

in Para 19 above.

B) approve proposal of the Applicant company for release of:

i) an amount of Rs.25 lakhs (including interest and hardship

payments) per month for the period October, 2020 to December, 2020.

ii) Rs.40 lakhs (including interest and hardship payments) per month

for the period January, 2021 to March, 2021 and;

C) Allow the Applicant company to file a proposal in the month of

March, 2021 for approval of repayment scheduled for the financial

Company Appeal (AT) NO.215/2022 14

year 2021-22 considering the status of pandemic and market

conditions of real estate sector prevailing at that time;

D) Any other order or orders or relief or reliefs as this Hon'ble tribunal

deems fit and proper, under the circumstances of the whole case, may

also be allowed."

15. Finally NCLT vide impugned order i.e. order dated 21.9.2022

rejected the prayer for extension of time for repayment to the

depositors. The operative portion of the impugned order is

reproduced hereinbelow,

"32.Heard, record has been thoroughly perused. Before going into

merits of the present case, we observe that this Tribunal vide its

order dated 23.09.2021 had allowed the prayer (b) i.e., Allow the

Applicant Company to release an amount of Rs.40 lakhs per month

during the period September 2021 to March 2022, thereby allowing

the applicant company to release the amount of Rs.40,00,000/- per

month from September, 2021 to March, 2022. Further the prayer (c)

i.e. Dispense with/waive off the requirement of maintenance of

statutory margin money as liquid assets in the Deposit Redemption

Reserve till 31st March, 2023 was partly allowed vide the order

dated 23.09.2021 by this Tribunal by waiving the requirement of

maintenance of statutory margin money as liquid assets in the

Company Appeal (AT) NO.215/2022 15

Deposit Redemption Reserve till 31st March, 2022. Considering that

prayer (b) and (c) as sought in the instant applications, already stood

disposed of vide order dated 23.09.2021, therefore, is absolutely not

tenable."

16. On examination of aforesaid facts before further proceeding it

would be appropriate to reproduce Section 73 and Section 74 of the

Act as follows:

"73. Prohibition on acceptance of deposits from public.--(1) On

and after the commencement of this Act, no company shall invite,

accept or renew deposits under this Act from the public except in a

manner provided under this Chapter:

Provided that nothing in this sub-section shall apply to a banking

company and nonbanking financial company as defined in the

Reserve Bank of India Act, 1934 (2 of 1934) and to such other

company as the Central Government may, after consultation with the

Reserve Bank of India, specify in this behalf.

(2) A company may, subject to the passing of a resolution in general

meeting and subject to such rules as may be prescribed in

consultation with the Reserve Bank of India, accept deposits from its

members on such terms and conditions, including the provision of

security, if any, or for the repayment of such deposits with interest,

Company Appeal (AT) NO.215/2022 16

as may be agreed upon between the company and its members,

subject to the fulfilment of the following conditions, namely:--

(a) issuance of a circular to its members including therein a

statement showing the financial position of the company, the

credit rating obtained, the total number of depositors and the

amount due towards deposits in respect of any previous

deposits accepted by the company and such other particulars

in such form and in such manner as may be prescribed;

(b) filing a copy of the circular along with such statement with

the Registrar within thirty days before the date of issue of the

circular;

(c) depositing, on or before the thirtieth day of

April each year, such sum which shall not be less than twenty

per cent, of the amount of its deposits maturing during the

following financial year, and kept in a scheduled bank in a

scheduled bank in a separate bank account to be called

deposit repayment reserve account;

(*****)

(e) certifying that the company has not committed any default

in the repayment of deposits accepted either before or after the

commencement of this Act or payment of interest on such

Company Appeal (AT) NO.215/2022 17

deposits and where a default had occurred, the company

made good the default and a period of five years had lapsed

since the date of making good the default; and

(f) providing security, if any for the due repayment of the

amount of deposit or the interest thereon including the creation

of such charge on the property or assets of the company:

Provided that in case where a company does not secure the

deposits or secures such deposits partially, then, the deposits

shall be termed as "unsecured deposits'' and shall be so

quoted in every circular, form, advertisement or in any

document related to invitation or acceptance of deposits.

(3) Every deposit accepted by a company under sub-section (2) shall

be repaid with interest in accordance with the terms and conditions

of the agreement referred to in that sub-section.

(4) Where a company fails to repay the deposit or part thereof or any

interest thereon under subsection (3), the depositor concerned may

apply to the Tribunal for an order directing the company to pay the

sum due or for any loss or damage incurred by him as a result of

such non-payment and for such other orders as the Tribunal may

deem fit.

Company Appeal (AT) NO.215/2022 18

(5) The deposit repayment reserve account referred to in clause (c) of

sub-section (2) shall not be used by the company for any purpose

other than repayment of deposits.

74. Repayment of deposits, etc., accepted before

commencement of this Act.--(1) Where in respect of any deposit

accepted by a company before the commencement of this Act, the

amount of such deposit or part thereof or any interest due thereon

remains unpaid on such commencement or becomes due at any time

thereafter, the company shall--

(a) file, within a period of three months from such commencement or

from the date on which such payments, are due, with the Registrar

a statement of all the deposits accepted by the company and sums

remaining unpaid on such amount with the interest payable thereon

along with the arrangements made for such repayment,

notwithstanding anything contained in any other law for the time

being in force or under the terms and conditions subject to which the

deposit was accepted or any scheme framed under any law; and

(b) repay within three years from such commencement or on or before

expiry of the period for which the deposits were accepted, whichever

is earlier.

Company Appeal (AT) NO.215/2022 19

Provided that renewal of any such deposits shall be done in

accordance with the provisions of Chapter V and the rules made

thereunder.

(2) The Tribunal may on an application made by the company, after

considering the financial condition of the company, the amount of

deposit or part thereof and the interest payable thereon and such

other matters, allow further time as considered reasonable to the

company to repay the deposit.

(3) If a company fails to repay the deposit or part thereof or any

interest thereon within the time specified in sub-section (1) or such

further time as may be allowed by the Tribunal under sub-section

(2), the company shall, in addition to the payment of the amount of

deposit or part thereof and the interest due, be punishable with fine

which shall not be less than one crore rupees but which may extend

to ten crore rupees and every officer of the company who is in default

shall be punishable with imprisonment which may extend to seven

years or with fine which shall not be less than twenty-five lakh

rupees but which may extend to two crore rupees, or with both."

18. Admittedly the appellant in the year 2016 had filed petition for

extension of time for repayment to the depositors. In view of Section

74(1) any deposit accepted prior to the coming of Companies Act,

Company Appeal (AT) NO.215/2022 20

2013 which was notified on 30th August, 2013 immediately deposits

on its maturity was required to be repaid. As per Section 74(1)(b)

repayment was to be done within three years from commencement or

on or before expiry of the period for which deposits were accepted.

Even if in a case of non-clearance of the deposits under Section 74(2)

the Tribunal has been granted discretion to extend the time. In Sub-

section (2) categorically it has been mention that the Tribunal may

on an application allow further time. The word "shall" has not been

used and as such it was discretionary jurisdiction of the tribunal to

extend the time. It is also clear that purport of Section 74 is to enable

a company accepting deposit to grant some breathing time for

repayment of the deposits. On examination of the provision it is also

clear that the Tribunal has not been granted discretionary power to

exercise the same in discreet manner. We are of the opinion that if

Tribunal is approached for extension, extension may be granted once

and not repeated extension can be inferred from the aforesaid

provision. This is the reason that a stringent and panel provision has

been incorporated in sub-section (3) of Section 74 of the Act. It

makes it clear that if on grant of such further time payment of the

deposit is not made one may be punished with fine which shall not

Company Appeal (AT) NO.215/2022 21

be less than Rs. 1 crore and it can extend upto Rs.10 crore. In this

sub-section further a strict condition has been imposed i.e. in default

every officer of the company shall be punishable with imprisonment

which may extend to 7 years or with fine which shall not less than

Rs. 25 lakhs and may extend to Rs.2 crores or with both.

19. Admittedly in the present case despite regular extension

deposits have not been cleared by the appellant. In the present case

the prayer of the appellant for modification of earlier order and

extension of liquidating dues both has been rejected primarily on the

ground that on earlier occasions twice extension was granted. Of

course, in the Memo of Appeal as well as during arguments it was

argued that detail reasons has not been assigned by the NCLT, but

on examination of the impugned order it is evident that NCLT has

discussed all the facts with regard to earlier prayer and extension

and finally it has rejected the prayer of the appellant. We do not find

any ground to interfere with the impugned order. However, we

propose to remit back the matter to the NCLT to take consequential

steps in terms of Section 74(3) of the Act expeditiously.

Company Appeal (AT) NO.215/2022 22

20. Accordingly while approving the impugned order we remit back

the matter to the NCLT to take appropriate steps in accordance with

law.

21. The Registry is directed to communicate this order to the NCLT,

Principal Bench, New Delhi forthwith.

(Justice Rakesh Kumar) Member (Judicial)

(Dr. Ashok Kumar Mishra) Member (Technical) Bm

Company Appeal (AT) NO.215/2022