( 1 ) M/s. CRB Capital Markets Ltd. (hereinafter referred to as the company ) is in provisional liquidation. At the instance of Reserve Bank of India, which filed CP No. 191/97, order dated 22nd May 1997 was passed admitting the petition and appointing the Official Liquidator as the Provisional Liquidator with direction to take charge of the assets and records of the company. This application is filed by the company through the O. L. under Section 446 (2) of the Companies Act (in short the act ) for recovery of Rs. 10 lakhs plus interest thereon @ 18% per annum from 15th July 1997 till realisation as well as administrative expenses @ 1%. Averments made in the application are that the respondents entered into a Lease Deed and Maintenance Agreement with the company for the premises located at 1st Floor, C-643, New Friends Colony, New Delhi and paid Rs. 10 lakhs as security deposit. These premises were vacated by the company on 15th July 1997 and rent for June and July 1997 was also paid. However, at the time of vacation of the premises aforesaid security deposit of Rs. 10 lakhs was not refunded by the respondents to the company. O. L. sent notice of demand dated 11th April 2000 calling upon the respondents to remit this amount to the O. L. within 15 days from the receipt of the demand notice with interest. The respondents replied to this notice and stated that they had kept a sum of Rs. 5 lakhs with the company as fixed deposit by means of four FDRs, which was to carry interest @ 14% per annum and after adjusting the said amount and interest due thereon from Rs. 10 lakhs (security deposit), it is the respondent who had to still receive a sum of Rs. 32,952. 04/ -.

( 2 ) ACCORDING to the O. L. , the respondents are not entitled to the adjustment of the security deposit in the aforesaid manner and, therefore, this application is filed seeking an order against the respondents for payment of this amount with interest.

( 3 ) REPLY filed by the respondents to the present application is on the same lines. It may be mentioned, at this stage, that respondent No. 1, Smt. Bimla Devi Sahni died during the pendency of these proceedings and her legal heirs have been brought on record. Apart from stating that legal heirs had not inherited any assets of late Smt. Bimla Devi Sahni, in respect of transaction in question it is mentioned that the premises were let out by Smt. Bimla Devi Sahni and Sh. Shiv Lal Sahni vide lease deed dated 25th February 1995 at a rent of Rs. 15,000/- per month (Rs. 9,750/- as use and occupation charges and Rs. 5,250/- as maintenance charges ). Separate agreement of the same date was also entered into between the parties whereby a sum of Rs. 10 lakhs was given to Smt. Bimla Devi Sahni as security deposit repayable without any interest. On 15th July 1997 the company vacated the premises without paying rent for the months of June and July 1997. While vacating the premises damage was caused and the respondent had to spend Rs. 50,000/- for getting it restored. The company also failed to pay booster pump and water charges of Rs. 1,200/- for the period April to July 1997 payment @ Rs. 300/- per month. It is further mentioned that out of Rs. 10 lakhs given by way of security, Sh. Shiv Lal Sahni and Smt. Bimla Devi Sahni kept Rs. 5 lakhs in FDR with the company which carried interest @ 14% per annum. They have also taken loan from the company. However, even when the said loan was finally repaid, the company failed to redeem/return the FDRs kept by them as security for taking the loan. Accordingly to respondents calculation at the time of vacating the premises, Sh. Shiv Lal Sahni and Smt. Bimla Devi Sahni were to get Rs. 10,32,952. 04/-, details of which are given as under:-

VALUE of FDRs = Rs. 5,00,000. 00

INTEREST on FDRs = Rs. 4,35,136. 00

RENT for June and july 1997 = Rs. 30,000. 00

BOOSTER pump and water charges = Rs. 12,000. 00

REPAIR charges = Rs. 50,000. 00

TDS = Rs. 16,616. 04thus, its claim that it is the