The main legal point established in the judgment is that a resolution passed by a company for rescheduling payments must have approval from relevant authorities and debenture holders to be binding on the parties involved.

Mr. Justice R.N. Mittal, President—This order will dispose of A-234 and A-228 of 1992 which contain common questions of law and fact.

2. The facts in the judgment are being given from A-234 of 1992. The complainant applied for 10 debentures of the respondent company which were allotted to him vide letter dated 14.8.84. According to condition No. 4 the debentures were to be redeemed by the respondent at par in three installments of Rs. 40/-, 40/- and 35/- at the expiry of 7th, 8th and 9th year. The 7th year expired in 1991 but the respondent did not redeem the part of the debentures which were to be redeemed in the 7th year and showed its inability to do so. A resolution was passed by them in their general meeting in Sept.’91 by which the installments were rescheduled. It is pleaded that the said resolution is not binding on the complainant. Consequently he has prayed that the respondent be directed to redeem the part of the debentures according to the terms of the agreement.

3. In the District Forum the respondents were served but they did not appear inspite of service. Consequently they were proceeded against ex-parte. The learned District Forum held that in view of the resolution passed in the annual general meeting of the respondent company for extending the date of re-payments of the installments for redemption of debentures in 1991, the respondent company could not be accused for any deficiency in service. Consequently it dismissed the complaint. The complainant has come up in appeal against the said order to the Commission.

4. The only question that arises for determination is, what is the effect of the resolution of the company regarding re-scheduling of the payments of the installments of the debentures. We have gone through the resolution passed by the respondent company. In the resolution it is stated that it was subject to the approval of the holders of 13.5% secured non-convertible part of the Debentures of series II of Rs.150/- each, Controller of Capital Issues, Financial Institutions, Banks and the other concerned authorities. However, it has not been shown to us that the approval of there solution has been given by the said persons /authorities. The appellant has stated that he did not receive any notice from the company regarding the meeting of the debenture holders. Thus it is evident that even a meeting of the debenture holders has not been convened by the company till date. Mr. Talwar has fairly admitted before us that the resolution sent to Financial Institutions and Reserve Bank of India for their approval, is still under their consideration. In the circumstances it cannot be held that the resolution is binding on the complainant. If it is so, the respondent cannot take any benefit of the resolution. The respondent is, therefore, liable to repay the amount of the debenture holders according to the agreement between the parties.

5. The facts of the appeal No.A-228/92 are similar. In that case also 10 debentures were purchased by the appellants.

6. For the aforesaid reasons we accept the appeal with costs and direct the respondent to make payment of the installments which have become due to the complainant(s) within a period of three months. In case they fail to do so action shall be taken against them u/Sec. 27 of the Consumer Protection Act. Costs Rs. 500/- in each appeal.

Appeal allowed with costs.

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