CAV JUDGMENT

Date : 21-02-2023

This company petition has been preferred by the Reserve Bank of India under Section 45-MC of the Reserve Bank of India Act, 1934 (hereinafter referred to as the ‘RBI Act of 1934) (Section 433 of the Companies Act, 1956) seeking to wind up the Helios Corporation Limited (hereinafter referred to as ‘the Company).

2. Vide order dated 19.05.2000, the petition was admitted and the Official Liquidator attached to this Court was appointed as Provisional Liquidator and interim order was passed prohibiting the company and its Directors from disposing of any of its assets.

3. The Company preferred Company Appeal No.5 of 2000 wherein the Division Bench of this Court on 13.02.2001 directed as under :-

“6. We, therefore, in the facts and circumstances of the case, remit the matter back to the learned Company Judge to hear the matter afresh in presence of the appellant and pass a fresh order for appointment of Provisional Liquidator and other necessary formality, if any. Both the parties have agreed that the case in question be placed before the learned Company Judge on 18.03.2001.

7. In the meantime, in the interest of justice and depositors, the interim order of the learned Company Judge should continue. With the above, this appeal as well as I.A. is disposed of.”

4. The company appeal, thereafter, has not been taken up for arguments and was listed on 22.11.2013 wherein learned counsel for the respondent stated that the management of the company has not disposed of any of the assets of the company. On 15.12.2022, the Provisional Liquidator appointed by the single Judge stated that he was continued to hold the charge of the company as the interim order passed by the single Judge was continued by the Division Bench.

5. The Company is functional and as the order of appointment of Provisional Liquidator was set aside by the Division Bench and only interim order passed by the Company Judge restraining the company from disposing of its properties was continued. In terms thereof, the company has not disposed of any of its properties, therefore, the question whether Provisional Liquidator should be appointed; and the company petition should be admitted; is to be examined by this Court afresh in terms of the order passed by the Division Bench.

6. Arguments were heard at length and both the parties have also filed their written arguments.

Submissions on behalf of Reserve Bank of India.

7. On inspection of the respondent - company by the Reserve Bank of India in February, 1996, it was observed that the company had collected public deposits. Thereafter, a show cause notice was issued to it and having not been satisfied with the reply, a prohibitory order was passed on 15^th of July, 1997 restraining it from accepting deposits with immediate effect. The order was challenged in CWJC No. 5773 of 1999 which was dismissed vide order dated 10.12.1999. In the inspection, conducted on 31^st of March, 1997, other violations were also found and it is alleged that there were violation relating to the various parts of the Residuary Non-Banking Companies (Reserve Bank) Directions, 1987 and more specifically, para 6 (1)(a), (b), (c) it had also not opened a Constituent’s Subsidiary General Ledger account with the scheduled commercial bank, or de-materialised account with depository through a depository participant registered with Securities and Exchange Board of India (hereinafter referred to as ‘the SEBI’) which was the violation of para 6(2). There was a violation of para 6(3) as it had not submitted the auditor’s certificate and other violations as enumerated in the report.

8. The Reserve Bank of India has alleged that Section 45-IA of the RBI Act of 1934 restrained Non-Banking Financial Company (hereinafter referred to as ‘the NBFC’) from commencing or carrying on business of an NBFC before obtaining a Certificate of Registration (hereinafter referred to as ‘the CoR’) for which the company was required to apply to the RBI. No application was s