LexM/S. INTEGRATED FINANCE CO. LTD. versus RESERVE BANK OF INDIA ETC. ETC.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
[2013] 13 S.C.R. 938
A
M/S. INTEGRATED FINANCE CO. LTD.
v.
RESERVE BANK OF INDIA ETC. ETC.
(Civil Appeal Nos. 55()5...5500 ot 2013)
8
JULY 16, 2013
[SURINDER SINGH NIJJAR AND
PINAKI CHANDRA GHOSE, JJ.]
,,,,,,,
'
c
Companies Act, 1956 -
s.391 -
Appellant, a Non-
Banking Finance Company (NBFC) -
RBI inspected the
books of accounts of appellant-company- Inspection report
disclosed violations of the provisions of the RBI Act - RBI
issued notice to appellant-company -
It started facing
D problems in running its operations because of drop in its
-(
profitability -
Appellant-company proposed scheme of
compromise with its creditors, viz. the depositors and bond
holders -
Petition seeking approval of the compromise
. scheme under the Companies Act - Dismissal of, by High
E Court - Justification - Held: Justified - Chapter JllB of the
RBI Act has-overriding effect over all other laws including
Companies.Act by incorporating s.45 with a clear intention
to ensure that in a case of NBFC, a scheme u/s.391 of the
~
Companies Act cannot be entertained unless it is in
F conformity with the provisions of s. 45QA of the RBI Act -
On facts, there was clear lack of bonafides on the part of
appellant-company in proposing the compromise scheme
- There was non-disclosure of material facts required to be
disclosed u/s. 391(1) rlw s. 393(1) of the 1956 Act -
The
y
.
G scheme was introduced only with a view to avoid repayment
to the small depositors - It was also contrary to public policy,
and had been proposed with the oblique purpose of avoiding
938
H
y
INTEGRATED FINANCE CO .. LTD. v. RESERVE
939
BANK OF INDIA
the mandate of s.45QA{i) of the RBI Act - Reserve Bank A
of India Act, 1934 - s.45QA.
Companies Act, 1956 -
s.391 -
Petition seeking
approval of compromise scheme under the Companies Act
- Duty of Company Court - Held: The Company Court whilst B
examining the fairness and the bonafide of a scheme of
arrangement does not act as a rubber stamp - It cannot
shut its eyes to blatant non-disclosure of material
information, which could have a major influence/impact on
the decision as to whether the scheme has to be approved C
or not.
Companies. Act, 1956 - s.391 -
Schemes submitted
for approval under the Companies Act - Applicability of
provisions of the RBI Act - Held: Chapter 11/B of the RBI D
Act is a self contained code -
It cannot be said that the
RBI Act and the Companies Act operate in distinct and
different fields - Also, it cannot be said that the provision
contained in the RBI Act being regulatory in nature will not
apply to cases of schemes submitted for approval under E
the. Companies Act - Reserve Bank of India Act, 1934 -
Chapter 11/B.
Reserve Bank of India Act, 1934 -
Chapter JJJB -
Incorporation of - Objects and reasons - Discussed.
F
Reserve Bank of India Act, 1934 -
s.45Q -
Non-
obstante clause in s.45Q - Applicability of -
Scope ~
Discussed.
Interpretation of Statutes -
Two enactments -
Over-
riding effect of later enactment - Held: Provisions of the
RBI Act would prevail over the Companies Act, it being a
later enactment - Companies Act, 1956 - Reserve Bank of
G
India Act, 1934.
H
940
SUPREME COURT REPORTS
[2013] 13 S.C.R.
A
The appellant-company was incorporated as a Non-
Ba n king Finance Company (NBFC) under the
Companies Act, 1956 and engaged in the business of
hire purchase and leasing. ·The Reserve Bank of India
(RBI), in exercise of its powers u/s. 45N of the Reserve
B
Bank of India Act, 1934, inspected the books of accounts
of the appellant-company. The inspection report
disclosed violations of the provisions of the 1934 Act.
Subsequently, RBI, on 1_8th January, 2005, issued a
circular to the appellant-company, prohibiting it from
C "accepting deposits from any person, in any form
whether by way of fresh deposits or renewal of the
existing deposits or otherwise, until further orders'.
Further, the appellant-company was directed not to sell,
0
transfer, create charge or mortgage, or deal in any
manner with its properties,. assets, without prior
permission of the RBI. The notice was advertised in the
Indian Express on 20th January, 2005.
Thereafter, the appellant-company started facing
E problems in running its· operations because of drop in
its profitability. In order to overcome these problems,
appellant proposed a Scheme of Compromise with its
creditors, viz. the depositors and bond holders, which
F
was approvedExcerpt shown. Read the full judgment & AI analysis in Lexace.