SUDHARSHAN TRADING COMPANY LTD. versus OFFICIAL LIQUIDATORS AND ORS.

Citation: [1994] SUPP. 1 S.C.R. 91 · Decided: 13-05-1994 · Supreme Court of India · Bench: R.M. SAHAI, N. VENKATACHALA · Disposal: Disposed off
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Judgment (excerpt)

SUDHARSHAN TRADING COMPANY LTD.· 
v. 
OFFICIAL LIQUIDATORS AND ORS. 
MAY 13, 1994 
(R.M. SAHAI AND N. VENKATACHALA, JJ.] 
Companies Act, 1956 : Sections 391, 433, 434, 439, 44!r-Subsidiary 
Company· conducting Chits-Default i11 payment to subscriber.-lJirections 
given. 
This Court by its judgment dated 14.5.1993*, while deciding the 
dispute in respect or a Chit Fund, between the appellant holding company 
and Its subsidiary company, on the one hand, the Subscribers' Association 
on the other, gave certain direcUons. The Subscribers' Association filed 
A 
B 
c 
the Interim" application alleging non-compliance or some or the direcUons. D 
Disposing or the application and clarifying the order dated 14·5· 
1993, this Court 
HELD : 1. The Holding Company shall pay Interest at the rate or 
25% on Rs. 5 lakhs from 3.11.1989 to 5.4.1990 minus the Interest which has E 
been earned on this amount and becomes payable to Subscribers' Assocla· 
tlon. [93·E) 
2. The 25% Interest directed to be paid by the Holding Company 
under orders dated 14.5.1993, was towards compensation on the total 
deposits made by the Subscribers' Association In the course of adjusting F 
equities between the parties. The Holding Company after deducting income 
tax has deposited the same with the Income·tax Department. It shall be 
open to the subscribers to apply to the Income-tax Department for refund 
of the same on the basis of this Order. [93·F·G] 
3. As regards the direction to pay interest at the rate or 12% the G 
subscribers were entitled to the interest from the date when their claim 
applications were decided by the High Court. Consequently, the Holding 
Company shall pay Interest on amounts payable to the subscribus on 
account of subscriptions made by them to Chit Fund from 6.10.1989 to 
20.2.1991 In addition to the interest already paid by them thereon from H 
91 
92 
SUPREME COURT REPORTS [1994] SUPP. 1 S.C.R .. 
A 21.2.1991 to 23.7.1993. (93-H, 94-AJ 
4. All subscribers who were shown as Members of the Subscribers' 
Association in the list filed by them in 1987 before the High Court have been 
paid. The membership of the Association cannot be enlarged. (94-F·GJ 
B 
*NP. V. Ramaswamy Udayar etc. v. The All India Subscribers' Associa-
c 
D 
tion & Ors., (1993) 3 SCC 233, directions given therein, clarified. 
CIVIL APPELLATE JURISDICTION : I.A. No. 2 of 1993. 
IN 
Civil Appeal No. 2866 of 1993. 
From the Judgment and Order dated 21.2.91 of the Kerala High 
Court in C.M.P. Nos. 2170/90 & 596/91 & 597 of 1991 in M.F.A. No. 518 
of 1981. 
R.K. Jain, A.Mariarpurtham and P.N. Purl (NP) for the Appellant. 
K.K. Venugopal, E.M.S. Anam, A. Sasiprabhu, A.T.M. Sampath, 
S.C. Birla (N.P.) for the Respondents. 
E 
The following Order of the Court was delivered : 
When Order dated 14th May, 1993 was passed by us, we thought that 
·we have succeeded in bringing quietus to the long drawn litigation between 
an affluent and prosperous holding Company and poor and suffering 
subscribers to the Chit Fund of the subsidiary company. We felt, however, 
F 
disturbed when we saw attempts made on the side of the subsidiary 
company to avoid payment on certain counts to the Subscribers' Associa-
tion and attempts made ou the side of Subscribers' Association to have its 
members increased and get payments made to all such members to the 
detriment of other large body of subscribers. Whatever that be, we heard 
G Shri R.K. Jain Senior Counsel for the Subscribers' Association, and Shri 
K.K. Venugopal, Senior Advocate for Sudharshan Trading Company, on 
several days and at length. Five claims have been advanced on behalf of 
the Subscribers' Association : 
(1) They were entitled to interest on deposit of Rs. 5 Lakhs from 
H 
3rd November, 1989; 
t
\ 
) 
SUDHARSHANTRADING CO., LTD. v. OFFICIAL LIQUIDATORS 93 
(2) Direction to pay 25% interest on the deposit mad~ by the A 
subscribers being by way of compensation, the Company should 
not have deducted income-tax on it. 
(3) Direction to pay 12% interest from the date when the claim 
applications of the subscribers were decided by the Kerala High 
Court was wrongly treated as 21.2.1991, as, according to ap-
plicants, this date should be from 1981 or in any case from 1987; 
B 
( 4) The Company was liable to refund the amount shown in the pass 
book yet they were refunding lessor amount after deducting not 
only the commission but also the dividend which had accrued on C 
the deposit. 
(5) The Company instead of paying eve
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