Appeal (civil) 2866 of 1993
SUDHARSHAN TRADING COMPANY LTD.
OFFICIAL LIQUIDATORS AND ORS.
DATE OF JUDGMENT: 13/05/1994
R.M. SAHAI & N. VENKATACHALA
WITH I.A. No. 2 of 1993.
1994 SUPPL. (1) SCR 91
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, disturbed
when we saw attempts made on the side of the subsidiary company to avoid
payment on certain counts to the Subscribers’ Association and attempts made
on 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 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 3rd
(2) Direction to pay 25% interest on the deposit made, by the 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 applicants, this date should be from
1981 or in any case from 1987;
(4) The Company was liable to refund the amount shown in the passbook yet
they were refunding lessor amount after deducting not only the commission
but also the dividend, which had accrued on the deposit.
(5) The Company instead of paying every Member of the Subscribers’
Association has paid to 186 Members only.
So far as the first claim is concerned, we are of the opinion that the
Company was liable to pay interest at the rate of 25% even on the deposit
of Rs. 5 Lakhs. It is not disputed that the interest at the rate of 25% has
been paid on the deposit from 6.4.1990. We, therefore, direct that the
Holding Company shall pay interest at the rate of 25% on Rs. 5 lakhs from
3.11.1989 to 5.4.1990 minus the interest which has been earned on this
amount and becomes payable to Subscribers’ Association.
As regards second claim, we clarify our Order dated 14th May, 1993 that the
25% interest directed to be paid by the Holding Company was towards
compensation on the total deposits made by the Subscribers’ Association in
the course of adjusting equities between parties. From the document filed
in this Court it appears that the Holding Company after deducting income-
tax has deposited the same with the Income-tax Depart-ment. 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.
As regards the direction to pay interest at 12% in claim 3, it appears the
claim of the Subscribers’ Association for purchasing the land offered by
the holding Company was accepted by the holding Company was accepted by the
High Court on 6,10.1989. When we passed the Order our intention was that
they shall be entitled to interest from the date when their claim
applications were decided by the Kerala High Court. Consequently, we direct
the Holding Company to pay interest on amounts payable to them 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 21.2.1991 to
As regards claim (5), for the payment of money to the subscribers as shown
in the pass books, it was urged on behalf of the Company that when the
mater was pending in the High Court a scheme was prepared for payment with
consent of parties and it was agreed that the refund shall be made of the
actual subscribed amounts and not the dividend earned on such amounts. The
Company was further permitted to deduct 5% commission on it. This is
substantiated by copy of the Order dated 24th June, 1992 of the High Court
produced by the learned counsel for the Company. This order was passed on
an application filed by an ex-subscriber. It was observed :
“………Clause 1 of Annexure R1 shows that the subscribers are being paid
by the company in liquidation ” on the basis of actual subscriptions less
Forman’s commission”. Therefore, payments are’ being made pursuant to the
Scheme without reference to the dividend. It is reasonable to hold
therefore that the company in liquidation is not, under the scheme, bound
to pay dividend.”
Since the scheme was framed with agreement and large number of subscribers
have been paid in accordance with it the claim of the subscribers is not
justified. The payment of the actual amount after deducting 5%” commission
without any dividend does not call for any interference.
….So far as the Membership is concerned, it is not disputed that 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
claim of the applicant, therefore, for enlarging the Membership cannot be
The application is disposed of accordingly.