The Hindu Business Line : Madras HC orders payment for small depositors of MCC Finance

AS a final settlement of the dues of small depositors of the Chennai-based MCC Finance Ltd, which has since been wound up, the Madras High Court has directed the Administrator of the company to disburse to the 9,989 depositors (whose total deposits with the company do not exceed Rs 10,000) 29 per cent of the deposits in one instalment.

Other depositors would be paid 4 per cent of their deposits. As and when the promoters remitted the subsequent instalments, further distribution would be made in convenient instalments.

The First Bench, comprising the Chief Justice, Mr B. Subhashan Reddy, and Mr Justice A. Kulasekaran, while hearing a petition from the administrator pleading for sanction to distribute to the small depositors (whose deposits do no exceed Rs 10,000) the entire amount of 29 per cent due to them, noted the plea of the petitioner that some amount could be saved even to the tune of some lakhs of rupees, if the instalments of the amount conforming to 29 per cent was paid to the depositors, who were substantial in number, i.e., 9,989.

"In the circumstances, we direct that the disbursement to 9,989 depositors, whose total deposits do not exceed Rs 10,000 shall be made in one lump-sum," the bench said.

The administrator would be despatching to the depositors, warrants on UTI Bank Ltd encashable at par at all branches of the bank. The mailing of warrants would commence on April 5.

MCC Finance Ltd was ordered to be wound up by the High Court on August 21, 2000 since it was unable to repay the deposits made by the public amounting to Rs 176 crore. Subsequently, the court ordered the promoters to remit a sum of Rs 60 crore for distribution to the depositors. Out of this amount, the depositors were paid three instalments of 15 per cent, 15 per cent and 6 per cent each totalling to 36 per cent of the amounts due to them as on January 31, 1999.

Later, the promoters submitted a scheme for final settlement of the dues to the depositors. On January 28, 2004, the court directed the promoters to pay a further amount of Rs 52.39 crore in instalments spread over a period 18 months. This was in addition to Rs 60 crore already remitted by them. The amount of Rs 52.39 crore was utilised for payment to the depositors as per a formula.

The promoters had since remitted (out of the commitment of Rs 52.39 crore) the first instalment of Rs 7.39 crore.

The bench directed that the money should be paid to the depositors, with the small depositors getting the entire 29 per cent of their deposits in one instalment.

In its order, the Bench clarified that instead of depositing the amount (with the court), the promoters of the company could now deposit straight to the administrator.

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