The Hindu Business Line : Payments to depositors — Madras HC orders auctioning of jeweller's assets

THE Madras High Court has directed the competent authority to sell by public auction the assets of the Chennai-based Bharathi Gems and Jewels to pay the dues to the 9,100 depositors who have been waiting for a decade to get back their monies. The total deposits mobilised by the firm amounted to Rs 21 crore.

A Division Bench consisting of Mr Justice P. Sathasivam and Mr Justice A.R. Ramalingam, while dismissing an appeal by the proprietor of the finance firm, Mr S. Thuraisingham, against the court's order dated August 20, 2003 seeking postponement of the payment of the first instalment, noted that the Depositors' Association had informed the court that they were "ready to face the consequences" following sale of the movable and immovable properties of the firm and they were willing to receive the amount from the proposed auction.

The Bench said that the petition preferred earlier by the proprietor of the firm praying for extension of time by three months (from December 19, 2003) for disbursement of the first instalment of the dues to the depositors (equivalent to 10 per cent of the total deposits) was being dismissed as he had "not only cheated the depositors in committing the default, but also misled this court by giving false assurance'' that he would revive their business.

In response to a petition filed by the Depositors' Association, the proprietor was directed to hand over all the properties attached earlier by the competent authority and the Commissioner of Land Administration within a period of two weeks, and in case of failure, the said authority was permitted to take possession of the properties, both movable and immovable, with the aid of police.

The competent authority was directed to take all endeavours to bring the said properties far sale through auction and realise the money therefrom.

The authority was free to distribute the amount among the depositors, numbering 9,100, proportionately.

The firm had filed an application before the Special Judge appointed under the TN Protection of Interest of Depositors (in Financial Establishments) Act, 1997, for grant of permission to re-commence his business of sale of gems and jewellery by handing over the re-possession of the attached properties.

He also prayed for postponing payment of the 1st instalment of the depositors' dues by 3 months (from December 19, 2003). The application was dismissed. Hence, the present appeal.

The court by its order dated August 20, 2003 had, as a temporary measure, agreed to the agreement reached on March 24, 2001 between the proprietor of the firm and the Depositors' Association for recommencement of the firm's business, which might facilitate repayment of the dues of the depositors.

The court said that if any difficulty was experienced in implementing the agreement, the parties could very well approach the court for modification of the agreement.

The Bench noted that the firm could not recommence its business for various reasons of its own. Therefore, the Bench had no other option except to reject the request of the firm to postpone the payment of the first instalment. It directed the competent authority to sell through public auction all the properties of the firm and the money thus realised should be paid to the depositors proportionately.