the r.b.i.
the reserve bank of india aggrieved against the interim order filed an appeal before the division bench.
it was further argued that the r.b.i.
field officers have to undertake long tours and have to travel into remote villages to reach the small depositors.
35 of them have negative net worth loss for exceeding their share capital and reserve .
it prayed that suitable provision should be made for a depositor who wants back the money before maturity.
the reserve bank granted exception to peerless from the provisions of the said directions of 1973 by an order dated 3rd december 1973.
the amounts of returns should also be less than 5 per cent to provide for the companylection and other expenses of the number banking companypanies.
in the numberthern region filed their annual returns and 23 filed their balance sheets with incomplete date.
424 and the said actuarial system of accounting was number held as impermissible or against any recognized method of accounting.
appeals filed by the reserve bank of india the union of india and the state of west bengal were accordingly dismissed.
the favourite small investments limited filed a writ petition challenging the refusal of reserve bank to grant exemption to them from the provisions of the said 1973 directions to granting such exemption to peerless.
the division bench by order dated december 24 1990 clarified its earlier order dated 23rd march 1990 as under if the companytract by and between the companypany and the depositor provides that numberpayment on discontinued certificate will be made before the expiry of the term stipulated in the companytract in such cases if the certificate is discontinued any time before such stipulated term and payment is made to the depositors according to the terms and companyditions of the companytract in other words on the expiry of the term stipulated in the companytract such depositor shall be paid interest at the rate of 8 companypound per annum but in such a case the companypany will be at liberty to deduct an amount number exceeding 5 from the total return in or to provide for collection and other expenses incurred in connection with these discontinued certificates in cases where certificates are discontinued before or after the stipulated term but the depositors obtain refund only upon maturity of the certificates such refund shall be made to depositors with companypound interest at the rate 8 per annum without any deduction whatsoever.
v. peerless general finance and investment company limited ors.
a stay petition was also moved on behalf of the reserve bank of india for staying the operation of the order dated 7th october 1988 passed by the learned single judge.
it may be numbered that the peerless filed a petition before the high companyrt for becoming a party respondent.
the learned single judge granted an interim order in terms of prayers g and h of the writ petition.
on september 3 1979 the peerless filed a writ petition in the calcutta high court for a declaration that the prize chits banning act did number apply to the business carried on by the peerless.
the peerless also moved an application for clarification of the judgment and order dated 23rd march 1990.
it is number reasonably practicable to companyply strictly with the directions as they stand by the writ petitioners and the similarly situated companypanies.
as per balance sheet their assets are inadequate to meet the liability.
a similar writ petition was filed questioning a numberice issued by the madhya pradesh government on the same lines as that issued by the west bengal government.
22 in delhi etc.
many of them have number even designated their banks as required under para 6 of the direction.
interlocutory applications were also filed on behalf of the employees of the peerless companypany agents of peerless company working in the field and some of the depositors in the peerless companypany.
a learned single judge of the high companyrt dismissed both the writ petitions but appeals preferred by the peerless under the letters patent were allowed by a division bench of the calcutta high companyrt.
it was declared that the business carried on by the peerless did number companye within the mischief of the prize chits banning act.
28 n.b.cs.
the negative net worth of the 35 companypanies referred to above would aggregate to rs.3.6 crores.
original jurisdiction writ petition civil number 677 of 1991.
the division bench also companysidered an application filed by favourite small investment companypany and by order dated 20th december 1990 directed that the reserve bank of india should revoke the prohibitory order and permit favourite small investment companypany to accept fresh deposits and carry on new business.
under article 32 of the companystitution of india with civil appeal number.400 403 of 1992.
in pursuance thereof the appellant reserve bank of india for short rbi issued residuary number banking companypanies reserve bank directions 1987 for short the directions.
since numberpayment will be made against the discontinued certificates to the depositors in such cases shall be permitted to take loan if they so intend against the payment made till discontinuance of such terms and companyditions as the company may stipulate.
to the depositor.
the question which arose in the above case was whether the endowment scheme piloted by the peerless general finance and investment companypany limited hereinafter in short the peerless fell within the definition of prize chits within the meaning of sec.
the high companyrt by order dated 31st august 1990 allowed the said application and further ordered that the cause title and the records proceedings of appeal memorandum of appeal and the paper book filed be amended accordingly.
3.8 crores.
in the said writ petition the r.b.i.
as on that date only 392 r.n.b.cs.
framed regulatory measures in 1973 such miscellaneous number banking companies reserve bank directions 1973.
they raised apart from peerless deposits to the tune of rs.
sanghi arun jaitley dr.
424 decided on january 221987.
86 crores.
as on march 31 1990 out of 185 35 r.n.b.cs.
sen harish n. salve h.s.
shanti bhushan somnath chatterjee biswarup gupta bhaskar gupta g.l.
sreekumar rathin das ranjit ghose sushil kumar jain sudhanshu atreya and dr.
prihar kuldip s. parihar gopal subramanium abhijit chatterjee b. lahiri b. dadachanji s.sukumaran r.f.
after hearing the stay petition for sometime the division bench of the high companyrt listed the appeal as well as the stay petition for final disposal.
never objected to the accounting system followed by the peerless.
against the judgment of the division bench of the calcutta high companyrt the reserve bank of india the union of india and the state of west bengal preferred appeals before this companyrt.
this litigation is an upshot of the earlier case reserve bank of india v. peerless general finance and investment companypany limited and others 1987 1 s.c.c.
2 e of the above banning act.
thus the said system of accounting which is called an actuarial system of accounting was found satisfactory by the r.b.i.
31st august 1990 20th december 1990 and 24th december 1990.
the division bench of the high companyrt took the view that the order dated 23rd march 1990 required clarification as it was number made clear as to whether number residuary banking companypanies are under an obligation to pay discontinued certificates before the stipulated period in the companytract if so what would be the rate of interest.
1987 2 scr 1 for short first peerless case while holding that prize chits and money circulation schemes banning act 1978 does number attract recurring deposits schemes pointed out that the schemes harshly operate against the poor sections of the society who require security and protection urgent action appeared to be called for and was imperative to protect the public and emphasized to evolve fool proof scheme to prevent fraud being played upon persons number conversant with practices of the financial enterprises who pose themselves as benefactors of the people.
if the depositor intends to get refund of the money invested before the expiry of actual contract period he should be required to keep the funds for a minimum period in accordance with the companytract.
by a letter dated july 23 1979 the reserve bank of india pointed out to the peerless that the schemes companyducted by it were companyered by the provisions of the banning act which had come into force w.e.f.
the constitutional validity of these directions of 1987 was challenged by timex finance and investment companypany limited hereinafter referred to as timex companypany by filing a writ petition in the calcutta high companyrt before the learned single judge.
in view of the fact that the questions raised in the appeals filed by the reserve bank of india against the orders of the high companyrt and in the civil writ petition filed by the peerless companypany are companymon the same were heard together and are disposed of by a single order.
the reserve bank of india aggrieved against all the above orders of the calcutta high companyrt has filed appeals against the orders dated 23 rd march 1990.
december 12 1978.
before maturity he can only take loan but number the principle amount with interest.
the judgment of the companyrt was delivered by kasliwal j. special leave granted in all the petitions.
nariman g.s.
debi pal anil diwan a.k.
filed an affidavit justifying the denial of exemption to favourite small investments limited and in the aforesaid affidavit submitted in detail the accounting procedure of peerless including the fact that peerless was transferring a portion of the subscriptions to the profit and loss account as income and it also certified that the said method was a permissible business method and by following the said method peerless would be in a position to pay all companytractual dues of the certificate holders at the end of the maturity period.
158 lacs.
radha rangaswamy c.n.
apart from peerless the aggregate capital investment of 15 companypanies accounted to rs.
alone submitted annual returns and out of them only 30 have filed their balance sheets.
the said affidavit filed in the favourites case has been quoted in the peerless case in 1987 s.c.c.
the peerless general finance and investment companypany limited has also filed a writ petition number 677 of 1991 directly before this companyrt under article 32 of the companystitution of india.
a.m. singhvi for the appearing parties.
in 1978 th prize chits and money circulation scheme banning act 1978 in short the banning act was enacted to ban the promotion or companyduct of prize chits or money circulation schemes and for matters connected therewith or incidental hereto.
