The Supreme Court has allowed CRB Capital Markets, a non-banking finance company (NBFC), to propose another revival scheme which is both in public interest and in conformity with all the corporate and income tax laws.
The NBFC is accused of duping around 1.35 lakh small investors and several financial institutions of Rs 1,200 crore in the 1990s.
A bench headed by Justice AR Dave confirmed the order of the division bench (DB) of the Delhi High Court, which had in November 2012 set aside its single judge’s order of 2006 that approved the revival scheme of CRB, saying that it violated statutory provisions and was against public policy.
“We make it clear that there is no bar on CRB Capital propounding another scheme during the pendency of the said winding-up petition or even thereafter, in case winding-up is ordered. However, only such a scheme may be propounded, which does not contravene any of the statutory provisions contained in the Companies Act, the RBI Act, the SEBI Act or the Income Tax Act or any other statutory provision and which is in public interest and not opposed to public policy,” the HC had said.
However, the apex court clarified that the directions to disburse the payments to investors, senior citizens and weaker sections, as per the December 2010 interim order of the DB will remain operative and will be subject to further order of the single judge.
“The disbursements will not imply that the scheme which has been set aside stands revived,” the top court ruled, adding that there is no bar to revise the earlier scheme and present it for reconsideration of the company judge who will expedite the matter.
The SC had in January 2013 stayed winding-up proceedings initiated by RBI and others in the HC.
Counsel Jay Savla, who appeared for 18 cooperative banks from Gujarat, said: “We were supporting the scheme as we are getting some money, but our wait got prolonged due to the tussle between RBI and other agencies and the agony still continues. Banks’ assets are decreasing and we apprehend being declared as weak banks.”
While senior counsel Sudhanshu Batra appeared for CRB, counsel Ramesh Babu appeared for RBI.
CRB chairman Chain Roop Bhansali had floated the company in May 1985 and converted it into a non-banking financial company in October 1996. The CBI had registered various cases against Bhansali, some SBI officials and others for duping Bank of Baroda and State Bank of India of `3.43 crore and `57 crore, respectively, in 1997, under the Indian Penal Code and Prevention of Corruption Act.
According to the CBI, CRB had issued warrants for huge amounts from these banks favouring its own associates who were ineligible for such fixed deposit repayment and brokerage warrants as they neither mobilised funds for the company, nor maintained deposits with it. The warrants were later encashed from SBI and BoB branches across the country, thus causing losses to the banks, it stated.