Recovery of amounts owed by a company under a fixed deposit scheme can be executed through various judicial measures. Some of these are highlighted here.
1. Application under Form 4 before Company Law Board, Chennai
Under the Companies Act, 1956 as well as Companies Act, 2013, the Company Law Board is empowered to adjudicate upon an application by a Fixed Deposit holder seeking for repayment of principal and interest owed by a company. The relevant Form 4 for application is provided here on page 24.
As H&M is having its registered office which falls within the jurisdiction of the Company Law Board, Chennai the application has to be made in Chennai.
Ordinarily an application made to the CLB will be disposed between 6 months to a year from date of filing.
Fees are nominal and there is no necessity of hiring a lawyer for representation.
2. Filing of Winding Up Petition in Madras High Court
Under the Companies Act, 1956 as well as Companies Act, 2013, if any debt is owed by a company, the creditor can issue a notice for winding up of the company. After notice has been served on the company at its registered office, 30 days are given to the company to meet the debt. If the same is not repaid within such period, a winding up petition can be filed.
Winding up of a company signifies that if the company is unable to meet its financial obligations, the court can order the company's administration and assets to be handed over to an Official Liquidator for ascertaining and liquidation of assets and redistribution of the same among the various creditors. The court has wide powers in a winding up petition and can even call a creditors' meeting and permit a compromise or a structured scheme for repayment without having to necessarily wind up the company. The court may even hand over temporarily, administration of the company to a third person till such financial obligation is met.
As H&M is having its registered office which falls within the jurisdiction of the Madras High Courtpetition has to be filed in Chennai.
Ordinarily a writ petition will be disposed between 2 to 3 years from date of filing.
Fees are nominal but legal representation is necessary.
3. Civil Suit for Recovery of Dues
Under Order VII of the Code of Civil Procedure, 1908, one can file a civil suit for recovery of money owed.
This has to be filed in the court where the cause of action arose. Ordinarily, it would be advisable to file this in Chennai although one can establish cause of action even in other jurisdictions depending upon the facts and circumstances of each case.
This can take quite long to be adjudicated upon (between 6 to 7 years). Court fees are quite high and legal representation is necessary.
4. Summary Suit for Recovery of Acknowledged Debt
Under Order XXXVII of the Code of Civil Procedure, 1908, one can file a summary suit.
Very similar to the Civil Suit, this is a faster and cheaper option especially in cases where the debt is acknowledged by the company. For example through FD Receipts or through letters sent asking creditors to delay presentation of post dated cheques towards satisfaction of the debt. This is because if the debt is acknowledged by the company, it is permitted to defend the case only and only if it has a serious prima facie defence.
Once again the same rules for jurisdiction apply. Disposal of the case can happen within 2 years. Court fees are reasonable but legal representation is necessary.
5. Cheque Bouncing Case
If the company has given you a cheque towards satisfaction of your debt and the cheque when properly presented has been dishonored, you can file a case under S. 138 of the Negotiable Instruments Act, 1881.
Notice of dishonor of cheque needs to be served upon the company within 30 days of the cheque being dishonored. 30 days time is to be given towards satisfaction of the debt from date of receipt of notice to the company. If within 30 days the debt is not satisfied, one can file the case before the Magistrate Courts.
Case can be filed in the court which has jurisdiction over the bank where the cheque was presented.
Time taken for adjudication can be between 3 to 4 years. Court fees are reasonable and legal representation is necessary. As the charge is of criminal nature often these cases are settled outside court.
6. Criminal Cases
Under S. 406, 417 and 420 of the Indian Penal Code, 1860 one can file a criminal case against the key officials of the company for breach of trust and cheating.
Case can be filed in the court which has jurisdiction where the fraud was committed.
Time taken for adjudication can be between 6 to 10 years as it is assumed that the party is innocent unless found guilty. Legal representation is necessary.
7. Complaint to Economic Offences Wing, Chennai
The Tamil Nadu Protection of Interest of Depositors (in Financial Establishments) Act, 1997 empowers the EOW to investigate complaints of depositors against companies. A complaint must be registered with the DSP, EOW, Chennai for process to begin.
The time taken for disposal of the complaint can be between 2 to 3 years. Legal representation is not required as the EOW carries out the investigation and legal fight on your behalf.
8. Investor Complaint lodged on MCA Portal
One can also file a complaint on the Ministry of Company Affairs web page by first creating a user identity and then filling up this form and submitting it.
However please note that invariably the reply is to take the matter up before the Company Law Board.