Patna HC orders freezing of assets of 918 NBFC’s
Patna High Court orders freezing of assets of 918 fly by night NBFC’s (Non bank financial companies) who are alleged to have swindled public money.Updated: Apr 12, 2007, 12:06 IST
The Patna High Court has directed the RBI and Registrar of Companies to issue necessary guidelines to all nationalised as well as private banks to freeze the accounts of 918 non-banking financial companies (NBFCs) who have defaulted on repayment of deposits and file a status report in this regard.
In a bid to recover the investments made by daily wagers, pensioners and middle-class people that were swallowed by the fly-by-night NBFCs which operated across the State, the court restrained all the 918 defaulting NBFCs from transferring, alienating and mortgaging any movable or immovable assets belonging to them without prior permission of the HC.
Expressing concern over the fraud committed on small investors, the court said that ‘lakhs of people had been robbed of their hard-earned money by these NBFCs.
While hearing a public interest petition seeking the court’s direction for recovery of Rs 12,000 crores deposits swindled by different NBFCs, a Division Bench of Chief Justice J N Bhatt and Justice Shailesh Kumar Sinha directed the Registrar of Companies to initiate prosecution against all defaulters and file an exhaustive report in the court on May 22.
The court also directed the State Government to file the ‘action taken report’ (ATR) with regard to steps taken under Bihar Protection of Interest of Depositors Act 2002 for recovery of the swindled deposits on the next date of hearing.
ROC counsel Sanjay Kumar said that altogether 918 NBFCs have defaulted on repayment and prosecution had already been initiated against 158 of them, whereas RBI counsel Chitranjan Sinha informed the Bench that his client had requested the company law board to take action against the erring NBFCs. State counsel JP Karn told the court that the Directorate to regulate NBFCs had been made functional. He added that notices were also published in local dailies inviting complaints from the victims of NBFCs.
The Bench was hearing the PIL filed by Council for Protection of Civil Rights and Liberties through advocate MP Gupta complaining of the fraud committed by NBFCs. It stated that the NBFC enquiry commission headed by a Patna High Court judge had made recommendation to the State Government in August 2000 itself and thereafter laws to protect small investors were also enacted.
Referring to the Bihar Protection of Interest of Depositors (in Financial Establishment) Act 2002 and subsequent rules of 2004, it added that these rules enabled the State Government to take action against unscrupulous promoters and directors of financial establishment which defaulted on repaying the money taken from the public as deposits.