M/S.Integrated Finance Company v. The Federal Bank Limited

Comp.A.No.705 of 2015 in C.P.No.172 of 2012 V.RAMASUBRAMANIAN,J.

This is an application seeking the transfer of the Government of India Bonds and Government Securities maintained with the Federal Bank for the purpose of Statutory Liquidity Ratio and also seeking permission to allow the applicant to utilise the accumulated interest that is now lying idle in current account.

2. Heard Mr.V.P.Raman, learned counsel for the applicant, Mr.APS.Kasthurirangan, learned counsel for the Bank, which is the petitioning creditor and Mr.T.Gowthaman, learned counsel appearing for Depositors Association.

3. The applicant is a non banking finance company. The company had deposited so much of money with the Federal Bank of India Limited as was sufficient for investment in Government of India Bonds and Government Securities, for the purpose of maintaining the Statutory Liquidity Ratio, as stipulated by the Reserve Bank of India. It appears that an amount of Rs.4,02,79,115.72 has accrued towards interest for the period from 01.11.2013 to 31.3.2015 on the investments so made. But, unfortunately, since the applicant is caught in series of difficulties, the accumulated interest is now lying in a current account with the Federal Bank, without earning any (2)

interest. Hence, the present application.

4. The Federal Bank has filed a counter affidavit to this application. In their counter, they have expressed willingness to transfer the amount now lying in current account, to an interest bearing account, with any of their branches.

5. There are three options open to this Court, namely (a) to direct the Federal Bank to invest not only the amount lying in current account, but also future interests, in similar Government of India Bonds and Government Securities, (b) to direct the Federal Bank to keep the amounts so far accumulated and the amounts that will come in future, in an interest bearing account, so that such a huge amount does not lie idle, and (c) to transfer all the proceeds to another Bank.

6. There is opposition to the third alternative, in view of the fact that Federal Bank also happens to be a unsecured creditor, which has filed petition for winding up.

7. As between the first and second options, the second option appears to be more profitable. The rate of interest payable by the Government of India on their securities is only about 6% per annum. (3)

8. It is stated by Mr.APS.Kasturirangan, learned counsel for the Federal Bank that the rate of interest payable on fixed deposits as on date is nearly about 8.75%. Therefore, I am of the considered view that directing the Federal Bank to transfer the amount now lying in current account and also the interest that will accrue in future to be kept in an interest bearing fixed deposit will meet the ends of justice.

9. Therefore, this application is disposed of directing the Federal Bank to immediately transfer the amount now available in current A/c No. 11000200039250 to an interest bearing fixed deposit account. The interest that accrues in future on the investments made towards Statutory Liquidity Ratio shall also be invested in recurring deposits, so that they do not lie idle. The Bank shall also file a statement after transferring the amount to the fixed deposit account.

20.7.2015.

kpl

V.RAMASUBRAMANIAN,J kpl Comp.A.No.705 of 2015 in C.P.No.172 of 2012 20.7.2015