Elder Pharma: Bombay HC appoints provisional liquidator to settle claims of complainants
The Bombay High Court has appointed the Official Liquidator attached to the Court as Provisional Liquidator of Elder Pharmaceuticals Ltd.
A copy of the letter has been sent to Moneylife Foundation by the Office of the Official Liquidator of High Court, Bombay, since Elder Pharma is one of the many companies that was highlighted by the Foundation in a Memorandum last year to the Ministry of Corporate Affairs (MCA). The MCA had forwarded the Memorandum as complaint to the Official Liquidator's Office.
The letter says, "...the Official Liquidator has informed to the complainants that they may file their claim in prescribed form no.66
endorsing copy to them and also informed that their claims will be adjudicated and settled in terms of provisions of section 529, 529(A) and 530 of the Companies Act, subject to the availability of funds in the credit of the Company (in provisional liquidation)".
Last year on 19th September, the Bombay HC, while hearing the case filed by Puspasen C Jhaveri, Premier Ferro Alloys & Securities Ltd and Neelam Securities Pvt Ltd, had asked to appoint a provisional liquidator for Elder Pharma.
The Moneylife Foundation's compilation showed that H&M accounts for the largest number of complaints. Besides H&M, companies, which have a large number of complaints are: Elder Pharmaceuticals, Jaypee Group, Unitech, Plethico Pharmaceuticals and Bilcare Ltd. The other companies were: Neesa Leisure, Phadnis Infrastructure, Micro Technologies, Jaypee Infratech, Yash Birla group of companies and Omnitech Infosolutions.
The survey found that a majority of the aggrieved depositors choose to complain to the company itself, which is pointless. The Company Law Board (CLB), MCA, economic offences wing (EOW) and the Securities & Exchange Board of India (SEBI) are the regulatory agencies with whom they should seek to get their grievance redressed.
In April 2016, the Company Law Board (CLB) had dismissed an application filed by Elder Pharmaceuticals seeking extension of time for repaying the dues to its FD holders. During the same month, the Bombay High Court had granted time till August to Elder Pharma to generate funds for clearing dues of investors. The HC had also warned the Company about appointing a liquidator in case Elder Pharma fails to meet the deadline.
While the pharma company makes its corporate fixed deposits (FDs) holders run from pillar to post, in July 2016, the Central Bureau of Investigation (CBI) alleged in a first information report (FIR) that Elder Pharma bribed BK Bansal, the Director General in MCA to prevent a Serious Fraud Investigation on the Company.
What does this mean for the fixed deposit holders for Elder Pharma? Unfortunately, the news is not very encouraging for them. After the liquidation proceedings, the secured creditors of the company and the tax department will have first right to whatever is recovered and the depositors claim would come only later. This is one reason why Moneylife discourages savers from investing in corporate fixed deposits, barring a handful of exceptions.