Claimed but unpaid deposit

Dear All,

There is a deposit which falls due on April 18, 2010 to be transferred to IEPF.

The query is as follows:  

The fact of the matter is that one deposit holder Mr. J had placed two Fixed Deposits with GRUH for Rs.50,000/- each on 18.4.2000 for a period of 3 years.  Both the FDs had matured on 18.4.2003.  Both the FDRs are having nomination in favour of Mr. A.

Meanwhile, the Company received two applications for loan against FDRs from the FD holder on 18.1.2001, who had submitted the FDRs duly discharged with the Company.  The applications were processed and loans were sanctioned.  During the same period, the Company received an intimation from a Bank informing that someone had been trying to open a bank account with the bank in the name of Mr J, fraudulently.  Therefore, the Company had issued a letter to the FDR holder informing stop payment of the two cheques issued in his favour for Rs.37,500/- each being the loan against above FDRs.

The Company had subsequently come to know that the deposit holder had died on 11.10.2000 and the above two FDRs were stolen by his driver who had made the application for loan against FDs.  A police complaint was filed by Bank and the Judicial Magistrate Court had directed the investigating police to verify the original FDRs, application for loan against FD, from the Company. 

Accordingly, the Company had submitted the two original FDRs, original pledge letter for loan against deposits, promissory note for loan against deposits, original application for FDs etc. to the police inspector for verification by hand-writing expert, on 21.06.2001.

The nominee of the FDRs Mr A  had submitted a letter dated 31.5.2001 to the Company duly informing the death of the FDR holder (copy of death certificate), with a request to continue the FDR till its maturity.  Since the nominee was staying abroad (in U.K), he had intimated the contact address also to Company.

In February 2008, the nominee of FDR Mr A approached the Company with a request to release the maturity amount of both FDRs.  As the Company had already deposited the original FDRs and other documents to the investigating police as per the directions of the Court, the Company had informed the nominee that the matter is sub judice and hence cannot release the payment to him.

As on date the FDs are lying unpaid with Company for about 7 years; would complete 7 years on 18.4.2010.

Our observation is that the Court had never put any restriction from making maturity payment of the FDRs to the nominee. The complaint filed in the Court and the subsequent investigation is against an attempt of fraud committed by the driver of the original deposit holder and the Company is in no way involved in the matter.  The Company is not made a party to the complaint and there is no restriction on the Company to make the maturity payment to the deposit holder/ nominee.

The nominee had made a claim of the maturity amount of both FDRs in February 2008 and the Company had denied the payment to the nominee.

Under the above circumstances, we would solicit your opinion –

1. Whether the deposits being matured on 18.4.2010 would fall within the purview of “Unpaid / unclaimed amounts lying with the Company” which require transfer of the amounts to the “Investor Education & Protection Fund” under section of 205C of the Companies Act.
2. In a situation where the legal heir/s are asked to submit the Succession Certificate for claiming the FD amount and the legal heirs are not able to obtain the same from the Court for any reason whatsoever, and in the process the 7 years period elapses, would such amounts be also required to be transferred to the “Investor Education & Protection Fund” under section of 205C of the Companies Act.
3. In another situation where the CBI has subsequent to some inquiry, advised the company not to pay the maturity amount but to renew the same as and when the same is matured.  However, the deposit holder has not renewed the same and in the process the 7 years have passed without making a claim. Will such an amount also be transferred to the IEFP.