Notice to be issued to Maharashtra Apex Corp

The National Consumer Dispute Redressal Commission (NCDRC) has ordered that notices be issued to the senior management of the Maharashtra Apex Corporation Ltd (MACL), one of the leading non-banking financial companies in Karnataka, now gone sick.

On a petition filed by the Karnataka Consumers' Forum of Mysore, the NCDRC ordered the issuing of notices to T. Ramesh Pai, chairman MACL, T. Sudakar Pai, managing director, MACL., and managing director of the Industrial & Technical Consultancy Organisation of Tamil Nadu (ITCOT). They have been directed to file their replies on December 14.

S.P. Thirumala Rao, president of the forum, a voluntary consumer organisation of Mysore, said in his complaint that a large number of depositors had invested their hard-earned money in the unsecured term deposits and non-convertible secured debenture bonds of MACL.

The MACL prospectus, issued to attract deposits for its debentures from the general public in 1998, highlighted the service rendered by the three generations of Pais of Manipal through their flagship Company, MACL.

It stated that in compliance with the directions issued by the Reserve Bank of India, in order to safeguard public deposits from unscrupulous non-banking finance corporations (NBFCs), the MACL had decided to come out with non-convertible secured debentures of the face value of Rs 1,000 each of a five-year tenure.

It was stated that ITCOT were to be the trustees to the issue. The duties and responsibilities of the trustees included protection of the interests of debenture holders in the event of default by the company, in regard to timely payment of interest and repayment of the principal.

However, as against its promise, MACL, after some time, failed to pay interest and refund the invested money on the bonds at the time of redemption in 2003. It had promised a 16 per cent interest for each bond of the Rs 50-crore issue. The total interest per annum amounted to Rs 8 crore.

This amount was retained by the corporation for over two years by adopting unfair trade practice and deficiency in service under the Consumer Protection Act, Rao complained and sought refund of the deposit amount to the depositors and credit Rs. 16 crores to the Consumer Welfare Fund as prescribed in Rule 10A of the Consumer Protect Rules.

This is the first such complaint to be filed before the NCDRC under the amended Consumer Protection Act, where the NCDRC had been sought to credit not less than 5 per cent of the amount retained by an opposite party to the Central Consumer Welfare Fund, as prescribed in the rules, the forum president said in his press release.