NEW DELHI, April 21: Hoffland Finance ltd (HFL) has sought permission from the Company Law Board for its deposit repayment scheme. In a written communication to the board, Hoffland Finance said it would give depositors two repayment options beginning August 1998. Under the first option, the entire principal amount would be re-paid in six quarterly installments before December 1999, while in the second option, the amount would be repaid in two equal installments by the third-quarter of 2000.Hoffland chairman B B Sharma told the Company Law Board, "We are confident of generating sufficient resources by selling real estate, realisation from debtors and through fresh business after August 1998." The company had suffered huge losses because of the general downtrend in the financial services business along with the depressed primary and secondary markets. The company suffered a further setback when the Securities & Exchange Board of India (SEBI) suspended its operations for a year beginning August1997.
Hoffland Finance had reportedly told the Company Law Board in its earlier hearing in February that the money raised by it were loans against securities and not fixed deposits. Following this, CLB had asked for a detailed reply from the company.
Under Option I of the repayment scheme, 5 per cent of the principal amount would be paid in first-quarter beginning August 1998. While 10 per cent, 15 per cent and 20 per cent of the amount would be paid in second, third and fourth quarter, respectively. The balance would be paid in two equal installments during the fifth and sixth quarter. Under Option II, 50 per cent of the principal would be paid after two years, 20 per cent in second quarter of 2000 and the balance in the third quarter of the same year. Under this option, investors would be paid interest but only in the fourth quarter of 2000. The scheme states that interest above 15 per cent will be treated as principal.
The total deposits raised by Hoffland Finance was around Rs 40 crore whichincluded Rs 20 crore each of secured and unsecured deposits. The repayment scheme is only for the unsecured deposits.
Meanwhile, the Hoffland Investor Forum, comprising 800 investors, have moved an application before CLB for early redressal of their complaint. In its application, the forum has stated "CLB is competent to safeguard the interest of the company by passing an order to repay the amount within a specified period and in case of a violation of the order, the company officials must be made punishable with imprisonment". Hoffland Finance has already been been booked under Section 58-A of the Companies Act.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
