Shorthand Dictation, Legal, Transcription No. 1

   The Reserve Bank of India issued a circular letter bringing the directions to the notice of companies like Peerless. On September 14, 1973, the Peerless Company addressed a letter to the Reserve Bank of India explaining the nature of their business and claiming that their business was outside the scope of the directions issued by the Reserve Bank. Most important of all, it was requested that, if it was thought that their business attracted the notification, they should be granted (80) exemption from the applicability of the notification as provided by paragraph 13. It was pointed out that their business was [100] of a special type, that it was carried on scientific lines and actuarial principles and that the applicability of the {120} notification would injuriously affect two hundred thousands of subscribers that 20,000 persons would lose employment and that the potential for future employment would be destroyed. It was further pointed out that over 90% of the concerned Public Fund was invested (160) in Government securities and in Nationalised Banks. The Balance-sheet of the company, its brochure and a copy of its advertisement were enclosed.

     The Reserve Bank of India by their order dated December 3, 1973 exempted the company from the provisions of paragraph 4 of the notification in so far as those provisions restricted the acceptance of subscriptions under the schemes upto 25% of the paid-up capital and free reserve fund. Certain conditions were however, imposed. The company was directed to {(240)} transfer every year to the reserve fund a sum not less than 50% of the profit after taxes. The company was directed not to declare any dividend at rates higher than 6% and 7% on ordinary and preferential shares till the free reserve became equal to the paid capital. The company was also required to maintain not less than [300] 75% of its total assets in the form of investments and Government Trustee-securities, etc.

    The Company was directed to submit (320) every year a certificate from their Auditors in regard to compliance with the conditions imposed. The exemption was to be reviewed every two years. It appears that there was an inspection in 1974, but we have no information about {360} the findings in the course of the inspection. Evidently, nothing objectionable was found.     This is apparent from the affidavit filed on behalf of the Reserve Bank of India in the Calcutta High Court in Civil Rule No. 5941 (W) 77, a writ petition [(400)] filed by Favourite Investment Company challenging the refusal of the Reserve Bank to grant them exemption from the Miscellaneous Non-Banking Companies Directions, 1973 and complaining of discrimination in that such an exemption had been granted to Peerless. Comparing the schemes of the two companies, it was pointed out in the affidavit that the Endowment Certificates issued by Peerless Company were for periods ranging from ten to thirty years while the Endowment Certificates granted by Favourite Company ranged from five to thirty {480} years. It was stated that the schemes of the Favourite Company which ranged for short periods from five to [500] thirty years were unscientific inasmuch as interest payable by the company on short term certificates was higher than 10% of the instalments or subscriptions collected by the company which were invested in Government securities and Banks where field was between five to ten percent.  547 Words  

  1. Injuriously:- adj. 1. Causing or tending to cause injury; harmful
  2. Endowment:- दानचंदा
  3. Actuarial : (adj) relating to actuaries or their work of compiling and analysing statistics to calculate insurance risks and premiums.

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