February 07, 2016

Govt Must Take Over Peerless to Protect Interests of Employees, Depositors

Gautam Chatterjee

THE Peerless General Finance and Investment Company Ltd, a renowned and reputed savings company, had been running its business under the directions of RBI. But its business was stopped by the Reserve Bank of India (RBI) from 1ST April, 2011. Lakhs of depositors, who had received their maturity claims promptly from the company and reinvested in it, were unable to continue their transactions with the company and this led them to unscrupulous chit fund firms like Saradha that duped lakhs of depositors and looted public money.


In 1987, the Supreme Court gave a judgement that the business of Peerless is perfectly legal and since 1987 Peerless had been running its business as a Residuary Non Banking Company (RNBC) registered with RBI. Peerless has been maintaining all the rules and regulations of RBI. It has paid more than 20 thousand crores of rupees to the depositors through maturity claims. So the depositors are also confident to reinvest in Peerless. As such, the employees of the company thinks that the directive of RBI for closure of the business of Peerless is against the employees, against the depositors and they think that RBI should withdraw its instruction immediately and should give permission to the company to continue its business as an RNBC. As per the RBI Act, RBI has the right to prohibit a company to run its business if that company does not follow the regulations framed by it. But Peerless has always followed its regulations.


The Supreme Court, in its 1987 verdict, advised RBI that employees’ interest should be protected while framing regulations for controlling the business of Peerless. But the present directive of RBI is harmful to the interests of employees and it has jeopardised their livelihood. Hence, the All India Peerless Employees Union is demanding RBI to revoke its decision and give permission to continue its business. Union representatives had met former Prime Minister Manmohan Singh, Finance Ministers Pranab Mukherjee and P Chidambaram and other central ministers of the erstwhile UPA government. They had also met a host of MPs, irrespective of their political affiliation, and leaders of all central trade unions requesting them to pursue the matter with RBI in the interest of thousands of employees of Peerless. The union representatives also met higher officials including the Governor and the Deputy Governor of RBI several times but unfortunately RBI has not given a positive reply.


Hence, in March 2012, the union took the bold step to challenge the RBI directive in the Calcutta High Court. Though our union is a small one, we were compelled to fight against the gigantic organisation like RBI. It is a very rare example in the trade union history and is very expensive also. Till now we have spent more than Rs 65 lakh and we are proud to say that each employee has given 32 days’ wages to meet the expenses for the court case.  Employees are committed to give more donations also and are ready to fight till the Supreme

Court, if required. The case is running in the court for more than three years.


The All India Peerless Employees’ Union has been fighting for protecting the interests of employees and depositors of the company. Having been requested by the Union in 1987, Somnath Chatterjee agreed to argue the case against RBI in favour of Peerless in the Supreme Court and the company won the case. In the verdict of that case, the Supreme Court mentioned that RBI must take care of the job security of the employees. But keeping aside the advice of the Supreme Court, RBI issued the directive to stop RNBC business in 2007 and it was finally implemented in 2011.


At the beginning of the hearing in the Calcutta High Court in 2012, the Peerless management submitted an affidavit that it was willing to restart RNBC business if RBI permits. In contrary, the Management has now intimated to the court through another affidavit that it was not interested to do RNBC business. The management has merged 60 branches and is planning to merge a few more branches shortly.


During argument in the court, it was revealed that the interest of depositors has been protected by the fund deposited in the UBI in ESCROW account. Now the question in the court is how the interests of employees (job security) would be protected if the company does not restart the business? The judge told the company’s management that if they intend to send home employees in the name of VRS, it will not be an alternative and employees will be at distress. Now hearings of the case are going on in the court.


Thousands of Peerless employees are spending sleepless nights worrying about their future. So the Union is demanding immediate intervention of the central government to solve this problem. Peerless is a profitable company. Its net owned fund is now above Rs 1,500 crore and the volume of unclaimed/unpaid amount is Rs 1,560 crore. Hence, the union is demanding the central government to take over Peerless for national interest.