Can a NPA declared company pay dividend ?

Source ;oneindiamoney:Monday, February 21, 2011, 12:04


Vikas WSP Ltd has informed BSE that:

"In the month of March 2009, due to world recession, realizations of export bills were delayed more than 3 months. As per Reserve Bank of India regulations, if the bills are delayed more than 90 days (3 months), the account has to be declared Non - Performing Assets (NPA). SBBJ declared the account of NPA in March 2009 and a recovery suite was filed, in DRT, Jaipur and obtained an interlocutory order from DRT restraining the company from distribution of dividend to its shareholders. 


Subsequently, the realizations of all the bills were received by the SBBJ bank, Company filed damages case against the bank and also filed an appeal against the order of lower Court in Appellate Court.


 On December 08, 2010, due to settlement with bank, the entire issue has been resolved with mutual agreement. Now matter ended. Appellate Court has ordered to distribute dividend within 3 months from the date of order i.e. upto March 07, 2011.

Due to mutual settlement between Bank and Petitioner (Vikas WSP Limited), the petitioner has not pressed the damages claim and therefore, the demand of damages claim is closed without any direction.

Now the company can distribute the dividend for the years 2008-09 and 2009-10 as approved by its shareholders within a period of 3 months from the date of order.

In view of the above order the last date of payment of dividend comes out to March 07, 2011. 


However, company has already distributed dividend for the year 2008-09 and dividend for the year 2009-10 will be distributed latest by March 07, 2011 which is the last date as per Appellate Court order.