Legal action

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

08 August 2015 Dear all,
Can you please help me in an interesting case which I need to resolve.
Suppose, there are 2 companies Ajay Pvt Ltd and Vijay Ltd. Ajay Pvt Ltd invested 10Cr. in Vijay Ltd out of which shares were issued of 5Cr. at Rs. 10+ 20Rs. premium to Ajay Pvt Ltd by Vijay Ltd. There is one common diretor Mr. Satish in both the Companies.It has been three years since shares issued but no dividend was declared and no any other notice was circulated by the Vijay Ltd to Mr. Satish regarding any business of the Company. Remaining 5Cr. is pending as share application money. Vijay Ltd is not issuing shares of this amount nor sharing any profit as dividend to Ajay Pvt Ltd. Then question is how Ajay Pvt Ltd can recover money from Vijay Ltd of Rs. 5Cr.? Can there be any legal action taken? Can appeal be filed with CLB OR NCLT? State all kinds of options with Ajay Pvt Ltd to recover this 5Cr.

Shudhanshu Agrawal

Shudhanshu Agrawal (Expert)
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08 August 2015 1st of all please clarify is there any agreement or document which is available on the basis of which the payment of Rs 10 Cr. was made to the company?

Querist : Anonymous

Querist : Anonymous (Querist)

10 August 2015 Yes, there is agreement of Rs. 5Cr. called as subscription agreement of which shares are issued and of remaining 5Cr. payment is made through cheque.

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Shudhanshu Agrawal

Shudhanshu Agrawal (Expert)
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10 August 2015 Is there any agreement about Rs 5 Cr which you paid through cheque? what is the basis of payment of remaining Rs 5 Cr.

Querist : Anonymous

Querist : Anonymous (Querist)

11 August 2015 No, there is no any agreement.Remaining 5Cr. is pending share application money, but Company replying that Company has no funds.In such a condition how to get back money? Send me a format of legal notice which can be served to the Company.

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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02 August 2024 In the scenario where Ajay Pvt Ltd has invested ₹10 crore in Vijay Ltd, with ₹5 crore having been issued as shares and the remaining ₹5 crore being pending as share application money, and no dividends or other notices have been issued, Ajay Pvt Ltd has several options to recover the pending amount. Here’s a detailed approach including legal remedies and a sample legal notice format:

### **1. **Options for Ajay Pvt Ltd**

**1. **Review the Subscription Agreement**:
- **Examine Terms**: Review the subscription agreement thoroughly to understand the terms and conditions related to the issue of shares and the handling of share application money.
- **Default Clauses**: Check if there are clauses related to default, non-issuance of shares, or actions to be taken in case of non-payment or non-issuance.

**2. **Negotiation and Communication**:
- **Direct Negotiation**: Initiate discussions with Vijay Ltd to resolve the issue amicably. This may involve negotiating the issuance of shares or requesting a refund.

**3. **Legal Notice**:
- **Send a Legal Notice**: If direct negotiation fails, Ajay Pvt Ltd can send a legal notice to Vijay Ltd demanding the return of ₹5 crore. This notice should outline the breach and the required remedy.

**4. **File a Complaint with NCLT (National Company Law Tribunal)**:
- **Petition to NCLT**: If Vijay Ltd fails to comply with the legal notice, Ajay Pvt Ltd can file a petition with the NCLT under the Companies Act, 2013. The grounds for the petition could be:
- **Breach of Contract**: Non-issuance of shares and non-refund of the application money.
- **Oppression and Mismanagement**: If there are grounds to show that the actions of Vijay Ltd are oppressive or amount to mismanagement.

**5. **Claim Recovery through Court**:
- **Civil Suit**: If other remedies do not work, Ajay Pvt Ltd can file a civil suit for the recovery of the amount in a competent court.

### **Sample Legal Notice Format**

Below is a sample format for a legal notice that Ajay Pvt Ltd can serve to Vijay Ltd:

---

**[Your Law Firm’s Letterhead]**

**Date: [DD/MM/YYYY]**

**To,**

**The Board of Directors**
**Vijay Ltd**
**[Company’s Address]**

**Subject: Demand for Refund of Share Application Money**

Dear Sir/Madam,

**Re: Subscription Agreement and Pending Share Application Money**

We act on behalf of our client, Ajay Pvt Ltd (hereinafter referred to as "our client"). It has come to our notice that despite a subscription agreement dated [Date], under which our client invested a total sum of ₹10 crore in Vijay Ltd, including ₹5 crore as share application money, the shares have not been issued, and no dividend or other communication regarding the company's business has been received by our client.

**Details of the Issue:**

1. **Investment and Share Issuance**:
- Our client invested ₹10 crore in Vijay Ltd, of which ₹5 crore was allocated towards the issuance of shares at ₹10 + ₹20 premium, totaling ₹30 per share.
- The remaining ₹5 crore was intended as share application money, which remains unutilized.

2. **Lack of Communication**:
- No dividend has been declared nor any notice regarding the company's business affairs has been communicated to our client.

3. **Default in Issuance of Shares**:
- Despite the lapse of three years, Vijay Ltd has failed to issue shares for the remaining ₹5 crore of the application money.

**Demand for Action:**

We hereby demand that Vijay Ltd take immediate action to:
1. Refund the amount of ₹5 crore paid as share application money, as no shares have been issued for this amount.
2. Provide a detailed explanation for the non-issuance of shares and the lack of communication.

**Deadline:**

Please treat this notice as a final opportunity to resolve this matter amicably. We request that the necessary action be taken within 15 days from the date of this notice. Failure to comply with this demand will compel our client to pursue all legal remedies available under the Companies Act, 2013, and other relevant laws, including but not limited to filing a petition with the National Company Law Tribunal (NCLT) for the recovery of the amount and any associated legal costs.

**Conclusion:**

We hope this matter can be resolved amicably and look forward to your prompt response.

Yours faithfully,

**[Name of Lawyer]**
**[Law Firm’s Name]**
**[Contact Details]**

---

### **Summary**

1. **Review the Subscription Agreement**: Understand the terms and check for breach clauses.
2. **Negotiation**: Attempt to resolve the matter directly with Vijay Ltd.
3. **Legal Notice**: Send a formal notice demanding the refund.
4. **File with NCLT**: If unresolved, file a petition with the NCLT.
5. **Civil Suit**: As a last resort, file a civil suit for recovery.

Always consult with a legal professional for tailored advice and to ensure compliance with current legal standards and practices.