Private limited company

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

23 September 2013 I hold 25pct shares in a Pvt Ltd Co duly registered under the Companies Act. I retired from active involvement in 1999. The Company continued operating with the MD and a wholetime Director but they slowly n steadily siphoned out more than 1 crore thru HV Drafts into Benami accounts or by large bearer cheque withdrawals.
They refused to hold any meetings either but filed fabricated annual accounts with the ROC (found out by me years later after a mad run around).
In 2002, they informed Principals that they had taken over all business of the Pvt Ltd Co and started a Partnership firm from the same office as the HO of the Pvt Ltd Co(PLC).
They informed some of the authorities that they were closing down the PLC and even encashed a large Guarantee Bond filed with Bombay Port Trust years earlier.
I managed to freeze some of the PLC accounts with the banks as I was a signatory to them. I even managed to get some statements from the banks which showed huge withdrawals to unknown entities (using the fact that bank computerised statemts do not show the name of the beneficiaries).
I have lodged a formal complaint with the ROC but very little is happening; though lately I heard that the ROC has filed cases against the two Directors for not holding the AGM and for not filing annual returns.
In turn, these two Directors have in 2010 filed on line for voluntary winding up of the PLC under some bogus Resolutions they claim passed without any meetings being held.
The PLC has assets running into 30 lakhs, I have done tracing of another 35 lakhs held in their Benami accounts and I hear they have purchased paintings worth another 40 lakhs at cost.
Where do I start I just do not know.
Can anyone advise me

Aalok Chhaperwal

Aalok Chhaperwal (Expert)
Follow

23 September 2013 As shareholder you have many rights such as calling on extra ordinary general meeting and propose the induction of Director which is in of your favour, also you take the companies board before CLB for oppression and mismanagement.

Querist : Anonymous

Querist : Anonymous (Querist)

24 September 2013 Thank you, Sir, for your response. However, though I know they are in the same office and are collecting statements from the bank(though the account has been frozen by me)they refuse to accept any mail- courier, Regd Post AD, and even ordinary post sent UPC, with mention "left- unknown".
Can I send Notice to their residences regarding breach of ROC rules.
You mentioned about CLB but frankly I am ignorant of this route- can you throw some light on it. I am an aged person 70+ and all my savings went into this Company which was my brainchild.
My mistake was impulsively resigning Directorship when I found there was a financial fiddle going on by those whom I trusted.

Upgrade to CAclubindia Pro. Subscribe Now!

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
Follow

10 August 2024 I'm sorry to hear about the situation you’re dealing with. Based on the details you've provided, it seems that the directors of your company have committed several irregularities and potentially fraudulent activities. Here's a structured approach you can consider:

### **1. ** Legal Actions and Remedies**

#### **A. ** Companies Act Violation**

1. **Complaint to Registrar of Companies (ROC):**
- Since you have already lodged a complaint with the ROC, follow up persistently. Provide all evidence you have collected, including bank statements and any documents showing the siphoning of funds.

2. **Winding-Up Petition:**
- You mentioned the company has filed for voluntary winding up. If this process is based on fabricated resolutions and without proper procedures, you can challenge it.
- **Petition for Winding-Up:** File a petition with the National Company Law Tribunal (NCLT) under Section 271 of the Companies Act, 2013, alleging that the company is being mismanaged and seeking a winding-up order.

#### **B. ** National Company Law Tribunal (NCLT):**

1. **Filing a Petition:**
- **Mismanagement & Oppression:** Under the Companies Act, 2013, you can file a petition before the NCLT for oppression and mismanagement (Section 241) if you can demonstrate that the affairs of the company are being conducted in a manner prejudicial to your interests.

2. **Action on False Resolutions:**
- Challenge the validity of the resolutions used for voluntary winding up. If these resolutions were passed fraudulently, this can be contested in NCLT.

#### **C. ** Civil & Criminal Complaints:**

1. **Civil Suit for Recovery:**
- You can file a civil suit for the recovery of the misappropriated funds if you have evidence of their misuse. This can be done in the Civil Court or High Court depending on the jurisdiction and amount.

2. **Criminal Complaint:**
- **FIR for Fraud:** File a First Information Report (FIR) with the police under relevant sections of the Indian Penal Code (IPC) for fraud and misappropriation of funds.
- **Economic Offenses Wing (EOW):** Consider filing a complaint with the EOW of the police for financial crimes.

### **2. ** Company Law Board (CLB)**

#### **A. ** What is CLB?

- The Company Law Board (CLB) was a quasi-judicial body that handled company law disputes under the Companies Act, 1956. It has now been replaced by the National Company Law Tribunal (NCLT) under the Companies Act, 2013.

#### **B. ** Actions:**

- **Review CLB Cases:** You might want to consult with a lawyer who can help you understand the transition from CLB to NCLT and how to proceed with your case.

### **3. ** Practical Steps**

#### **A. ** Notice and Communication:

1. **Sending Notices:**
- Send notices to the directors at their registered addresses and residences. Use multiple methods including registered post, courier, and email to ensure they receive the notice.

2. **Public Notices:**
- Publish a notice in a widely circulated newspaper about the fraud and mismanagement, which can help in creating a public record of your claims.

#### **B. ** Documentation and Evidence:

1. **Compile Evidence:**
- Collect all documents, including bank statements, communication with ROC, any correspondence with directors, and evidence of fraudulent activities.

2. **Legal Consultation:**
- Engage with a lawyer experienced in corporate fraud and financial crimes to guide you through the legal process and represent your case.

### **4. ** Engaging with Authorities**

1. **Securities and Exchange Board of India (SEBI):**
- If the fraud involves securities or investments, SEBI can be approached for regulatory actions.

2. **Income Tax Department:**
- Report the misappropriated funds and suspicious transactions to the Income Tax Department, as it may involve tax evasion.

### **5. ** Legal Assistance**

1. **Hire a Corporate Lawyer:**
- A lawyer specializing in corporate law and financial fraud will be crucial in navigating the legal complexities and filing appropriate cases.

2. **Seek Legal Aid:**
- If affordability is a concern, seek legal aid services or consult with legal professionals who may offer pro bono support for such cases.

### **Summary**

- **Filing Complaints:** Continue pressing with the ROC and consider escalating to NCLT for issues of mismanagement and fraudulent winding-up.
- **Legal Actions:** Explore criminal and civil legal actions against the directors.
- **Consult Professionals:** Engage with legal and financial experts for proper guidance and representation.

This is a complex situation, and having professional legal advice is essential to navigate through the legal remedies and ensure that your interests are protected.