Consequences of negotiable instruments given as security
ravindra reddy
(Querist) 03 June 2016
This query is : Resolved
I got introduced to a sub broker in 2010.he proposed a fixed monthly return of 4% pm on investments. Initially it was only about my personal funds later he proposed to solicit investments from others offering them 3 /4% pm depending on individual negotiation. He offered me a share of the profit post giving returns to the investors. He said that the funds would be managed in his own demat account as a pool of funds. He asked me to issue my personal cheque and promisory notes of the principal amount to the investors I referred and gave me his cheque and promisory notes in return as security. He made regular interest payments as well as returned capital amounts of few people as and when the requirement was there. Timely transactions and good relationship instilled blind faith in me towards him also the investors trust grew over a period of 5 -6 years. Which resulted in accumulation of the total collected kitty of 6.5 crores.
This person is suddenly absconding since 26th April 2016. I also came know that he had done similar transactions with 8 other people as well
Now the situation in front of me is very complex as I am liable for the investors money as they have given money in my account in cheque and cash as well for which I hav issued them security cheque and promisory notes .
I along with 8 others have lodged a cheating and fraud complaint against the said person for which we will get the FIR copy in a couple of days.
I need your help to understand what legal consequences I will face in said situation??
What remedies I can resort to?
Please help
Kumar Doab
(Expert) 03 June 2016
Engage an able counsel ASAP.
Trace the whereabouts and assets of the person.
RAVI K GOUD
(Expert) 05 June 2016
Mr. Ravinder,
First of all when you wanted to invest in the stock market you should have your own account. when you wanted to invest without maintaining the account you would be inviting a lot of risk for your funds and others.
As you have collected the funds from others you will be responsible for their funds as the sub-broker is no way connected to them.
You have to inquire with the Regulatory Authorities (SEBI, NSE, BSE etc.)whether the Sub-broker is registered with them or not. If not, proceed with Criminal action.
As the sub-broker has given the cheques for security, then you can file criminal case under U/Sec. 138 of N.I Act if the cheques are bounced or dishonored when they are deposited.
You can also file a criminal case for cheating and appropriation of other's funds with a deceitful intention.
And finally you must do in accordance with the advice of Expert Mr.Kumar Doab.
Ms.Usha Kapoor
(Expert) 03 July 2018
Agree with Ravi K Goud and Kumar Doab.
