Continuation of business with the last name of company.
brijender gupta
(Querist) 08 April 2014
This query is : Resolved
Can directors of a company,booked u/s 420,34,506 IPC, continue their business under the same name & style ,as it was,when the court case is pending against them with the blocked bank a/c & attached properties.
Devajyoti Barman
(Expert) 08 April 2014
Yes, unless the Company itself is under any restraint order passed by civil court.
The aforesaid section were applied to Directors not to the Company.
Dr J C Vashista
(Expert) 09 April 2014
Yes, there is no such provision in Cr. PC or IPC to restrain the Directors to operate and continue the business as the company is a fictitious entity. It is being operated by Directors, who are booked and tried under the provisions of IPC.
Advocate. Arunagiri
(Expert) 09 April 2014
Untill and unless the competent court disqualifies the directors, the directors can do business in the name of the company.
R.V.RAO
(Expert) 09 April 2014
until the name of the company is struck off from the records of the registrar of companies(ROC),the company will need to continue as a legal entity.
ROC MAY REMOVE THE NAME OF THE COMPANY FROM RECORDS IF IT IS DECLARED as A DEFUNCT COMPANY.
the issues of legality or illegality of directors of the company or the company's business is decided upon by the courts of law.
so as long as the ROC does not strike down a company name from records,it continues in the same name.
brijender gupta
(Querist) 09 April 2014
As i was into a franchise agreement with a pvt ltd company (with two directors & both were in jail after 15 days of agreement).
As per agreement i was to just provide space to the company for starting its operation like advance rent & subsequent rent therefrom to staff recruitment & all other centre operations.
I was about to take a premises on lease for centre but before start off they were arrested u/s 420,34,506 & as i came to know
about it, i immediately stepped back, as i was to loose money on just space with no operations for indefinite period.
I was given a fee refund guarantee by means of cheque ( one year PDC) which got dishonoured on presentation for blocked a/c.
Now on demand of franchisee fee refund else filing a case u/s 138 NI ACT against the directors , directors of the company threatens to file a case against me for not providing the space to them for operations wherein ,in lieu of above facts,its very clear that they were incapacitated.
So can they file a case against me for so ?
T. Kalaiselvan, Advocate
(Expert) 09 April 2014
They can very well file a case if the terms and conditions were violated but you can easily challenge the same by narrating the events that preceded which led to your act of declining to honor the conditions.
Devajyoti Barman
(Expert) 09 April 2014
Forget their threats. You file cheque bouncing case before it is too late.
R.V.RAO
(Expert) 10 April 2014
Immediately file case under sec 138 of NI Act. the company lawyer/officers come running to you for settlement.
Then you may settle payment issue with the company. After your payment issue is settled to your satisfaction, only then you will withdraw 138 case, you tell them.
brijender gupta
(Querist) 10 April 2014
Thanks to all of you for your valuable guidance.
Guest
(Expert) 10 April 2014
Your dealing was with the company, an artificial person, not with directors of the company. Company was not wound up on arrest of its directors. So, the company existed.
So, as per your statement, "i immediately stepped back, as i was to loose money on just space with no operations for indefinite period, "breach of agreement was on your part only, not on the part of the company. So, your case of sec.138 or u/s 420,34,506 IPC, is quite doubtful to stand against the company.
brijender gupta
(Querist) 10 April 2014
@ Expert Sh. P S Dhingra Sir.
Would request your kind advice & clarification for the following:
The company, an artificial person, was incorporated by its two directors who were in jail after 15 days of signing agreement , along with all of their administrative/operations' department heads.
Moreover , today ,as directors are out on bail, are incapacitated to operate company by its initial name & style , might be restrained by court. They have started operations with the some other name.
If i would have taken a premises on lease, whom should i hand it over for operations & further subsequent rent/operational expenses for which company is liable as per agreement.
During the period of arrest & till today,no other directors took over the responsibility of the company for operations.
Guest
(Expert) 10 April 2014
Dear Mr. Gupta,
Ordinarily clarifictions from me are unwarranted to be asked by you when you have not rendered even any basic necessary information, like, nature of contract, background of arrest of the company directors and its managers, whether the company was wound up or not, what were the terms of agreement, mode of your backing out and how the company responded on your backing out, whether you got the agreement rescinded by the authorised persons of the company or got any confirmation whether the company needs the desired space for work any more or not, etc., etc., there may be several more questions.
Further, did you at any time mention that all of their administrative/operations' department heads and also all of the other employees of the company were jailed and the company premises was locked?
Still further, did you even made any mention that directors on bail are incapacitated (and by whom) to operate company by its initial name & style?
Still further, as you presumed, "might be restrained by court," what is the basis of your presumption, and whether confirmed from directors on bail whether the company was ready to continue with the agreement or the agreement was required to be cancelled?
Simply writing, "i immediately stepped back" does not confer on you the discretion to violate the terms of agreement, unless the agreement was cancelled or treated as void in law.
Had you taken such precautions you would also have got answer to your question, to whom you were required to hand over possession of the space or was to drop your plan to acquire the space.
If no other director took over the operations of the company, that clearly reveals that the existing directors still hold the position and are responsible for any act of the company, irrespective of whether they are allowed or barred by law or any other competent authority to handle operations of the company.
So, all of your questions are irrelevant in the context of the aforesaid drawback of your query for want of several types of information.
In fact, this type of casual query on your part cannot solve your problem. Irrespective of incapacity of the directors of the company to handle the affairs of the company legally you are at the receiving end on several counts. Even cheque bounce on account of the blockade of the company accounts does not attract the provisions of sec. 138, as blocking of account by court or any other authority was beyond control of the company to honour the cheques.
So, to get appropriate solution to your problem you need to get detailed consultation in person from some expert by getting your case examined in detail with reference to all the contract related documents, agreement and company's present status. It is not a case pertaining merely to the Negotiable Instruments Act, IPC, but also attract the proviions of the contract act and company law.
So, don't take that as lightly, as you consider as per your own perception. Must take appropriate steps well in time to save your position.
brijender gupta
(Querist) 10 April 2014
@ Expert P S Dhingra Sir.
I heartedly apologise for if i offended you.
For want of knowledge was my query/clarification.
I will follow all of the above valuable advice.
Guest
(Expert) 11 April 2014
Ok. I am not offended, but as a querist, you need to know that for appropriate guidance, all necessary basic information is a must to be provided for asking any question.
