Loan given to pvt ltd co. but directors resigned
Mayank Arora
(Querist) 03 September 2014
This query is : Resolved
Hello Experts,
I gave a loan to a pvt ltd company and they are not paying it back saying they are running into heavy losses.
Now, the 4 original directors of the company appointed 2 very junior staff members (who would have been getting salaries of Rs 10-12,000) as directors and then themselves resigned. As I suspect, this would have been to escape the liquidation formalities. The current directors have absolutely no clue and know nothing about the operations of the company. The previous directors sold the remaining assets for scrap so no assets are left now.
What should I do? Can the previous directors resign and make dummy directors like these? Should I file a cheating case against the original directors?
Devajyoti Barman
(Expert) 04 September 2014
Meet an ad vocate and file a winding up petition in high court.
Rajendra K Goyal
(Expert) 04 September 2014
File winding up petition High Court.
ajay sethi
(Expert) 04 September 2014
if company is running into losses chances of recovery of money are bleak even if you file Winding up Petition
malipeddi jaggarao
(Expert) 04 September 2014
Company is a separate legal entity. Unless the outgoing Directors gave personal guarantee you can not do anything to them. You can only recover from the company's assets by initiating winding up proceedings. If there are no assets left, it will be a wasteful exercise.
Mayank Arora
(Querist) 04 September 2014
Thank you experts
But is the planting of such dummy directors allowed? This way, any loss making company could make their servants directors so they don't have to deal with the investors later?
Advocate. Arunagiri
(Expert) 04 September 2014
If your problem is recovery of money from that company, you can follow the procedure for winding up of that company.
If your problem is on the quality of the directors, you can lodge a complaint to the Registrar of Companies.
malipeddi jaggarao
(Expert) 04 September 2014
As I already explained, a duly incorporated company is separate legal entity. The assets of the company are chargeable, and the directors are free to resign and new directors may come in. Even if the old Directors are there, when the company is not having assets, what is the benefit unless the directors gave personal guarantee. If they have given personal guarantee to your loan, though they resigned, they are liable. If they have not given, even if they stay in the company what is the difference for you? If you can prove the suspected fowl play, you should state what is the fowl play you are suspecting with some evidence. Then you can make complaint to the Registrar of Companies, but i do not foresee any positive results (basing on the facts in the query).
Dr J C Vashista
(Expert) 05 September 2014
Well advised by experts, I agree.
However, can a stake holder move to High court for winding up the company on the pretext of liability of the company?
malipeddi jaggarao
(Expert) 05 September 2014
@ Expert Dr Vashista:
Sir, the following are the provisions for winding up of the Company - a petition has to be moved before the Tribunal not HC. Kindly look into the following:
PART I.—Winding up by the Tribunal
271. (1) A company may, on a petition under section 272, be wound up by the Tribunal,—
(a) if the company is unable to pay its debts;
(b) if the company has, by special resolution, resolved that the company be wound up by the Tribunal;
(c) if the company has acted against the interests of the sovereignty and integrity
of India, the security of the State, friendly relations with foreign States, public order,
decency or morality;
(d) if the Tribunal has ordered the winding up of the company underChapter XIX;
(e) if on an application made by the Registrar or any other person authorised by the Central Government by notification under this Act, the Tribunal is of the
opinion that the affairs of the company have been conducted in a fraudulent manner or the company was formed for fraudulent and unlawful purpose or the persons concerned in the formation or management of its affairs have been guilty of fraud,misfeasance or misconduct in connection therewith and that it is proper that the company be wound up;
(f) if the company has made a default in filing with the Registrar its financial statements or annual returns for immediately preceding five consecutive financial years; or
(g) if the Tribunal is of the opinion that it is just and equitable that the company should be wound up.
(2) A company shall be deemed to be unable to pay its debts,—
(a) if a creditor, by assignment or otherwise, to whom the company is indebted for an amount exceeding one lakh rupees then due, has served on the company, by causing it to be delivered at its registered office, by registered post or otherwise, a demand requiring the company to pay the amount so due and the company has failed to pay the sum within twenty-one days after the receipt of such demand or to provide adequate security or re-structure or compound the debt to the reasonable satisfaction
of the creditor;
(b) if any execution or other process issued on a decree or order of any court or tribunal in favour of a creditor of the company is returned unsatisfied in whole or in part; or
(c) if it is proved to the satisfaction of the Tribunal that the company is unable to pay its debts, and, in determining whether a company is unable to pay its debts, the Tribunal shall take into account the contingent and prospective liabilities of the
company.
272. (1) Subject to the provisions of this section, a petition to the Tribunal for the winding up of a company shall be presented by—
(a) the company;
(b) any creditor or creditors, including any contingent or prospective creditor or creditors;
(c) any contributory or contributories.
--regards--
jaggarao malipeddi
Dr J C Vashista
(Expert) 06 September 2014
I am deeply oblidged and feel grateful to expert Sh. Malipeddi Jaggarao for enriching my knowledge.
malipeddi jaggarao
(Expert) 07 September 2014
Thanks Dr.Vashista ji.
In fact I am obliged to get this opportunity from you!
Advocate. Arunagiri
(Expert) 07 September 2014
Mr.Jaggarao,
It is true that the winding petitions are to be filed before the tribunal in accordance with the 2013 Act. But, as the tribunals are not yet started functioning the cases are to be filed in the High Court only.
The MCA had notified 282 sections only. S.271 and 272 are not notified yet.
Please correct me if I am wrong.
T. Kalaiselvan, Advocate
(Expert) 07 September 2014
Now the question is about the recovery of loan amount from the company. Since the loan was availed by the company (though the directors have signed on behalf of the company), it is the company which can be approached for repayment. If the directors have personally cheated, a criminal complaint can be lodged against them.
malipeddi jaggarao
(Expert) 08 September 2014
@ Expert Shri Arunagiri - As regards implementation part, you are correct sir.
