My Relative was director with Pvt.Ltd Company. He was independent & non executive director. All decisions were taken by MD. Company had issued Cumulative Pref shares for business expansion. Tenure of these shares was 20 years. Company paid dividents for 6 years . Company then went into some financial problems. Due to pressure from some agents MD of the company issued number of cheques towards redumption of Pref shares worth almost 4.5 crores. He was anticipating some funds from financer.
- No board resoluion was passed.
- Registrar of company was not informed - form 5.
- No origanal Share certificates were obtained.
- MD himself had signed all cheques
- Redumption was done from profit ( as they did not have) neither new pref shares were issued for redumption of old shares.
- Redumption was done only to share holders in perticular area.
Cheques when presented to bank obviously bounced. Most of the investors filed cases under 138 against company, MD as well as other directors. MD was eventually arrested in 138 cases & cases against him are going on. My relative also has 6 - 7 cases under 138 & about 6 - 7 cases in 420. Cases are filed in state which is far off from his residence.
Company has now gone into liquidation by High Court Order.
What option my relative has.
Main cause of all problems is wrong issuance of cheques towards redumption of pref shares. Can my relative appeal in Company Court to declare issuance of cheques as illegal as per company's act? Is it possible after company's liquidation? Can any relief obtained from local court. Due to distant location it is difficult to find good lawyer. He also fears that if he goes there local investors with the help of local police file some more cases & arrest him.
Please suggest some remedy as he & his family is suffering.
Best Regards,
Shrinkar
