A rights issue was announced in a pvt ltd company in which there was an ongoing tussle between majority and minority shareholders. The majority wanted to gain control over further money from the minority shareholders. The minority shareholders didnt take part in the rights issue. The majority shareholders also didnt want to bring any money to the company. But after the rights issue it was seen that shares were alloted to majority shareholders.
When the minority shareholders enquired about the fund utilization of the proceeds of the rights issue, the majority shareholders are saying that the allotment based on the right issue was done against the share application pending allotment. The utilization of that share application money pending allotment for various purposes are shown as the utilization of proceeds from the rights issue.
Is this possible?
