Seeking appropriate stringent remedy against a Pvt-Ltd Company & its dubious promoters for unauthorised conversion of

POSTED BY K Vaishnav ON February 24, 2013 6:41 pm ONE COMMENT

Sir

we’re unfortunate shareholders-cum-investor of a private limited company since past 5-odd years-whose project still struggles. Given relations with promoters earlier-we’d also lent some amount as “Unsecured Loans & Advances” some 5-years back-which promoters used to show as “Share Application Money pending allotment” in Co’s B/S-a portion of same was converted into equity-shares by co.@ a premia of Rs.150-after lapse of nearly 2 years which when we objected, they verbally assured that same is just given as security till the project take-off & once project got over they’ll buy same at a higher price-and then they repaid part of loan amount.

Given company & its promoters’dubious game-one of minority shareholder had filed a CLB petition against Company for “Oppression & Mismanagement”.Worried on same- on the initiative of some middlemen-they entered into an MoU with our group as Minority Shareholders –under which they lured some new investor on the pretext of investing further sum in company & agreed not to raise any further capital except new members-& accordingly our group has filed consentum in CLB & accordingly CLB passed order as” “Parties have settled the matter and wish to withdraw the C.P in terms of the MoU.C.P.No.XX (ND) XX is hereby disposed off in terms of the MoU. No order as to cost.”

but sensing something fishy-new investor backed-out & not invested any sum. Annoyed with this –promoters wrote to revoke the MoU. Sensing something wrong & to safeguard our interest-we wrote to them in Sept12 about not to convert balance amount into any further shares of the company as same were loan amount & it was not making any substantial profits-& also demanded interest for all these years till repayment/allotment of shares-again we reminded via our Advocate’s letter in 20oct12-but the unscrupulous promoters ultimately converted balance loan amount also in shares on 08-Oct-12 at a premia of Rs.35 without our consent or application-forms for allotment submitted by us & totally in contravention of MoU as per CLB order-Promoters played bluff & filed return of allotment only in Nov12-but same came to our notice only in Feb12.

coming to the company & its promoters-the least said about them is better. First they shown rosy pictures of the company & its product-but Since becoming shareholders of this company 5 years back in 2007-Promoters started showing their true colours.They hardly communicated for Meetings,AGMs,or for that matter anything-infact for the 1st time in 5-odd years we got AGM notice-to which we objected because they’re paying abnormal Remuneration to Directors’wife (a household lady) & also to restrain them from converting our “loans & advances” into shares.

Sir-thru this esteemed forum -we seek your & other hon’ble members advice on how to proceed against such notorious & unscrupulous company & its dubious promoters. We’d like to know what’re remedies available to us as Minority Shareholders (together alongwith other group of minority shareholders -we hold around 20% in company & balance 80% held by Promoters)-both criminal as well Civil-since it involves hard-earned money of some of senior citizen lady members as well.

Some of the notorious violation:-

1) contrary to the terms of MoU and hence in gross violations, to the order of Hon’ble CLB-they unauthorisedly converted loan amount into shares to obviate their loan liability & payment of interest thereon.

2) we’d neither given any application for allotment of shares (last allotment) nor been intimated by company till date despiter lapse of more than 120 days since allotment.

3) Misused “Loan funds” interest-free in the disguise of “Share Application Money Pending allotment” for past 5-odd years -aren’t they liable to pay interest even on earlier allotment of shares after 3 years & now for 5 years

4) contrary to the terms of MoU and hence in gross violations, to the order of Hon’ble CLB-they unauthorisedly passed resolution in AGM to pay remuneration to Directors’wife (a House-wife),thus exposing for contempt proceedings against the company and its directors, of civil and criminal liabilities.

One reply on this article “Seeking appropriate stringent remedy against a Pvt-Ltd Company & its dubious promoters for unauthorised conversion of”

  1. Dear K Vaishnav, I can understand your pain & anger. After reading your part query (it seems, you could not post more due to space limitation & thus your post is end less at the time, I feel so), in my opinion, you should file a Criminal suit against your so called directors & promoters.

    I’m unable to understand, what stopped you from naming the co. or it’s promoters or directors in this query. This is not a personal finance related issue but more a criminal kind thing or should I better term it as economic offence. Please take help of Advocates on the matter as it’s a legal one not pure personal finance one.

    Thanks

    Ashal

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