Company

Sruthi Aravind (Querist) 01 March 2013 This query is : Resolved
a company purchased the whole shares of a shareholder in another company. before buying, financial due diligence was conducted. the report filed was wrong and it resulted in the bloating up of price from 20 crore to 40 crore.is anyone liable for fraud or any other offences in this regard?

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Raj Kumar Makkad (Expert) 02 March 2013
If the report was delieberately prepared wrong with malafide intention then definitely such doers are accused persons and action may be got initiated against them.

prabhakar singh (Expert) 02 March 2013
The shareholder who got benefited and the person who prepared the report as well, can be charged of collusion and fraud in criminal side and transaction can also be sought to be cancelled by court through a law suit claiming back paid consideration to gather with compensation of loses,if any.

Sruthi Aravind (Querist) 02 March 2013
Thank you sirs. But is there any mention about this in company law?

prabhakar singh (Expert) 02 March 2013
It is section 415 of Indian Penal Code that defines cheating (fraud)and section 420 provides punishment.

And it is section 14 of the Indian Contract Act that defines "free consent" and it's section 17 defines "fraud" and it's s.19 provides option against whom fraud was played to obtain consent to avoid such contract by getting it declared "void"by civil court.

This is how both criminal and civil action can be initiated.

You need both side lawyers to consult.

Taher (Expert) 03 March 2013
Sruthi...
Whether share valuation was done and a certificate issued from CA otherwise what was the basis of financial duediligence.

If share price was inflated and share transfered/sold then thr must be a agreement/acceptance from both side.
Please clarify.