Company siphoning off assets to defraud creditors
Querist :
Anonymous
(Querist) 11 June 2020
This query is : Resolved
I hold decree debt against an unlisted PLC,but company has stayed the execution for the last 5 years. Meanwhile promoters have abandoned the company, siphoned off almost all its assets, and floated new companies to carry on the old business ! Old company is still Active in MCA records.
Understandably this is Fraud by company promoters under Indian company Law,called 'Phoenixing' !
How do I make the errant Directors too liable ,apart from the company, as and when we file the EP against the PLC ?
Do I file a seperate EOW case for this prayer or will the EP court itself will hear this prayer ?
Raj Kumar Makkad
(Expert) 11 June 2020
What were you do doing since last 5 years when such things were happening despite of the stay order against your exeuction petition?
You need to insist upon the vacation of the stay order in view in view of the latest actions taken place. You have every legal right to get the reversal of all such properties back for the satisfaction of the said decree diverted after passing of the said decree under order 21 of CPC.
Dr J C Vashista
(Expert) 12 June 2020
After filing of EP you went in silence and did not pursue it to get the stay vacated, why?
Whether the stay is still in vogue or vacated ?
What were the properties involved for attachment in your EP ?
P. Venu 
(Expert) 12 June 2020
How can the company, by itself, stay the execution of the decree?
Querist :
Anonymous
(Querist) 12 June 2020
@ all experts who replied pl ! the debt was arbitral award which has been appealed under section 34 and stayed. the case is still going on and likely to be in our favour soon ! Hence my question for further action pl !
Kindly reply !
Raj Kumar Makkad
(Expert) 12 June 2020
You need to insist upon the District Judge to expedite and decide the matter at the earliest keeping in view the prevailing current facts. You need not to worry even if any diversion of the properties has taken place after passing of the award by the company as the same shall be got reverted.
Querist :
Anonymous
(Querist) 12 June 2020
@ Expert Shri Raj Kumar Makkade ! thks for the kind answer, further supposing I have proof of the Directors' malfeasant actions to siphon off company assets with the idea of denying its creditors their moneys, is there any provision to make the errant Directors PERSONALLY liable too in the EP against the Company ? Does this call for a separate criminal complaint against the Directors ?
Raj Kumar Makkad
(Expert) 12 June 2020
Geneal legal provisions of criminal law are always applicable against such persons who deliberately with intent to frusterate the lawful verdict of the court, create hurdles or initiate any illegal act. Such persons are individually liable for their acts irrespective of their status and designation.
Rajendra K Goyal
(Expert) 13 June 2020
The company siphoned the assets, there was no stay from the court for such action. Your claim was stayed.
Bring all facts to the knowledge of the court and pray to attach remaining asset of the company.
Querist :
Anonymous
(Querist) 13 June 2020
@ Expert Shri Rajendra K Goel ! Sir,when the court stayed the award,we requested for interim conditions,but it had been pending for 5 years now and meanwhile the directors bled the company white ! for this reasons,I want to bring in Personal Liability of the directors & attach their assets apart from EP against the company !
Is this feasible and how to approach it broadly ?
All experts may kindly answer this query pl !
Raj Kumar Makkad
(Expert) 13 June 2020
Have you any personal grudge against the directors or your interest is confined only upto the execution of your award?
It seems that you are more concerned with the personal properties of the directors rather confing to your own issue.
Follow whatever already advised to you.
Rajendra K Goyal
(Expert) 14 June 2020
Personal assets of the directors generally not attached except for pending govt. / tax or similar dues or otherwise. Try to get company assets attached. If court reject the prayer, approach higher court.
