Cause of Action
PRADEEP SAMANT
(Querist) 26 June 2011
This query is : Resolved
In finance company cases cause of action is date of deposit or date of FIR?
Case Matter: The deposit was accepted by the branch in 1997 vide cash receipt by the branch manager ,acknowledged though certificates by authorised signatory -the director..
The Director resigns in Feb 1998..
The FIR by the investor is lodged in Oct ,1998 ,eight month of resignation .
Can he be tried for breach of trust/Fabrication of ducument/and cheating u/s 406/420/467/468 ..
Guest
(Expert) 26 June 2011
if the FIR is lodged than their was any illegality please clear your query and tell in detail it is not answerable
M.Sheik Mohammed Ali
(Expert) 26 June 2011
if you having acknowlegment, then you can provide to the police.
PRADEEP SAMANT
(Querist) 26 June 2011
The company office got closed down due to looting ..and the investor registered the FIR against all subscriber in the personal capacity as a party and not against the company and its director.
The payment was not due at the time of closure of office ,neither any notice by the investor for prematurity of the amount was given to the company. Further no application of grievances was lodged with CLB and the case was registered u/s 406/420/467/468 against all individual shareholder ,One of them Managing Durector ,the other Finance Dirtor and two other director, including my client who has resigned eight month before the lodging of FIR but not an party to the cash trasnaction ,which was collected at branch.
PRADEEP SAMANT
(Querist) 26 June 2011
Acknoldgement of resignation was there as well as no dues certificate issued by company dulay signed by MD was obtained. Later intimation of the resignation was sent to ROC by telegram and vide letter against their query ,duly acknoledged.
Still Police impllicated my client in the case.
Guest
(Expert) 26 June 2011
Dear Pradeep,
The cause of action starts right from the beginning of the event, i.e., from the date of deposit, not from the date of FIR.
About involvement of your client, he being director of the company can be sued individually, besides the company, irrespective of the fact he has resigned from the post but the event relates to his contribution in the past. It is a matter of common sense, when the company has been closed by the directors, who should be sued by the investor for his genuine dues, which remained unsettled?
No dues certificate issued by the company does not absolve your client from his liability towards the investors as that intends to show only the liability of any outstanding company dues (not of investors) against him having been cleared.
it is also not compulsory for the investor to go to the CLB for any criminal offence against the company or any director of that company. Closure of company, itself, without meeting with the liabilities against the investors, indicates some bad intention of the company or its directors.
Investor is not liable to bear the brunt of looting of the company, as directors were responsible for not making adequate insurance of company's cash and other valuable assets.
Now, the only solution to the problem remains is, he has to prove that he was not involved in breach of trust, fabrication of documents, cheating, etc., on his part.
prabhakar singh
(Expert) 26 June 2011
most perfect reply by Expert : PS Dhingra, CEO, Dhingra Group.i have nothing 2 add,and concur with him.
PRADEEP SAMANT
(Querist) 26 June 2011
Dear Dhingra Jee
The FIR was lodged against the eight subscriber of the company mentioned in memorundum & article of association and not against the board of directors,which were others at the time of FIR.
its only inccidental that my client happened to be director till Feb 98, and resigned eight month before the filling of FIR and also sent an information wide telegram to the ROC intimating about the resignation in accordence to the provison of ROC ,which says "When a director has tendered his resignation, and the Board of directors has accepted it, and has acted on it, such director cannot be held liable for the liability incurred by the said company after the date of acceptance of his resignation, except the liability which has been incurred by him for purchase of shares of the said company and nothing more. Saumil Dilip Mehta v. State of Maharashtra (2002) 5 Comp LJ 183 (Bom)
Further the fianace of company was solely handled by Managing Director jointly with any one of two director ,out of which he was one..but never signed the cheques.
In personal capicity he was never a part of any financial transaction with any of the investor.
In case an public limited company being a legal entity itself duly incorporated and given certificate of commencement by ROC, can a director be made personally liable for company's failure (the failure of the present board of director) to discharge companies obligation.
Further ,the prosecution failed to provide any company's document other than the bank account copy and certificate issued by company signed by MD and the director -my client , and money receipt signed by the branch manager?
The interest till the time ,my client was dircetor, was being given to the complainant and there was no grievance of any sort.
now my question is that with above facts,that how can he prove that he was not involved in breach of trust, fabrication of documents, cheating, etc., on his part...
Ajay Bansal
(Expert) 27 June 2011
What is crime in question?
Guest
(Expert) 27 June 2011
Dear Pradeep,
Please don't take it otherwise, as I have expreseed my views only what the law position is, not in any biased manner, as neither I know your client, nor the depositor petitioner, nor the the lawyer of the petitioner.
I have tried to bring out the reality in order that you may take the cue to make defence for your client, based on the existence of evidence, which you only know, as I have not seen any document. What position I have stated in my earlier reply might also be known to the lawyer of the petitioner. Rather you should be thankful that the investor has not tried to make a case under Money Laundring Act 2002 against your client and other company directors, the case being related to an NBFC company, which would have been much more serious.
So, you would need to make your defence keeping in view of all those points, so that you may not get caught by surprise any time. So, I would like to request you not to take shelter of any presumption, rather prepare defence just to repudiate the charge with cogent reasons/pleadings.
In fact the whole problem lies in the fact what you have stated yourself "acknowledged though certificates by authorised signatory -the director." That totally goes against your client.
Had he not signed as the authorised signatory of the certificate he would have enjoyed a very safe position. Further, since the company is closed that has become more serious and invited trouble for all the directors and even subscribers to the Memorandum & Articles of Association, when the directors preferred to close a finance company without fulfilling company's obligation towards its creditors. Had the company been alive, your client would not have been caught in the case. Naturally, the investor who had invested money and finds the company closed someday without paying his dues would definitely presume that the finance company would have been opened just amass wealth by cheating the people. He would definitely try to involve, not only the then directors, but also the subscriber directors of the MAA presuming all the subscribers and directors as a group of cheaters.
So, better try to understand the position in depth. Signature of your client on the certificate, itself, is the major cause of problem. Rest depends upon yourself how you like to take my advice in the matter.
PRADEEP SAMANT
(Querist) 27 June 2011
Dear Sir,
I have not taken it otherwise.. Only trying to present that how i was planning defence and your advice has giving me someinsight as to how to go about it.
You are correct in your presumption that Signature of my client on the certificate, itself, is the major cause of problem. That is why I wanted to know that in what direction should I take the evidence.
I am more concerned about 420/467/468/... If somehow these are drooped and case tried u/s 406, we might get the same compunded... how to achieve that is the question ?
Guest
(Expert) 28 June 2011
Dear Pradeep,
Only accounting records and bank account statements can help save your client in dropping these sections. If proved that the amount was duly credited in to and appeared in the accounts, it can safely be stated that being director it was legal requirement for him to sign the document, while the amount was never paid personally by the plaintiff to your client.
So, ask your client to help you in getting the deposit slip for the cheques/cash deposited by the complainant, bank account statement, profit & loss account and the Assests and Liabilities account (1997-98), copy of Police Report registered on looting of the company, etc., up to the date of closure of the company. He may also try to check how the funds were disposed off and with whose signatures cheques issued for expenditure, etc., between the dates of receipt of amount till the date of resignation of your client.
Only your client can help you in his own interest by getting all such information. Otherwise, your efforts would be just "ANDHERAY MEI TEER CHALANA".
Guest
(Expert) 29 June 2011
You are welcome.
PRADEEP SAMANT
(Querist) 29 June 2011
Sir One more fact has come to the case is that the case has not yet been put on charge even after 11 years as accused are not appearing .. The main complainant is dead and the bank which operated the account is shifted to some new loaction.
Now If I try to get the file of my client separated ,can on disscusion on charge ,there is any possibilty to get the section dropped ...and what should be done in the above light.
