Non-payment of Dividend

tamilarasibabu (Querist) 11 September 2009 This query is : Resolved
Dear All

What is the Legal implication to be adopted for Non-Payment of Dividend,
i) can it be challenged before CLB under Companies Act? if it so, the relevant provisions under which it can be made?
ii)whether it will be a cause for raising Consumer Dispute or it vil be only a civil suit

riven

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Adinath@Avinash Patil (Expert) 12 September 2009
You have not cleard why company has not given dividend.IS company runing in loss are any other reason.
In my opinion If company is in good profit & profit shows in balanceSheet & and company is declared dividend in annual balance sheet &annual general meeting & avoding to give to give payment of dividend you can file litigation under companies Act.riven

Raj Kumar Makkad (Expert) 13 September 2009
You can approach CLB if dividend is not paid to the shareholders in any financial year by company. because you are shareholder of the company means owner hence no cause of action arises in your favour to file any complaint before consumer forum.riven

KUMAR JAGADEESAN (Expert) 14 September 2009
Friend

From your query I presume that the directors of the company have recommended dividend and the same has been declared by the shareholders in the AGM. If so, once declared, dividend becomes a debt due by the company. Section 205A of the Companies Act 1956 lays down the time bound method of distribution of dividend like opening of a separate bank account etc.

The jurisdiction to try this offence lies with the District Court having jurisdiction over the registered office of the company and not the CLB

J.KUMAR
Hyderabadriven