• Disputes between Directors of private limited company

Hi i am from Haryana. I started a Multinational Corporation in 2013 having its legal entity(subsidery) in United Status with my childhood friend and local Delhi friend who was a local. Initially we were three friends or partner A, B & C. A & B invested whole money however C was having the industry experience so he was taking care of operations so we were equally sharing the ownership however C had to resign due to the circumstances(for some client benefit with mutual understanding). The share of the third partner C should have gone to the rest of the partners A & B equally however A created the documents as he used to take care of the documentation with CA & CPA and he took 51% shareholding and 49% was given to me(B). I didn’t doubt and didn’t even protest as we were good friends so A took the majority share. After few years disputes came in because B & C were good friends since childhood and A was not happy with this. On the other hand the company was doing very well in the market so A started his own entity without informing anyone but somehow we came to know that he is running a same business with different name as well. Now the performance of our company was going down as A who was doing sales for first company was doing for his own company only. So we were very demotivated as nobody was concentrating on work due to A’s behaviour issues and he was holding the majority shares and all the important people like CA, CPA were in his impressions as he hired them locally.
Now when disputes became bigger day by day B & C decided to leave the company as it was not doing well but work culture was also demolished as A was busy running his new company. As C was not having shares in the company he left the company just A & B remained. Now i am not at all interested working with him so i decided to get apart. So i asked A to take half & half and lets dissolve the company but he is not agreed. He wants to keep it with him. He is asking me to finalise the things. We have some money in our US bank Account which is still in business use and good ITR’s for last 3-4 years. But it is not operational anymore except one contractor employee working at our client site on a project in USA. We are waiting for his project to end up. Now i am afraid if once the money is free from business use A would withdraw the amount from US to India as he and i both have online transfer access to bank account however we have jointly access in India. I am afraid if he can directly transfer to India in his personal account. So i need a Corporate Lawyer who can advice me on this and also be ready to help me out in court in case expected or unexpected happens at any moment. I have some more information which is not described here. Please get in touch through my email: [deleted]
Best advice is preferred with quotations.

Thanks & regards 
Shashwat Chakarpani
Asked 4 years ago in Business Law

2 answers received in 1 hour.

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8 Answers

You can file winding up petition for winding up of company

2) court can pass orders for winding up of company if it just and equitable that affairs of company be wound up

3) you can request bank not to transfer any funds from bank accounts unless you give your consent in writing

4) number of lawyers on this website from Delhi contact any of them

Ajay Sethi
Advocate, Mumbai
87939 Answers
6207 Consultations

5.0 on 5.0

Dear Client,

It is duty of a director of a company to act in good faith in order to promote the objects of the company for the benefit of its members as a whole, and in the best interests of the company, Also, director of a company shall not involve in a situation in which he may have a direct or indirect interest that conflicts, or possibly may conflict, with the interest of the company.

A director of a company shall not achieve or attempt to achieve any undue gain or advantage either to himself and if such director is found guilty of making any undue gain, he shall be liable to pay an amount equal to that gain to the company and shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.

So even now you can approach registrar of company complaining the act of director and restrain his authority.

Yogendra Singh Rajawat
Advocate, Jaipur
21481 Answers
31 Consultations

4.4 on 5.0

Since if you want to leave and wind up the company that is take your profit and settle the liability of the company then in that case a winding up petition can be preferred by you before the NCLT.

Shubham Jhajharia
Advocate, Ahmedabad
25516 Answers
179 Consultations

5.0 on 5.0

1.A's company can be made liable for a passing off action as he is employing the resources of your company for pulling potential clients to his own company

2. Even if A holds majority shares, it is to be seen how the profits of the company were distributed between you two. If they were distributed equally and also the liabilities were distributed in equal ratio, then whatever papers you signed wherein majority shares went to A, your consents therein will be considered as blanket consents as it is the intention of the parties which is to be seen as to how the company's accounts are to be treated

3. In meanwhile if you can have a joint access and authority for the US bank then that will avoid complications as A will be then prevented from unilaterally withdrawing the company's funds to his personal bank account. Even if this isn't possible, if A indulges in any such action then he becomes liable for criminal action for embezzlement and siphoning off of funds and for cheating and fraud

Yusuf Rampurawala
Advocate, Mumbai
6882 Answers
79 Consultations

5.0 on 5.0

Also check the memorandum and articles of association if they restrict the director of the company from setting up a business which is in direct competition with the company's business

Yusuf Rampurawala
Advocate, Mumbai
6882 Answers
79 Consultations

5.0 on 5.0

In the present case, you should file for winding up of the company. The liquidation or winding up of a company is the process whereby its life is ended and its property is administered for the benefit of its creditors and members.

Winding up is defined under Section 2(94A) of the Companies Act, 2013.

As a contributory, you shall be entitled to present a petition for the winding up of the company.

P. S. your email address cannot be seen due to website's privacy policy. For any other queries, feel free to call.

Regards.

Siddharth Jain
Advocate, New Delhi
5930 Answers
101 Consultations

5.0 on 5.0

Hi,

You may bring dispute to the court and prohibit the partner A from alienation of any asset and creating any third party interest. This may save you from the crisis.

Ganesh Singh
Advocate, New Delhi
6646 Answers
16 Consultations

4.5 on 5.0

When the relation between all the partners of the firm comes to an end, this is called dissolution of the firm. Section 39 of the Indian Partnership Act, provides that “the dissolution of the partnership between all the partners of a firm is called the dissolution of a firm.”

Dissolution of a partnership firm merely involves a change in the relation of partners; whereas the dissolution of firm amounts to a complete closure of the business. When any of the partners dies, retires or become insolvent but if the remaining partners still agree to continue the business of the partnership firm, then it is dissolution of partnership not the dissolution of firm. Dissolution of partnership changes the mutual relations of the partners. But in case of dissolution of firm, all the relations and the business of the firm comes to an end. On dissolution of the firm, the business of the firm ceases to exist since its affairs are would up by selling the assets and by paying the liabilities and discharging the claims of the partners. The dissolution of partnership among all partners of a firm is called dissolution of the firm.

If your partner is not agreeing for dissolution of the firm then you may aproach court for dissolving the firm on the grounds of :

Misconduct of Partner:- If any partner other than partner suing is responsible for any loss to the firm, which amounts to misconduct and affects the carrying on of business then the court may order for the dissolution of the firm.

Constant breach of agreement by partner:- The court may order for the dissolution of the firm if the partner other than the suing partner is found guilty for constant breach of agreement regarding the conduct of business or the management of the affairs of the firm and it becomes impossible to continue the business with such partner.

Transfer of Interest:- When any of the partner other than the suing partner transfers whole of its share to the third party for permanently.

The court may order for dissolution on any other ground which court think is just, fair and equitable. e.g. loss of total confidence between the partners. Havidatt singh v. Mukhe Singh A.I.R. 1973, J&K , 46.

You may contact any lawyer practicing in this field for further advise and course of legal action.

T Kalaiselvan
Advocate, Vellore
78097 Answers
1543 Consultations

5.0 on 5.0

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