Dispute in business with younger brother
I need help/ advice.
In May 2013, my younger brother asked me to start CAB business which he would run. I agreed and took a vehicle loan, whole down payment from my pocket. Since the business started, I am only paying EMIs, he told that the business is under loss and will recover soon. He never gave me detail of business (neither average work nor cash inflow or outflow etc.). Whenever, I asked he just skipped. I thought he would take care of business. In May 2014, he told me to take a second CAB which would give profit as he thought he was able to run two CAB. This time also, I agreed. But nothing went right. I still had no data from firm about expenses, profit or loss etc.
I had started taking interset in daily business around september 2014, and observed that business cannot be in such huge loss. During this time CAB were attached to radio taxi (UBER/ OLA etc.). In January-March 2015, I have observed that he is transferring money to trading account etc. When I asked him to give me details of the firm, he is denying. He is not running business, didn't give me past files containing expenses, investments, profit and loss. Still now, payment from OLA and UBER is going to his bank account and he is not paying it back. During a checking, I have also found that he has been misusing credit card (credit card bill is more than the work done by CAB, even diesel expense is more than the total payment from radio taxi).
Now, if I check my balance sheet, I do own around 4.5 Lacs from him. Even he has not paid drivers since last month, the payment he has taken from radio taxi and still getting, as account transfer has not been done (work done through OLA and UBER comes directly to the bank account).
I know, it is a personal issue as I helped my younger brother to become success but he is stealing money from business and losing in trading, partying all the times etc.
Is there anything which can be done legally,so that balance sheet etc. of firm can be prepared; his accounts can be checked, and the money which has come to his account can be recovered.
He is living a life as there is no law to stop such crimes.
I still have EMIs for next 2 years.
I am under tremendous pressure of financial crisis and mentally weak too.
Any help would really be appreciated.
Shiv Kumar Agarwal
Asked 1 year ago in Business Law from Delhi, Delhi
1) it appears that you have taken car loan for purchase of 2 cars , EMI is being paid by you only
2) it appears your brother has fudged accounts and is siphoning of funds from business
3) inform your brother that you want accounts of the firm to be audited and that in future all EMI would be paid from earning of the 2 cabs only . if your brother refuses to listen to reason issue him legal notice as per terms of your partnership deed for share of profits and for accounts
4) if your brother declines to give you share and keeps on siphoning funds you can file suit for accounts and for dissolution of partnership firm
5) if you stop paying EMI bank will take possession of the 2 cars and sell them to recover its dues
6) if there is shortfall bank will seek to recover balance amount from you as loan has been taken in your name only and not that of firm
1. Since a very close relationship is involved in this financial mess it is quite delicate affair to handle as far as legal recourse is concerned,
2. Is this business run by forming a partnership firm with you. If that is so then you can ask for dissolution of firm and rendition of a/c to stop further loss.
3.If there is no proof of such business relationship then you will have to make payment of EMIs.
4. Ask for details of business.
5. if he does not then you can stop paying the EMIs and allow the bank to confiscate the cabs.
I do not find any other better option for your errant brother.
1. Did you have any business agreement with him by which he was bound to show you his accounts?
2. If not then you can not ask for the acciounts from him as he is the sole owner of the said business,
3. However, since you have taken the vehicle loan, the two cars are in your name and yiou can take those cars in your possession,
4. If the cars are taken away from his business, your brother will expectedly be tamed down and will agree in your terms to further run his business.
If you are the vehicle owner, you may better jump into the scene directly by terminating his services or contract if any and deal with the company yourself.
There is no hard and fast rules that you have to stick with your brother despite he is defrauding you.
If you ask and pressurise him for the accounts and your share of profit, he may refuse and the relationship may strain instead, you ask him to quit and take care of the business yourself. This will fetch you relief.
1. Did you start the business in partnership with him? If yes, whether a partnership deed was executed between both of you?
2. If a partnership deed was executed the profit has to be divided according to the profit sharing ratio mentioned in it.
3. If no partnership deed was mentioned the profit is to be shared equally.
4. You may in order to recover your share in the profits of the business, issue a lawyer's notice to him demanding your share. If he refuses to honour your demand then you may file a case for recovery against him in the local court which can order him to give to your lawful share along with interest.