• Matter relates to Joint Venture

The publishing company we started in 2007 joined with a business group in 2015 and made it and we along started a joint venture publishing company with 50% equity for both parties. In the board of directors two directors from our part and three from business group.
The new company’s business were based on the intangible assets of our previous company and products of new company were based on the same assets. 
On Jan 2017 due to difference of opinion they took administration and management of company and remove me from the authorised signatory for the operation of bank accounts with out our authorisation.But till date no board meeting was held or inform us but started business in a new brand name ( the same products )also . The CA of the company is nominee of the business group was not finalised the accounts of company from 2016-17 . At the initial stages company business were based on the intangible assets of us and now also the product/ books were based on the same assets. In the accounts of 2015-16 it was mentioned the dues to us which comes to more than 1 cr.
In the circumstances we would like to clarify the following points 
1.	What are the solutions for us to get the dues from the company 
2.	How we can withdraw our equity from company
3.	What are the legal solutions for us to settle the matter.
4.	What are the legal implications for non filing documents to ROC for the financial year 2016’17 onwards
5.	What are the other legal options before us.
Asked 6 years ago in Business Law

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8 Answers

You can take them to nclt as operations debtor if the claim is not disputable. 

2. You need to approach the court. 

3. It depends on the approach of parties and their terms of settlement. 

4. It will create a compliance issues if any complaint is filed. 

5. Approaching court, if the settlement is not working will be a last resort

Prashant Nayak
Advocate, Mumbai
34577 Answers
249 Consultations

You should have challenge the removal before company tribunal. Director can be removed by majority but equity stake still intact, have 50% share, hence removal is not proper. Notice should have given and director shall be given an opportunity of being heard in the meeting.

Non-filing of annual return is an offense and officers who are responsible for such default will be held liable for the penalty or punishment for such failure.

Yogendra Singh Rajawat
Advocate, Jaipur
23083 Answers
31 Consultations

Hi

1) Solutions to get the dues from the company:-

Since the monies are owed by the company to its directors(Accounts of 2015-2016 wherein it is mentioned that dues from companies to its promoters is more than 1 crore), as a rule , special general body meeting should be called for and the remaining directors should pass a resolution to release the money to the directors.

Ideally you should file a petition for mismanagement u/s 241 and 242 of companies act  before the national company law tribunal

2) Withdrawal of equity:-

Since you intend to withdraw the equity, you should first ask the existing promoters to buy your shares (either at book  value/ premium to book value) as the existing promoters generally have the first right of refusal. 

If after 30 days of notice , the existing promoters do not express their willingness to buy the shares, you can sell the same to any other person by way of private treaty. 

Since it is a private limited company, in case you do not get an alternative buyer, you can approach national company law tribunal u/s 242 of companies act. 

 

For your queries 1,2,4, 5,6 approaching NATIONAL COMPANY LAW TRIBUNAL u/s 241 and 242 of companies act is the legal remedy. 

3)In the event of not filing returns  A director of the company can be punished if the company has not been filed even after 270 days from the date when the company should have originally filed with additional penalty.

Any Director who has defaulted in the filing of annual return of a company can also be penalized with an imprisonment of a term extended up to six months or with a fine of an amount not lesser than fifty thousand rupees and it might extend up to five lakh rupees, or with both imprisonment and fine. 

 

An alternative could be filing a civil suit in District court against the promoters under money recovery suit , but i am afraid, in case you go to civil court, the existing promoters in turn may go to NCLT .

So the best option could be approaching NCLT only

Hope this information is useful. 

Rajgopalan Sripathi
Advocate, Hyderabad
2173 Answers
394 Consultations

1) issue legal notice to company to submit audited accounts for 3 years 

 

2) as per the The Companies (Registration Offices and Fees) Second Amendment Rules 2018, the penalty for not filing a companies annual return (Form MGT-7 and Form AOC-4) would be increased to Rs.200 per day from 1st  July 2018

 

3) Application can be made under section 241 of companies act 2013  before tribunal if affairs of company are being conducted in manner prejudicial to interests of company

 

4) since material change has taken place in the management of control of the company,as you have been removed as authorised signatory you can seek reliefs from CLT 

 

5) seek orders to direct company to furnish audited accounts for last 3 years 

 

6) contact a local lawyer 

Ajay Sethi
Advocate, Mumbai
99859 Answers
8148 Consultations

 A joint venture law may be described as an association between a group of persons (natural or legal entities) who enter into an agreement to do business together or to undertake a particular project, without losing their independent corporate structures

A joint venture may take place between corporations, limited liability companies, partnerships, or any other type of legal entities. It may be for a short period, or for several years.

The purpose of a joint venture determines its type or mode.

In a joint venture by way of contract, the contract is entered into between the parties and sets forth their relationship, and their respective rights and liabilities..

If the joint venture is by a registered deed then registration helps in providing certain benefits and exemptions under various statutes and enactments, and makes the partners eligible for instituting legal proceedings to enforce their rights, as arising from the partnership agreement. Registration also gives them the right to sue any third party, to enforce the contractual rights of the partnership.

The first essential step in drafting the joint venture agreement of an unincorporated joint venture should be the identification of the project that the parties will be engaging in. If the parties are not clear about the purposes of their relationship, it will be difficult to deter- mine the specific obligations of the parties under the agreement.
Considering that a clear identification of the rights and duties of each party is the basis of a successful relationship between the venturers, these aspects should be thoroughly discussed.

Therefore you have an answer to all your queries in the agreement between the venturers and what action can be taken  including the various reliefs under various circumstances etc is available in the agreement between the partners of this joint venture.

An unincorporated joint venture is a contractual joint venture that is affected by a legally binding agreement, and does not involve the incorporation process. It does not create a separate corporate entity or create equity capital. Thus, it is very like a partnership. This kind of joint venture is generally entered into for a limited period or for a particular purpose,  and  does  not  join  the  parties for perpetuity.  An unincorporated joint  venture may be either by way of contract or partnership.

T Kalaiselvan
Advocate, Vellore
90062 Answers
2499 Consultations

Section 241 (1) of the 2013 version of the Act states that any member of a company who complains that the affairs of the company have been or are being conducted in a manner prejudicial (damaging) to the interests of the company, its members or the public at large may apply to the Tribunal for an order under this Chapter. The Centre, if it feels the complaint is genuine, may itself apply to the Tribunal for an order under this Chapter.

the financial statements and annual returns of a company must be filed on time with the MCA each year. As per Companies Act, 2013, non-filing of annual return is an offence. 

 

 

Mohammed Mujeeb
Advocate, Hyderabad
19338 Answers
32 Consultations

You will need to file a commercial civil suit

Prior to that explore settlement in respect of the dues of 1cr which you claim

If nothing fructifies then suit is the only option

If the claim is admitted by the opponent in any document or other records then u can also file a summary suit instead of a regular suit

Even if you file a suit, either summary suit or regular suit, since there is a money to be recovered, these suits will have to be filed under the commercial courts act

Under that act pre suit mediation is compulsory between the disputing parties for which you will have to file the prescribed application in court

If mediation by court fails then it will send the matter for adjudication by the regular court

Yusuf Rampurawala
Advocate, Mumbai
7903 Answers
79 Consultations

You should legal notice to office bearers of the company for recovery of dues from the company.

You should also Send them a notice for disinvestment from the joint venture and offer them to purchase your equity shares. 

Mohit Kapoor
Advocate, Rohtak
10686 Answers
7 Consultations

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