I will try to be as detailed and honest as possible. I started a partnership firm (not registered) five years ago on December 30, 2010 with a long-time friend of mine (I will call him Mr. A) since he helped me before starting the business financially with few sums which I had paid back before this venture began. I introduced him in to the firm without any capital. The firm was a small investment management company wherein friends and relatives would deposit some capital and they would get a fixed or floating rate of return over time. The business was Share trading. In the beginning it was all fine I had a small bunch of people whose money I would manage and everything went smoothly. However, as the time went by more people started depositing money with me. With the capital base increasing I started diversification and expansion. Meanwhile one more long-time friend of mine (I will call him Mr. B) joined the firm though not as a partner. Mr. A and Mr. B would introduce new clients and they would get commissions plus salaries. In the mid of 2012 Mr. A introduced one client (I will call him Mr. C) who wanted a bit extra percentage in return on his investment. Mr. A induced me to put that extra percentage and I accepted it. That worked out to be 9% a month! However, no formal agreement was made. And his investments came in the form of cash. Not very heavy investments though. Henceforth this went on for about 18 months or so. Mr. B also brought in people (largely uneducated women and few men among his relatives). As the other business grew demand for capital increased. People made my firm a money making machine and I started coming under huge stress. On many occasions I was forced to make huge principal payments within months of investments that too with a profit. Payments started getting delayed and to manage eventually became almost impossible. I have to be honest in saying that after a point when call for principal repayments started my firm transformed into a Ponzi. The beginning of 2014 was horrible as the pressure mounted so much so that I was threatened of illegal and legal consequences. I shall put what happened next as “events” in a list form: 1. One of the client came visited my office during May 2014, badly abused and threatened me. His wife had put some 20 lacs in a period of 1 year and withdrew 15 lacs during that time breaching all the terms and conditions of the agreement. He wanted the rest 5 lacs immediately which I could never be able to pay. 2. One June 08, 2014 a bunch of clients visited my office in my absence created a scene there, damaged office property and took my computer along. I kept on begging them over the phone not to harm my business area as I was in talks of finalizing a deal. 3. I tried the next day the same thing but they refused to return my computer, abused me and threatened me. 4. After trying everything and losing all hope on June 09, 2014 I left my home and went absconding. I was very scared and hopeless. 5. Then after my parents filed NC with the local police station against the people who took away my laptop and they returned it back. But the harassment continued towards my family and later. 6. It’s been more than 2 years now and Mr. A informed my parents that he was arrested because Mr. C took him and they underwent a settlement (He may be lying). Now that Mr. A had to settle Mr. C, Mr. A is demanding my presence and money back. Although huge sums of money has been already paid by me. I want an expert to throw some light on this with all their experience: What are the legal consequences on me now that more than 2 years have been passed? What if they do something illegal with me? What legal help do I have at my disposal? I want to be able to conduct business properly but I cannot be absconding all the time.
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You are in serious mess and it appears that some criminal act is surely committed.
The business you mentioned is nothing but illegal as Ponzi business has no legal recognition,
The FIR is likely to be registered against your name u/s 420 IPC.
So first engage an advocate to find out whether any case is filed agaisn tyou or not.
TO KNOW THE VERACITY IF CLAIM OF a AND C for amicable settlement send someone you trust to verify before you come out of your hiding .
1) has any FOR been lodged against you ?
2) prepare detailed list of yiur creditors and amount payable to each of them
3) you can contact them individually and reach an settlement with creditors wherein you offer to pay them in instalments over period of a year or so
4) ask for terms of settlement arrived at between A and C in writing
@Ajay Sethi (1). You mean FIR? I don't know whether there is an FIR against me or not. As its been 2 and a half years. How do I know whether there is an FIR? There was a missing complaint that my family had filed of mine. But I appeared in person to the police station and closed that. If there would have been an FIR I believe there would have been some movements. (2). In most cases there was an agreement I made with all of my clients and that had all the risk factors mentioned. While more than 60% of the amount is paid no amount was taken as a "loan". Hence would it be favorable to talk to each one of them as that would be my admission?
1) yes I meant FIR if you owed clients substantial sums of money they would have filed cases against you for cheating , criminal breach of trust . If no case is filed you don't have police breathing down your neck and no court cases to deal with
2)if at all you have made payment to them it should be in full and final settlement of outstanding dues
3) no harm in talking to them on individual basis .dont make any written commitments unless they Agree in writing to principal amount only
1. The remedy that A may adopt and pursue against you is a suit for recovery in the civil court, the limitation period whereof is 3 years from the date on which the amount becomes payable. So the lapse of 2 years does not foreclose the remedies which exist under the legal framework against you.
2. You can contest the lawsuit on merits as and when the summons are issued to you by the court.
3. You should engage a local lawyer to ascertain if a FIR has been lodged against you. Since lawyers are well connected locally it will not be an uphill task to find out the details. If the FIR is lodged then obtain anticipatory bail.
4. You are free to talk to the investors to settle the dispute.
What are the legal consequences on me now that more than 2 years have been passed?
Whether 2 years or more than that, the liability on your side has to be cleared to the creditors. How you are going to do is the question.
The legal consequences shall be based on the documentary evidences that are against you.
You can involve all those who back stabbed you by embezzling the accounts or misappropriating the funds and can also lodge police agaisnt them for cheating and breach of trust offences including misappropriations etc.
This may put pressure on them so that they would come forward to settle the creditors of their dues.
What if they do something illegal with me?
You have to approach police for security to you.
What legal help do I have at my disposal?
Ascertain your position and secure all those evidences which are in your fao and then challenge any case that is filed agaisnt you.
I want to be able to conduct business properly but I cannot be absconding all the time.
Analyse the conditions and the prevailing circumstances and if the situation is conducive, you may go ahead with your proposal.
(1). You mean FIR? I don't know whether there is an FIR against me or not. As its been 2 and a half years. How do I know whether there is an FIR? There was a missing complaint that my family had filed of mine. But I appeared in person to the police station and closed that. If there would have been an FIR I believe there would have been some movements.
If there is no FIR, then there is no criminal case pending agaisnt you, hence you may be free enough to start the business once again.
(2). In most cases there was an agreement I made with all of my clients and that had all the risk factors mentioned. While more than 60% of the amount is paid no amount was taken as a "loan". Hence would it be favorable to talk to each one of them as that would be my admission?
This is a good situation under which you are not obliged to pay anyone especially when the conditions were explained to each and everyone while they make their deposits.
The market behavior cannot be predicted by anyone, hence yo may make your stand based on the market behavior and escape the liability.