Director's Response

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S.Jegadeesan (Querist)
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02 January 2011 I wish to clarify one thing about Director's Responsibility in the Company.i.e. M/s.JSK Pvt Ltd was incorporated in 2009 with 3 Directors.Further it has obtained a Loan from one of the relatives of the directors for Rs.10 Lakh.The Loan agreement was signed by the Mr.Guna one of the Director & the Lendor. Subsequently Mr.Guna was dead & the lender has asked the remaining director to settle the Loan personally.Whether it is valid under the Companies Act 1956 & any other act?
Further the Lender has deposited (but it was dishonored by the banker due to insufficient funds) the PDC in his bank even he knows the Death of Mr.Guna ? Is it legally affect the remaning director?

Regards,
S.jegadeesan.

CA SURENDRA KUMAR RAKHECHA

CA SURENDRA KUMAR RAKHECHA (Expert)
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02 January 2011 From the facts it is clear that the company has taken a loan from relative of Mr. Guna and it is also clear that the amount was deposited into the bank of the JSK P Ltd. and still showing as loan secured by one of the Director.

The Loan Agreement is a personal guarantee by Mr. Guna to his relative.

The prime responsibility of repayment of loan is of the Company. When company fails; then Mr. Guna is liable to pay.

In the instance case; company is liable to pay Mr. Guna.

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If the loan is outstanding in the name of Mr. Guna in the books of the company ( assuming that first of all loan was given to Mr. Guna and in turn he transferred it to the company); then the company is not liable to pay to his relative.

S.Jegadeesan

S.Jegadeesan (Querist)
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03 January 2011 Dear Sir,
Thanks for your reply.
But in this Pvt Ltd, Mr.Guna got the loan for company purpose.So it is showing like company has to repay to the lender under unsecured Loan.My ultimate question is
Suppose Mr.Guna was dead & also company fails to repay the loan after his demise , It will affect the remaining Directors? i.e. whether the remaining directors should settle from their own property?

CA SURENDRA KUMAR RAKHECHA

CA SURENDRA KUMAR RAKHECHA (Expert)
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04 January 2011 If the company has issued one cheque to him; then remaining Directors are liable to pay. Otherwise if the party lodge a claim in the court; they are bound to face prosecution.

If the company is unable to pay; then liquidation proceedings can be started against the company. In this case; the directors are not personally liable to settle the dues.

If the facts of the case are such which clearly show that the Directors have cheated the person; then corporate veil can be lifted and the remaining Directors would be personally liable.

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