Counsel

From the facts provided, it emerges that MOU’s were entered into between the parties regarding the capital to be invested and the sharing of profits. For absolute clarity on the issue, the terms and conditions of the MOU’s including the obligations of the respective parties are required to be seen. But from a perusal of the factual narration and assuming that there is an unequivocal obligation on the other party to share the profits in the MOU, appropriate proceedings before the Court of competent jurisdiction can be initiated claiming damages for breach of MOU/Contract by the other part in case the other part refuses to fulfil its payment obligations under the contract/MOU. The original/copies of the MOU’s, correspondence between the parties etc., would have to be perused for further assistance.

It emerges that the person in Punjab has no privity with any of the vendors in Delhi directly since the supply of the goods, receipt of the payment etc. was done in your name/bank account. It is understood from the facts stated that the payment for the goods have been made and there was no issue raised by the person at the first instance before making payment. Further, no invoices exist or no consideration was given to you for the services extended. In these circumstances, it would be difficult for the person to prove any claims before the courts against you although there is not denying the fact that you were part of the transaction. However, rather than escalating the issue and avoiding any litigation costs, it would be advisable to discuss with the vendor and the get the goods replaced, if possible.

The said covenant may not strictly be enforceable since the same can be construed as being an agreement in restraint of trade, especially since the same relates to a period after the termination/expiry of the contract under consideration. Such agreements in restraint of trade are not valid under law and therefore cannot be given effect to. The exception to such a law has been carved out only in case of sale of goodwill or under the Partnership Act. Therefore, you should take up the issue with the company, inform them about the invalidity and it is further advisable to remove the said clause in order to avoid any litigation relating to the said clause in future.

Procedure for removal of a director of a private limited company:

A Company by ordinary resolution in an Annual general meeting or an extraordinary General meeting can remove a director. Special Notice about the resolution to remove a director shall be issued to the members. A copy of the said notice to be sent to the director to be removed also. The director shall be given an opportunity of being heard in the meeting. If the director gives any written representation to the notice, then the said representation shall be given to all members. If the representation could not be given to all members, then the Director can request the said representation to be read out in the meeting. The members can pass an ordinary resolution, by a simple majority and remove the director. The Company shall within 30 days from the removal of a director file Form No.32 and a copy of the resolution with the Registrar Acquire his shares directly or indirectly so that his shares are acquired by the remaining directors. This may be done through the direct purchase of shares in the market or by offering the same to the exiting director to sell his rights to the remaining Directors as price agreed upon or at the market value.