Deepak promoted and incorporated Clever Ltd. in January, 2019. He sold 25 acres of land in the State of Punjab, which he had acquired in his name in January, 2017 to Clever Ltd. in March, 2019. He made a profit of ₹2 cro

When Deepak acquired the property in January 2017, he was not in a fiduciary position as Clever Ltd was not in existence. Therefore, he is entitled to retain the profits that he makes in the transaction. The transaction of profit made by Deepak in this case is legal. However, if Deepak acquired the property in February 2019, then fiduciary relationship sets in as the company is already incorporated. He has acquired the property with a view to sell it to the company. Therefore, he must disclose all the facts to the company. In this case, he cannot retain the profits which he has not disclosed to the company. Upon disclosure, the company may exercise any of the following options: Rescind the contract and recover the profit if any made by Deepak on any ancillary transaction. Retain the property paying no more than what Deepak has paid, depriving him of his profits. Where the above two options are not possible due to alteration of property or Deepak having already received his profits, the company can sue him for misfeasance and breach of duty to disclose.