Pradeep. K Mittal Past Central Council The Institute of Company Secretaries of India, New Delhi Advocate 171 Chitra Vihar, Delhi-110092 9811044365/9911044365.

Pradeep. K MittalPast Central Council

The Institute of Company Secretaries of India, New DelhiAdvocate

171 Chitra Vihar, Delhi-1100929811044365/9911044365

POINTS TO BE KEPT IN MIND POINTS TO BE KEPT IN MIND BEFORE DRAFTING COMMENCESBEFORE DRAFTING COMMENCES

SECTION PARTICULARS

59(1) To order rectification of register of members on transfer

73(4) To direct the company to make repayment of the matured deposits or for any loss or damage incurred by him as a result of non-payment.

74(2) On an application by the company, NCLT may allow further time to the company to repay the deposit.

230(1) With reference to compromise or arrangements between the company and its creditors and members, Tribunal may order a meeting of creditors or class of creditors or members of the company.

231(1) To enforce compromise and arrangement as sanctioned under Section 230.

Sections under which petition is to be filed before the NCLT

SECTION PARTICULARS

232(1) To sanction the scheme of merger and amalgamation.

235(2) To entertain the application made by the dissenting shareholders of the scheme approved by the majority.

237(4) Any aggrieved person in respect of compensation made by the prescribed authority may make appeal to the Tribunal within 30 days.

241(1) Complaints of oppression and mismanagement will be heard by the Tribunal.

242(1)(a) Where the company’s affairs have been or are being conducted in a manner prejudicial or oppressive to any member or members or prejudicial to public interest or in a manner prejudicial to the interests of the company, Tribunal may pass necessary orders.

SECTION PARTICULARS

243(1) In case of termination or modification of certain agreements by the Company with managing directors or other directors, leave be granted by the NCLT.

245(1) To pass specified order in receipt of application by members or depositors or any class of them in case if they are of the opinion that the management or conduct of the affairs of the company is being conducted in a manner prejudicial to the interests of the company or its members or depositors.

252(1) Tribunal may order restoration of the name of a company to the Register of companies in case of an appeal made to the tribunal within three years of the order of the Registrar.

253(1) To entertain the application made by the secured creditors of a company representing 50 per cent or more of its outstanding amount of debt and the company has failed to pay the debt within a period of 30 days of the service of the notice of demand.

SECTION PARTICULARS

262 To sanction the scheme of revival and rehabilitation of sick industrial companies as prepared in Section 261, Companies Act, 2013.

264 To implement the scheme of revival and rehabilitation of sick industrial companies.

266 To implement the scheme of revival and rehabilitation of sick industrial companies.

270 To pass order of winding up of the company.

273 On receipt of petition for winding up, NCLT may either dismiss the petition with or without costs; make any interim order as it thinks fit; appoint a provisional liquidator of the company till the making of a winding up order, make an order for the winding up of the company with or without costs; or any other order as the NCLT thinks fit.

BASIC PRINCIPLES OF DRAFTING ORDER VI OF CODE OF CIVIL PROCEDURE,

1908 (CPC)

PLEADING

PLAINTREPLICATIO

N/REJOINDER

RULE 1

WRITTEN STATEME

NT

PLEADING TO STATE MATERIAL FACTS AND NOT PLEADING TO STATE MATERIAL FACTS AND NOT EVIDENCEEVIDENCERULE 2

Every pleadings must have the facts and not law. It must state all the material facts - Order 6 Rule 2 CPC.

  MAYAR ( H . K . ) LTD . AND ORS . VS . OWNERS AND PARTIES , VESSEL M . V . FORTUNE EXPRESS AND ORS [AIR 2006 SC 1828]

  RAMESHKUMAR AGARWAL VS . RAJMALA EXPORTS PVT . LTD . AND ORS .[AIR 2012 SC 1887]

RULE 4 PARTICULARS TO BE GIVEN WHERE

NECERSSARY

In all cases in which the party pleading relies on any misrepresentation, fraud, breach of trust, willful default or undue influence and in all other cases in which particulars may be necessary beyond such as are exemplified in the forms of aforesaid, particulars (with dates and items if necessary) shall be stated in the pleading.

RULE 7 DEPARTURE

No pleading shall, except by way of amendment, raise any new ground of claim or contain any allegation of fact inconsistent with the previous pleading of the party pleading the same.

RULE 8 DENIAL OF CONTRACT

Where a contract is alleged in any pleading, a bare denial of the same by the opposite party shall be construed only as a denial in fact of the express contract alleged or of the matters of fact from which the same may be implied, and not as a denial of the legality or sufficiency in law of such contract.

RULE 9 EFFECT OF DOCUMENT TO BE STATED

Wherever the contents of any document are material, it shall be sufficient in any pleading to state the effect thereof as briefly as possible, without setting out the whole or any part thereof, unless the precise words of the document or any part thereof are material.

RULE 10 MALICE, KNOWLEDGE, ETC.

Wherever it is material to allege malice, fraudulent intention, knowledge or other condition of the mind of any person, it shall be sufficient to allege the same as a fact without setting out the circumstances from which the same is to be inferred.

Anil Agarwal and Others Vs.Hindustan Petroleum Corporation Ltd, Rep. by its Chief Regional Manager,

and Others MANU/AP/0597/2012Rule 10 of Order VI C.P.C. insists that, wherever a plea of malice fraud or other similar plea is raised, full particulars thereof must be stated in the plaint itself. This is an

exception to the general rule that only the broad facts, but not the details or evidence must be stated in the pleadings.

RULE 12 IMPLIED CONTRACT OR RELATION

Wherever any contract or any relation between any person is to be implied from a series of letters or conversations or otherwise from a number of circumstances, it shall be sufficient to allege such contract or relation as a fact, and to refer generally to such letter, conversations or circumstances without setting them in detail.

RULE 13 PRESUMPTIONS OF LAW

Neither party need in any pleading allege any matter of fact which the law presumes in his favor or as to which the burden of proof lies upon the other side unless the same has first been specifically denied.

RULE 14 PLEADING TO BE SIGNED

Every pleading shall be signed by the party and his pleader, if any.

Provided that where a party pleading is, by reason of absence or for other good cause; unable to sign the pleading, it may be signed by any person duly authorized by him to sign the same or to sue or defend on his behalf.

RULE 14A ADDRESS OF SERVICE OF NOTICE

Every pleading when filed by a party, shall be accompanied by a statement in the prescribed form, signed as provided in Rule 14, regarding the address of the party.

Such address may, from time to time, be changed by lodging in Court form duly filled up and stating the new address of the party and accompanied by a verified

petition.

Service of any address may be effected upon a party at his registered address in all respects.

A) WHETHER ALL FACTUAL DETAILS HAVE BEEN TAKEN OUT:

i) all previous litigation if any before any court of law to examine as to what was the stand taken by the

party before that court;

ii) all correspondence between the parties;

iii) Whether is there any admission by Respondents

on debts payable Respondent to Petitioner.

B) ALL EVIDENCE NECESSARY FOR DRAFTING

a) Memorandum & Articles of Association

b) Annual Returns certified copies along with proof

payment of fees to MCA;

c) Balance Sheets for the last four years;

d) Criminal complaints/cases against any of the Respondents;

e) Any judgment of court of law convicting the Respondents for

the offence involving Moral Turpitude or any judgment delivered by any court where the parties are same;

SUSHIL KUMAR SINGHAL Vs. PNB [ 2010(8) SCC 573]

(Moral Turpitude means anything contrary to honesty, modesty or good morals. It means vileness and depravity. )

f) Copies of Board Resolutions/Forms

C) APPOINTMENT OF ADDITIONAL DIRECTORS

a) Allege that no notice of Board Meeting was received

b) Check as to whether maximum number prescribed under the Article allow further appointment of Directors;

c) Allege that there is no tangible need for appointment Of additional directors;

d) Give the background of additional directors;

e) Attach Form No.32 – If filed late, then allege that

Board Meeting has been shown in the back date

f) Whether approval of any FI/Bank has been obtained;

D) CESSATION OF OFFICE OF EXISTING DIRECTORS

A) Whether any of the grounds as set out under Sec. 167

Companies Act, 2013

i) Removal under Section 169: Removal of Directors

ii) Contravention of Section 185: Loan to Directors

iii) Contravention of Section 188: Related Party Transaction

iv) Convicted of offence involving Moral turpitude

a) Section 138 of NI Act

b) Criminal Acts as defined Under IPC

E) REMOVAL OF PROMOTER DIRECTORS

a) Non-compliance of Section 169* of the

Companies Act , 2013;b) No notice of Board Meeting/General

Meeting:i) UPC is no proof of service of

notice;ii) Proof of Dispatch is a must;iii) Extracts of Cash Book

showing amount Spent in postage.

*Removal of Directors

c) Removal contrary to understanding in family co.

d) Removal against the principle of quasi partnership

e) Directorial complaints generally not maintainable In a petition under Section

397 & 398 of Co Act.

F) ILLEGAL TRANSFER OF SHARES / REMOVAL OF DIRECTORS

a) Annual Return is filed showing that cession of directorship and transfer of shares held by the promoters;

b) Statutory Returns is not evidence/proof of transfer of shares/cession of directorship;

KOBIN PVT. LTD VS. KOBIN INDIA LTD [2005(126) ComCas675]

TONY ELECTRONICS LTD 2013 (196) DELHI LAW TIMES 777.

MANNA LAL KHAITAN AIR 1977 SC 536

The provisions of Section 56 of Companies Act,2013 are mandatory;

G) INFORMATION CAN BE OBTAINED UNDER

RIGHT TO INFORATION ACT:

a) Under the Passport Act:/Immigration laws:b) About the ownership of the immoveable properties;c) Information from Municipal Corporation of Delhi/DDAd) Information about acquisition of shares involving FEMA;

H) ALLEGATION THAT PETITION IS BARRED :

a) Section 8 of Arbitration and Conciliation Act, 1996

b) Section 9 of Civil Procedure Code 1908

Civil suit for : a) wrong removal of director

b) wrong transfer of shares

a) HOLDING A MEETING WITH THE CLIENTS AND DO THE CROSS- EXAMINATION &

ASK AS MANY AS QUESTIONS AS YOU

CAN?

b) TAKE OUT THE PHOTOGRAPHS OF

RELEVANT PERSONS OR ARTICLES;

I) FORMS OF PLEADINGS

a) Form prescribed

b) Set brief description of each of the petitioner and respondents;

c) Narrate the Facts:

i) Determine points/Issues involved

ii) Set the facts on each of the points;

In the absence of pleadings, evidence, if any, produced by the parties cannot be considered and no party should be permitted to travel beyond its pleadings.

ANIL VASUDEV vs. NARESH KARUSHALI [SCC 2009 SC 310]

HARI CHAND VS. DAULAT RAM [AIR 1987 SC 94]

d) Never admit or confess on any points which may go against you.

e) Examine as to whether the case being set out should not be contrary to documents being filed by you;

f) Legal clauses / Submission::

i) Cause of actionii) Limitation:iii) Jurisdiction:iv) No previous legal proceedings on same issue;v) Prayer

g) Signing of petition on behalf of company, authorization by the company in favor of MD, Director or Company Secretary. The petition can be dismissed in absence of authorization (Order 29 CPC).

h) If the petitioner is a company, then Board Resolution resolving to file petition must be filed. Similarly, if the petitioner is either a Trust or Society, Firm, then a resolution resolving to file a petition and authorizing an officer to sign, verify and file the petition must be annexed along with the petition. Whenever any petition is filed under any provisions of Companies Act, 2013, there must be an affidavit in support of petition under Order 6 Rule 15 (4) CPC.

i) The Director, by virtue of their office, are not entitle to file a case

APPLE VALLEY RESORTS VS. H P ESTATE ELECTRICITY BOARD [2003 (48) SCL 680 Himachal Pradesh)]

RAGHUVIR PAPER MILLS VS. INDIA SECURITIES LTD [2000 Corporate Law Cases 436].

j) Verification / Affidavit – Petition to be supported by an affidavit – Order 6 Rule 15 CPC. The Affidavit must be on Stamp Paper and notarized either by Oath Commissioner or Notary Public.

J) DOCUMENTS TO BE ATTACHED

a) Memorandum & Articles of Association duly amended;

b) Copy of latest Audited Balance Sheet;

c) Correspondence/Agreement/Documents relied upon;

d) DD payable towards court fees.

e) Paper Book with index duly page numbered;f) Proof of Service of petition with respective authorities like

RD or ROC wherever necessary;- Documents to be attached.- Signature upon the pleadings- Party- Pleader

K) WRITTEN STATEMENT

Preliminary Objection

a) Limitation Section 3 of Limitation Act;

To decide as a Preliminary Issue – OFFICIAL TRUSTEE VS. SACHINDA

NATH CHATERJEE [AIR 1969 SC 823].

It is obligatory for any court to see as to whether any suit or any petition, appeal or application, if filed, after the period of limitation, has to be dismissed . (Section 3 of Limitation Act)

Ashok Kr Khurana Vs. Steelman Industries 2000 (85) DLT 398 Delhi DB

b) Improper affidavit – Order 6 Rule 15 CPC

c) Not maintainable – Section 9 CPC

d) Barred by Law: Section 8 of Arbitration & Conciliation Act, 1996

e) Jurisdiction

f) Resjudicata : Section-11, CPC (Nazim Ali Vs. Anjuman Islamia 1993 (3) SCC 91).

REPLY ON MERITS – ORDER 8

I. Give Brief Background:

a) Formation of company

b) Contribution of Respondents in terms of capital, loans, personal guarantees, mortgage/

hypothecation assets by Respondent, non-drawl of salary

c) Day to day management with respondents

d) Give historical background of Petitioner in terms of finances, business and personal

dealings

II) Specific denials of the averments made in petition – Order 8 Rule 5 CPC.

Every allegation of fact in the plaint if not denied specifically or by necessary implication, the averments/pleadings shall be taken to be admitted – Order and Rule 5. ARAVALI LEASING LIMITED VS. UNITED BOTTLES LTD. [1998 CCC PAGE 584]

Evasive denial is no denial – LOHIA PROPERTIES (P) LTD. VS. ATMA RAM

KUMAR 1993 JT (VOL.5) 223 SC.

RAJ BAHADUR SHARMA VS. UNION OF INDIA 1998 (9) SCC PAGE 458.

Evasion and unspecific denial is no denial and is in fact admission and no further proof is necessary for the party to lead: Rajiv Saluja Vs. Bharatia Industries DCLR 2002 (II) Delhi 46

III) After denial, set out your own case and attach copies of documents, evidence and paper relied upon in support of your own case.

AMENDMENT OF PLEADINGS If any party to the petition wishes to amendment its (a) Petition (b) Reply/Written Statement (c) Rejoinder (d) Sur-Rejoinder, party can move an application under Order 6 Rule 17 CPC read with Section 151 CPC. The application can be at any time before the final arguments commenced;

Any amendment amounting to (a) a totally new and inconsistent case cannot be allowed, by way of amendment; (b) different and fresh cause of action, (c) any substitution of an entirely new case in the place of the previously pleaded case (d) an amendment which seeks to bring allegations of fraud when the main petition is silent (e) introduce a new set of ideas to the prejudice of any right acquired by any party on account of lapse of time; is impermissible under Order 6 Rule 17 of CPC and beyond the powers of the CLB/NCLT

Pleading would only be amended if it is to substantiate, elucidate and expand the pre-existing facts already contained in the original pleadings.

(i) Municipal Corporation of Greater Bombay v. Lala Panchamand Ors.MANU/SC/0284/1964,

(ii)Ajendaprasadji N. Pande v. Swami Keshavprakeshdasji N. MANU/SC/8760/2006

(iii) B.K. Narayana Pillai v. Parameshwaran Pillai MANU/SC/0775/1999

(iv) A.K. Gupta & Sons Ltd. v. Damodar Valley Corporation MANU/SC/0014/1965

(v) The Madras High Court held in Kumaraswami Gounder v. D.R. Nanjappa Gounder MANU/TN/0224/1978

Now, it is well settled that leave to amend is always granted unless the court be satisfied that the party applying is acting mala fide, or that by his blunder he has caused injury to his opponent which cannot be compensated by an order for costs. And further, leave is granted however negligent or careless the first omission may have been, and however late the proposed amendment, provided it can be given without injustice to the other side: see

JAI JAI RAM MANOHAR LAL V. NATIONAL BUILDING MATERIAL SUPPLY, GURGAON, MANU/SC/0016/1969

It has also been said that courts do not exist for punishing the parties and that rules of procedure are not framed to defeat justice: see PATHIKONDA GOPALA RAO V. NAGIR PEDDA KITAMMA, MANU/AP/0036/1955 : AIR1955AP138 .

The Supreme Court has held that even the admission can be withdrawn.

MANU/UP/0746/2004, MANU/SC/1017/1995 (para 4), MANU/PH/0715/2005 (para 11)and MANU/SC/0019/1983

The power to grant amendment of pleadings is intended to serve the ends of justice and is not governed by any narrow or technical limitations. Reliance was placed on the case law reported at MANU/SC/0016/1969 : AIR 1969 SC 1267.

Amendment barred by law – still allowable.

In Ragu Thilak D. John v. S. Rayappan And Others - MANU/SC/0057/2001  : (2001) 2 SCC 472, the Supreme Court held that where it is arguable that the relief sought by way of amendment would be barred by the law of limitation, the amendment should still be allowed and the disputed matter made the subject-matter of an issue. 

In Pankaja And Another v. Yellappa (Dead) By LRs And Others - MANU/SC/0590/2004  : (2004) 6 SCC 415, the Supreme Court held that even where the relief sought to be added by amendment is allegedly barred by limitation, there is no absolute rule that amendment in such a case should not be allowed and that an amendment sub serving the ultimate cause of justice and avoiding further litigation should be allowed.

FINAL RELIEF CANNOT BE AT INTERIM STAGE

The Supreme Court reported in MANU/SC/0258/1995 : 1995(3) SCC 257 being Bank of Maharashtra v. Race Shipping and Transport Co. Pvt. Ltd. and Anr. wherein it has been held that the Court should deprecate the practice of granting interim orders which practically give the principal relief sought in the petition for any better reason than that a prima facie case has been made out without being concerned about the balance of convenience etc.

WHERE LAW IS SILENT, YET REMEDY MUST BE GIVEN BY COURT:

In M.V. Elisabeth and Ors. v. Harwan Investment and Trading Pvt. Ltd. 1993 Supp (2) SCC 433, Supreme Court observed that where substantive law demands justice for the aggrieved party and the law does not provided the remedy, it is the duty of the Court to devise procedure by drawing analogy from other systems of law and practice. Similarly, in Dhanna Lal v. Kalawatibi and Ors. MANU/SC/0565/2002 : (2002) 6 SCC 16, the Supreme Court observed that wrong must not be left unredeemed and right not left unenforced.

WAIVER AND ACQUISCENCE: 

U.P. Jal Nigam v. Jaswant Singh MANU/SC/5073/2006 : (2006) 11 SCC 464 laying down the principles of acquiescence and holding that it is unjust to give a claimant the remedy where, by his conduct, he has done that which might fairly be regarded as equivalent to a waiver.

PERSONAL LIABILITY OF DIRECTORS

No complaint under section 138 of the Negotiable Instruments Act, against the employees or directors of the company would be maintainable, without making the company a party.VIJAY KUMAR DANGE VS. SAROJ THAKUR & ORS., MANU/HP/0663/2015.

If the company is represented through Directors, no execution can be filed against such Directors. Dr. Rakha Kamat Vs. Nath steel Equipments 2010 (4) Current Civil Cases 34. Delhi High Court.

Directors cannot be made liable for the dues payable by the company.

ESIC Vs. S K Aggarwal 1998(6) SCC 288 = VI(1998) SLT 425. M/s Faire Brothers Export Import P Ltd Vs. Nagpur Textiles 2008(4) RAJ 97 (Delhi)

THE FIGURES SHOWN IN INCOME TAX RETURN IS ADMISSION:

The Supreme Court in the case of Uttam Singh Dugal & Co. Ltd. v. Union Bank of India MANU/SC/0485/2000 : [2000] 39 CLA l/[2000] 102 Comp Case 118/[2000] 7 SCC 120, has held that the income-tax returns showing transfer of shares of the petitioners is an admission, thereby by virtue, of the said admission, the petition is to be rejected on admissions as per law laid down under Order 12, Rule 6 of the Code of Civil Procedure.

ORAL/WRITTEN ARGUMENTS A) As a general rule, a petitioner is bound by his

pleadings and should not be allowed to set up a case absolutely new case. OM PRABHA JAIN VS. ABNASH CHAND [AIR

1968 SC 1083]1. Select first the point on which there is

least dispute.2. Arguments before the Judges are not the same as platform oratory. The force of an argument lies in the reasons behind it.

3. Facts should be stated with clearness, directness, & never with dullness. No beating about the bush.

4. It is the soundness of evidence and not eloquence that wins the cases;

5. Avoid abusive language and it never pays;

6. Make your own case by your own side’s evidence. At the same time, weakness of the other side’s evidence to be highlighted.

7. Take out the entire law, Law dictionary, Legal Maxim,

8. Take out Govt. Circulars, Clarifications Answers to frequently Asked Questions published by the Department; The Circular binds the Dept. but not quasi-judicial authority They can always different view.

9. Never try to confuse the Judge but only opposite counsel.

WRITTEN ARGUMENTS

A) First find out the issues involved in the case:

B) On each issue , set out your pleadings and

documents with relevant page no and also cases relied upon by you.

C) Oral or documentary evidence led by both the parties;

D) Critical analysis of the evidence with the provisions of India Evidence Act;

E) Case applicable

F) Conclusions.

IMPORTANT POINTS

i) Court should not set up a case – which was never presented by the parties. SHEODHARI VS. SURAJ PRASAD AIR 1954 SC 758.

ii) Frauds avoids all judicial acts including judgments and decree. Even judgment or decree passed by court, in pursuance of practice of fraud, could be set aside and recalled by any lower court or superior court. S.P CHENGALVARYA NAIDU VS. JAGANNATH 1994 (1) SCC 1.

In petition under Section 397 and 399 of the Companies Act, 1956, the Company Law Board direct the (i) Respondents directors to restore the funds so siphoned off to the company (ii) appointment of independent director (iii) declaring appointment of directors as illegal (iv) restoring the directorship of those directors who have been illegally removed. RAMESH CHANDER BAMMI VS. PINDI ROADLINKS (P) LTD [2007 (81) CLA 97 CLB.] 

In a petition for oppression and mismanagement, after giving of consent by members, if the consent is withdrawn and the remaining petitioner fell below 10%, the petition would not be maintainable. However, the petition would be maintainable only if, after filing of petition, the Company issues Bonus Shares or there is a reduction of paid-up share capital and the holding of Petitioner is reduced below 10%. AJIT KUMAR GUPTA VS.. COMPANY LAW BOARD 2008 (82) CLA 1 (ALLAHABAD.

The CLB set aside allotment of shares – co deprived off of funds, petitioner to now funds for allotment of shares or long term funds to the company – company now not deprived of working capital. ABP(P) LTD VS. UNITED NEWS OF INDIA 2008(83)CLA 408 CLB.

  The Directorial complaints not to be agitated

unless company is closely held, quasi-partnership. KAREDIA SURYANARAYANA VS. SRI RAMDAS MOTOR TRANSPORT LTD 1999(35) CLA 117 CLB.

Thank You