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Pradeep. K Mittal Past Central Council The Institute of Company Secretaries of India, New Delhi

Pradeep. K Mittal Past Central Council The Institute of Company Secretaries of India, New Delhi Advocate 171 Chitra Vihar, Delhi-110092 9811044365/9911044365. POINTS TO BE KEPT IN MIND BEFORE DRAFTING COMMENCES. Sections under which petition is to be filed before the NCLT.

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Pradeep. K Mittal Past Central Council The Institute of Company Secretaries of India, New Delhi

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  1. Pradeep. K Mittal Past Central Council The Institute of Company Secretaries of India, New Delhi Advocate 171 Chitra Vihar, Delhi-110092 9811044365/9911044365 POINTS TO BE KEPT IN MIND BEFORE DRAFTING COMMENCES

  2. Sections under which petition is to be filed before the NCLT

  3. BASIC PRINCIPLES OF DRAFTING ORDER VI OF CODE OF CIVIL PROCEDURE, 1908 (CPC) RULE 1 PLEADING REPLICATION/REJOINDER PLAINT WRITTEN STATEMENT

  4. PLEADING TO STATE MATERIAL FACTS AND NOT EVIDENCE RULE 2

  5. 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]

  6. 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.

  7. 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.

  8. 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.

  9. EFFECT OF DOCUMENT TO BE STATED RULE 9 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.

  10. 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/0597/2012 • Rule 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.

  11. 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.

  12. PRESUMPTIONS OF LAW RULE 13 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.

  13. PLEADING TO BE SIGNED RULE 14 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.

  14. ADDRESS OF SERVICE OF NOTICE RULE 14A • 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.

  15. 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.

  16. 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

  17. 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;

  18. 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

  19. 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

  20. 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.

  21. 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;

  22. 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/DDA d) Information about acquisition of shares involving FEMA;

  23. 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

  24. 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;

  25. 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;

  26. 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]

  27. 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 action ii) Limitation: iii) Jurisdiction: iv) No previous legal proceedings on same issue; v) Prayer

  28. 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.

  29. 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.

  30. 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

  31. 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

  32. 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).

  33. 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

  34. II) Specific denials of the averments made inpetition – 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]

  35. 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

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

  37. 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;

  38. 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

  39. 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. LalaPanchamandOrs.MANU/SC/0284/1964, (ii)Ajendaprasadji N. Pande v. Swami Keshavprakeshdasji N. MANU/SC/8760/2006

  40. (iii) B.K. NarayanaPillai v. ParameshwaranPillai 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 KumaraswamiGounder v. D.R. NanjappaGounderMANU/TN/0224/1978

  41. 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

  42. 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 .

  43. 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.

  44. 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. 

  45. 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.

  46. 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.

  47. 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 DhannaLal 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.

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