1. Pradeep. K Mittal Past Central Council Member The Institute of Company Secretaries of India, New Delhi Advocate 171 Chitra Vihar, Delhi-110092 9811044365/9911044365 pkmittal171@gmail.com POINTS TO BE KEPT IN MIND BEFORE DRAFTING COMMENCES

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

3. Every pleading shall contain only a statement in a concise form of material facts on which the party pleading relies but not the evidence by which they are to be proved. Every pleading shall be divided into paragraphs, numbered consecutively, each allegation be should be in a separate paragraph. Dates, sums and numbers shall be expressed in a pleading in figures as well as in words. PLEADING TO STATE MATERIAL FACTS AND NOT EVIDENCE RULE 2

4. 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]

5. 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.

6. ORDER 6 RULE 14 OF CPC 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. The authorization to sign the pleadings could be either by a)Board Resolutions in case of body corporate b)Power of Attorney duly executed.

7. Before any one proceed to commence drafting, it is absolutely necessary to gather necessary information by having extensive discussion with the clients. The information can be gathered by asking the following questions: 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.

8. 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

9. 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 (now DIR-12)– 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;

10. 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

11. E) Removal of Promoter Directors a. Non-compliance of Section 169 of the Companies Act,2013 b. No notice of BM/GM i) UPC is no proof of service of notice; ii) Proof of dispatch of notice is must; iii) Extracts of Cash Book showing amt. spent in postage; iv) Attendance Register; v) Extracts of the minutes of either BM/AGM/EGM c. Removal contrary to understanding in family company; d. Removal against the principle of quasi partnership; e. Directorial complaints generally not maintainable. In a petition u/s 397 & 398 of Companies Act, 1956, unless company is not in the nature of quasi-partnership. Therefore, always allege that the company is in the nature of quasi-partnership.

12. 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;

13. 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;

14. (H) Allegation that petition is barred A) Section 8 of Arbitration and Conciliation Act, 1996 B) Section 9 of CPC 1908 Civil Suit for: i) wrong removal of director ii) wrong transfer of shares

15. (I) HOLDING A MEETING WITH THE CLIENTS AND DO THE CROSS- EXAMINATION & ASK AS MANY AS QUESTIONS AS YOU CAN SO AS TON UNDERSTAND HISTORICAL BACKGROUND OF THE WHOLE CASE.

16. J) FORMS OF PLEADINGS a)Form prescribed b)Set brief description of each of the petitioner and respondents; c) Never admit or confess on any points which may go against you.

17. d)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]

18. 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

19. 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.

20. 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.

21. K) 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

22. L) WRITTEN STATEMENT/REPLY Neither the CLB Regulation nor NCLT rules prescribe any proforma for filing of Written Statement or Reply to the Company Petition or Company Application. However, the Written Statement or Reply may be in the following proforma. a) Preliminary objections raised all legal objections such as i) Petition is time barred ii) NCLT has no jurisdiction or jurisdiction is barred iii) Petition is liable to be dismissed due to fraud being played by the petitioner iv) Petitioner does not satisfy the fundamental conditions of (a)either shareholding (b) or requisite number of members- Section 399 of Companies Act, 1956. v) Petition is barred by res-judicata- Section 11 of CPC. Nazim Ali vs. Anjuman Islamia 1993(3) SCC 91. vi) Similar petition is pending and, therefore, invoke the principle of matter being sub-judice as per Section 10 of CPC.

23. b)Petition is not supported by legal and proper affidavit or legal and valid consent. c) Issue raised in the petition is already subject matter of arbitration agreement as provided u/s 8 of Arbitration and Conciliation Act, 1996. d) In case the petition has been filed by the company, there is no proper board resolution authorizing the filing of the petition. 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

24. REPLY ON MERITS While drafting Written statement, give brief historical background for easy understanding and comprehension of all issues/ contents/disputes involved in the company petition or points raised in the written statement. 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. ORDER 8 CPC

25. 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]

26. 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

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

28. 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;

29. 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

30. 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

31. (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

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

33. 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: PATHIKONDA GOPALA RAO V. NAGIR PEDDA KITAMMA, MANU/AP/0036/1955 : AIR1955AP138.

34. 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.

35. 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.

36. 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.

37. 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.

38. 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)

39. 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.

40. 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.

41. 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.

42. 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;

43. D) Critical analysis of the evidence with the provisions of India Evidence Act; E) Case applicable F) Conclusions.

44. FINAL RELIEF CANNOT BE GRANTED 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. Important Principles of law

45. 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.

46. 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.

47. 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.

48. 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.

49. 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.]

50. 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.

51.  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.

52. Thank You