Pradeep. K Mittal Member Central Council of

1. Pradeep. K Mittal Member Central Council of The Institute of Company Secretaries of India, New Delhi Corporate Lawyer & Advocate Delhi High Court, Delhi 9811044365/9911044365 POINTS TO BE KEPT IN MIND BEFORE DRAFTING COMMENCES

2. A) Whether any legal notice required; i) Section 433 ii) Section 113(3) of the Companies Act, 1956

3. B) Whether all factual details have been taken out: 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

4. iii) All evidence necessary for drafting a) Affidavits from traders; b) Annual Returns/Share Certificates; c) Balance Sheets d) Criminal complaints/cases against any of the Respondents; e) Agreement for sale of immoveable assets f) Copies of Applications/Licenses; g) Copies of Board Resolutions/Forms

5. iv) Instances of financial irregularity mis-management; a) Sale of Property at a depressed consideration; b) Purchase of materials at a higher apparent value; c) Sale of goods to associate/concern at a depressed consideration; d) Acquisition of assets for personal use by debiting cost to the company’s a/c’ e) Extending loans at zero interest to sister/associate concerns and not repaying the principal sum or interest in time;.

6. v) Take out copies of Annual Returns Forms No. 32 and forms 5 & 2 from the Registrar of companies; vi) Information available with the Govt Deptt can be sought from Under the right to Information Act.

7. C) Holding a meeting with the clients and do the cross- examination & ask as many as questions as you can? D) Take out the photographs of relevant persons or articles;

8. E) FORMS OF PLEADINGS a) From 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;

9. 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. Ram Swarup Gupta Vs. Bishnu Narain Inter College AIR 1987 SC 1242 Hari chand Vs. Daulat Ram AIR 1987 SC 94

10. Every pleadings must have the facts and not law. It must state all the material facts - Order 6 Rule 2 CPC. iii) Refer the documentary evidence on which you are relying upon, never re-produce the documents:

11. 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;

12. F) Legal clauses / Submission:: a) Cause of action b) Limitation: c) Jurisdiction: d) No previous legal proceedings on same issue; e) Prayer

13. f) Signing of petition on behalf of company Authorization by the company in favour of MD, Director or Company Secretary, Order 29 CPC. g) 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.

14. h) 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 i) 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 notorized preferably before Oath Commissioner.

15. G) DOCUMENTS TO BE ATTACHED a) Memorandum & Articles of Association duly amended: b) Copy of latest Audited Balance Sheet: c) Correspondence / Agreement / documents relied upon

16. 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 order 6 Rule 14 CPC. - Party - Pleader

17. Written Statement H) 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.

18. It is mandatory for any suit to dismiss any petition, appeal or application if filed after the period of limitation. Ashok Kr Khurana Vs. Steelman Industries 2000 (85) DLT 398 Delhi DB

19. 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.

20. 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-drawal of salary c) Day to day management with respondents;

21. 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

22. Evasive denial is no denial – Lohia Properties (P) Ltd. Vs. Atma Ram Kumar 1993 JT (Vol.5) 223 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

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

24. 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. Omprabha 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.

25. 3. Facts should be stated with clearness, directness, and 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 and impeterate language. It never pays;

26. 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,

27. 8. Take out Govt Circulars, Clarifications Answers to frequently Asked Questions published by the Department; The Circular binds the Deptt but not quasi-judicial authority They can always different view. 9. Never try to confuse the Judge but only opposite counsel.

28. Written Arguments: a) First find out the issues involved in the case: b) On each issue , set out cases c) Oral or documentary evidence led by both the parties;

29. d) Critical analysis of the evidence with the provisions of India Evidence Act; e) Case applicable f) Conclusions:

30. 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.

31. IMPORTANTS JUDGEMENTS Creation of a new majority is an act of oppression. Needle Industries (I) Ltd Vs. Needle Industries Newey (I) Holding Ltd 1981(3)SCC 333. There must be continuous acts of oppression on the part of majority shareholders continuing up to the date of petition. Kalinga Tubes Vs. Shanti Prasad Jain AIR 1965 SC 1535.

32. The CLB, while dismissing the petition, however, to do substantial justice ordered for purchase of shares of petition – valuation to be done before sale of immoveable property – petitioner to quit. Surendra Goyal Vs. Nile Aqua Faucets (P) Ltd 2008(83)CLA 383(CLB).   In a petition under Section 397, The court can grant the remedy only if proved facts would justify passing of winding up order on the ground that it is just and equitable. Westfort Hi Tech Hospital Ltd Vs. V S Krishnan others 2007 (78)CLA (Kerala DB).

33. In petition under Section 397 and 399 of the Companeis act, 1956, the Company Law Board may 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.

34. Single instance of allotment of shares with a view to disturb the shareholding between the two groups would entitle him to file petition under Section 397 even in Section 25 ompany. ABP (P) Ltd Vs. United News of India 2008(83)CLA 408(CLB). An Act beneficial to a company cannot be set aside. Shiv Nath Rai Bajaj Vs. Nafabs India (P) Ltd 2001(45)CLA 404.

35. 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.

36. 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

37. Thank You