POINTS TO BE KEPT IN MIND

BEFORE DRAFTING COMMENCES

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
 BASIC PRINCIPLES OF DRAFTING
ORDER VI OF CODE OF CIVIL PROCEDURE,
1908 (CPC)
RULE 1

PLEADING

WRITTEN REPLICATION/
PLAINT REJOINDER
STATEMENT
RULE 2 PLEADING TO STATE MATERIAL FACTS AND NOT EVIDENCE
 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.
 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.
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.
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 (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;
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 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.
 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/DDA
d) 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 CPC 1908 Civil Suit for:

i) wrong removal of director

ii) wrong transfer of shares
 (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.
 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.
 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]
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
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.
 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
 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.
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
 ORDER 8
REPLY ON MERITS CPC

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.
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:

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:
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.
 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)
 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 Principles of law

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.
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.
 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.
  
 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