PREPAREDNESS FOR NCLT

VARIOUS LAWS A PROFESSIONAL MUST KNOW

BY: PRADEEP K. MITTAL,

B.COM, LLB, FCS

Advocate, PKMG Law Chambers

Past Central Council Member,

The Institute of Company Secretaries of India, New Delhi

e-mail id: pkmittal171@gmail.com

Contact Nos. +91-9811044365, +91-9911044365

(I): THE LIMITATION ACT, 1963:

A) Section 5 of Limitation Act: The Court or Tribunal can

condone delay in filing the petition or application on

“sufficient grounds” being shown by the Applicant. The

Hon’ble Supreme Court in N.Balakrishnan Vs. M.

Krishnamurthy 2008(228) ELT 162(SC) held that the

Under Section 5 of the Limitation Act , for condonation of

delay , the length of the delay is immaterial whereas the

explanation or the reason for such delay is of importance.

The Hon’ble Supreme court in Manoharan Vs. Sivarajan

and Ors. MANU/SC/1192/2013 : (2014) 4SCC 163

held that the Courts while deciding the application under

Section 5 of the limitation act should not go the merits of

the case but the grounds set out in the application

seeking condonation of delay to be weighed and judged.

B) Section 14 of Limitation Act:

Where the party has been pursuing the matter before a

wrong court diligently and in good faith, the period

undergone in the trial before the wrong court, is liable

to be condoned by the competent court before whom

the petition has been filed subsequently.

In Mohinder Prakash v. DLF Commercial Developers Ltd.,

MANU/DE/6320/2012 it was held as under:

“The plaintiff must establish that while pursuing a wrong

remedy there was an element of mistake in the remedy or

the selection of the wrong forum. Besides establishing such

fact it is necessary that he must also establish that the

mistake was committed with due diligence and good faith.

Good faith has been defined as “exercise of due care and

attention.” Therefore, the time is excluded before forum of

inappropriate jurisdiction and delay condoned. “

The Hon’ble Supreme Court in the case of Union of India Vs.West Coast paper Mills Ltd MANU/SC/0191/2004 hasobserved as under:-

“However, Section 14 of the Limitation Act is wide inapplication, in as much as it is not confined in itsapplicability only to cases of defect of jurisdiction but it isapplicable also to the cases where the prior proceedingshave failed on account of other causes of the like nature.”

The Hon’ble Supreme Court in one of the case hasheld that the Quasi-Judicial Authority includingTribunal (though strictly they are not Court in legalsense) can condone the delay which, occur due topendency of the matter before wrongCourts/Authority.

C): Section 18 of Limitation Act:

Where before the expiration of the prescribed period of

for a suit or application in respect of any property or

right, an acknowledgement of liability in respect of such

property or right has been made in writing signed by the

party against whom such property or right is claimed, a

fresh period of limitation shall be computed from the

time when the acknowledgement is to signed.

Where no period of limitation is prescribed:

The Full Bench of Rajasthan High Court in Chiman Lal v. State of

Rajasthan and Ors. MANU/RH/0180/2000 : 2000 (2) RLR 39, had held

that when no period of limitation is provided then it has to be exercised

within a reasonable time and that will depend upon the facts and

circumstances of each case like:

when there is a fraud played by the parties;

the orders are obtained by misrepresentation or collusion with public

officers by the private parties;

orders are against the public interest;

the orders are passed by the authorities who have no

jurisdiction;

the orders are passed in clear violation of rules or the

provisions of the Act by the authorities;

and void orders or the orders are void ab initio being

against the public policy or otherwise.

Section 19 of Limitation Act, 1963

Section 19 says that before the expiry of limitation, in casethe debtor or his agent makes part payment of the amountdue, then the period of limitation shall be counted from thedate of such part payment.

In M/s Naraingarh Suger Mills Ltd. v. Krishna Malhotra,MANU/DE/1447/2012 it was held as under:

“The limitation period for the determination of thedebt partly paid commences from the day of lastpayment and suit for the recovery of the part amountwas held to be in limitation.”

In Sanjeev Chopra v. All Wear Clothing (India) P. Ltd.,MANU/DE/0664/2012 , it was observed as under:

“In case a debtor makes the part payment of adebt or of interest before the expiration of theprescribed period of limitation, fresh period oflimitation shall commence from the period whensuch payment is made.”

c): Article 113 of Limitation Act, 1963:

Any suit for which no period of limitation is provided elsewhere in this

Schedule – A period of three years from the date of accrual of cause of

action. In IFCI Venture Capital Funds Ltd. v. Santosh Khosla,

MANU/DE/1078/2012 it was observed as under:

“The limitation period for the recovery of loan amount was held to

be commenced from the date of default and not from the date of

grant of loan.”

In Sineximco Pte Ltd. v. Dinesh International Ltd.,MANU/DE/4261/2012 it was held as under:

“In case of suits based upon a bill of exchange payableby installments the right to sue/ cause of action wouldaccrue/ arise on each default by the payee of the bill ofthe exchange and a fresh cause of action wouldaccrue on each default unless the parties to theagreement are satisfied that the whole of the amountshall become due in case of default. “

The Delhi High Court in the case of Punjab National Bank Vs.

BSES Rajdhani Power Limited MANU/DE/3730/2015 has

observed as under:-

“In civil law, a person's right to recover money on account of

mistake would be a period of three years from discovery of

the mistake. In view of Article 113 of the Schedule of the

Limitation Act and which is a residuary article for a suit

which is not covered under any of the preceding articles of

the Schedule of the Limitation Act.”

INDIAN CONTRACT ACT, 1872

Section 10: All agreements are contracts if:-

a)Made by free consent of parties;

b)Made by the parties competent to contract;

c)For lawful consideration;

d) For a lawful object;

Section 15 of Indian Contract Act, 1872 : Coercion

The definition of Coercion is reproduced as under:

“the committing or threatening to commit any act forbidden by

the Indian Penal Code, or unlawful detaining or threatening to

detain, any property to the prejudice of any person whatever

with the intention of causing any person to enter into an

agreement”.

Section 16 of Indian Contract Act, 1872 : Undue Influence

Under Section 16 of the Indian Contract Act, 1872, a contract is said to be

produced by undue influence “where the relations subsisting between the

parties are such that one of the parties is in a position to dominate the

will of the other and uses that position to obtain an unfair advantage over

the other”.

The Settlement Deed cannot be cancelled unless either one

of the elements of fraud, misrepresentation, undue influence or coercion

is present.

Section 17 of Contract Act ,1872: Fraud

“Fraud means and includes any of the following acts committed by a party

to a contract, or with his connivance, or by his agent, with intent to deceive

another party thereto or his agent, or to induce him to enter into the

contract:-

i) the suggestion of a fact, of that which is not true,

ii)the active concealment of a fact by one having Knowledge or

belief of the fact;

iii) a promise made without any intention of performing it

iv) any other act fitted to deceive;

v) any such act or omission as the law specially declares to be fraud:

SPECIES OF FRAUD : HOW SUPREME COURT DEFINED

a) The Hon’ble Supreme Court in the case of Bhaurao Dagdu Paralkar v.

State of Maharashtra and Ors. (MANU/SC/0495/2005 : JT 2005 (7) SC

530) dealt with effect of fraud.

Fraud is proved when it is shown that a false representation has been

made

(i) knowingly, or

(ii) without belief in its truth, or

(iii) recklessly, careless whether it be true or false'.

b) Suppression of a material document would also amount to a fraud on thecourt. ( Gowrishankar v. Joshi Amba Shankar Family Trust(MANU/SC/0555/1996 : 1996 (3) SCC 310).

The Supreme Court in the case of Indian Bank v. M/s. Satyam

Fibres (India) Pvt. Ltd., MANU/SC/0657/1996 : AIR 1996 SC

2592 has laid down that the judiciary in India possesses inherent

power to recall its judgment or order if it is obtained by fraud on

Court and the above principles will also apply to statutory Tribunal.

SECTION 25 of Indian Contract Act, 1872:

An Agreement without consideration is void unless an agreement ismade out of natural love and affection;

The Supreme Court in the case of John Tinson & Co. P. Ltd. v.Surjeet Malhan MANU/SC/0331/1997 has held there should beconsensus ad idem for a concluded contract and it is seen thatSection 25(1) of the Contract Act contemplates that when a transferis without consideration, it is a void contract.

The Supreme Court in Manna Lal Khetan Vs. Kedar Nath KhetaMANU/SC/0060/1976 has observed as under:-

It is well established that a contract which involves in itsfulfillment the doing of an act prohibited by statute is void.Where a contract, express or implied, is expressly or byimplication forbidden by statute, no court can lend itsassistance to give it effect. What is done in contravention ofthe provisions of an Act of the Legislature cannot be made thesubject of an action.

(The case deals with transfer of shares which stood attached underorders of Court – SC held that Shares under attachment cannot betransferred ).

SALE OF GOODS ACT, 1930:

Section 45: The seller of goods is deemed to be an unpaid seller withinthe meaning of this Act (a) When the whole of the price has not beenpaid or tendered.

The Rajasthan High Court in the case of Samnath India Exports Vs.Shanti Lal Jain MANU./RH/1688/2013 has observed as under:

The Sale of Goods Act, 1930 covers all issues relating to sale ofgoods. Section 55(1) provides that "where under a contract ofsale the property in the goods has passed to the buyer and thebuyer wrongfully neglects or refuses to pay for the goodsaccording to the terms of the contract, the seller may sue himfor the price of the goods."

Section 101 - Indian Evidence Act, 1872:

Burden of Proof: Whosoever desires any court to give judgment as to any legal

right or liability dependent on the existence of facts which he asserts, must prove

that those facts exist.

The Delhi High Court in the case of Anjum Nath Vs. British Airways

MANU/DE/4242/2015, while interpreting Section 101 and 102 of Indian

Evidence Act, has observed as under:-

In my opinion, it was for the plaintiff to prove her case. Under

Section 101 of the Indian Evidence Act the burden of proof is on

the plaintiff to prove the facts which would entitle her to a legal

right.

Section 106 of Indian Evidence Act, 1872:

Burden of proving fact especially within knowledge.- When any fact is

especially within the knowledge of any person, the burden of proving that

fact is upon him.

ONUS TO PROVE

Section 106: When any fact is especially within the knowledge of any person, the burden of proving that fact is upon him.

(a)…………………

(b)A is charged with travelling on a railway without a ticket. The burden of proving that he had a ticket is on him.

Section 106 of the Evidence Act in terms does not apply to a proceeding under the said Acts. But it may be assumed that

the principle underlying the said section is of universal application. Under that section, when any fact is especially within the knowledge of any person, the burden of proving

that fact is upon him. Amba Lal Vs. Union of India MANU/SC/0090/1960

(II)How Power Of Attorney to be Executed: Section 85 of Indian

Evidence Act, 1872:

If the Power of Attorney is not executed in accordance with law, then no

power has been validly conferred on the Attorney and any petition is liable

to be dismissed on this short ground alone.

REQUISITES OF VALID POWER OF ATTORNEY.

a): Board Resolution in a validly convened Board Meeting

b): The date of affixation of Common Seal and date of attestation by Notary

Public should match;

c): Affixation of Common Seal (now optional under Companies Act, 2013)

d): The Power of Attorney must be on Stamp Paper of requisite

value as per rules of State Stamp Act;

e): There must be notorial stamp affixed during attestation.

i)Electric Construction & Equipment Co. Ltd. v. Jagjit Works, 1984 RLR

549 DHC.

ii)Syndicate Bank v. M/s. S.A. Trading Corporation & Others, 1990 (3)

Delhi Lawyer 356 DHC.

CODE OF CIVIL PROCEDURE, 1908:

Section 151 of CPC: Inherent Powers of Court = Regulation 44 of CLB

Regulations, 1991 (now Rule 11 of NCLT Rules, 2016)

The Hon’ble Supreme Court in the case of Vinod Seth Vs. Devinder

Bajaj MANU/SC/0424/2010 has observed as under:-

“ Section 151 is intended to apply where the Code does notcover any particular procedural aspect, and interests of justicerequire the exercise of power to cover a particular situation. It isa procedural provision saving the inherent powers of the courtto make such orders as may be necessary for the ends of justiceand to prevent abuse of the process of the court. It cannot beinvoked with reference to a matter which is covered by aspecific provision in the Code. It cannot be exercised in conflictwith the general scheme and intent of the Code.”

In the very recent verdict of K.K. Velusamy v. N.

Palaanisamy, (2011) 11 SCC 275 the Hon’ble Supreme Court

upheld that Section 151 of the Code recognizes the discretionary

power inherited by the every Court as a necessary corollary for

rendering justice in accordance with law, to do what is ‘right’

and undo what is ‘wrong’.

HOW PETITION TO BE DRAFTED: ORDER 6 RULE 1 & 2 CPC.

Order 6 Rule 2: Every pleading shall contain, and contain only, a statement in

a concise form of the material facts on which the party pleadings relies for his

claim or defence, as the case may be, but no evidence by which they are to be

proved.

“In the absence of any concise statement of material facts, the mere

raising of a plea of tenancy is not enough. D H Deshpande Vs. Janardhan

Kashinath AIR 1999 SC 1464.

AMENDMENTS OF PLEADINGS – ORDER 6 RULE 17 CPC

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

The Supreme Court in Ganesh Trading Co. v. Moji Ram ,MANU/SC/0018/1978: AIR 1978 SC 484, while dealing with theamendments of pleadings, has observed as under:

“Even very defective pleadings may be permitted to be curedso as to constitute a cause of action where there was none,provided necessary conditions such as payment of either anyadditional court fee, which may be payable or of costs of theother side are complied with. It is only if lapse of time hasbarred the remedy on a newly constituted cause of action thatthe courts should ordinarily refuse prayers for amendments ofpleading.”

AMENDMENT PLEADINGS

Even 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 (para 3).

Signing of pleadings

As per provisions of Rule 6 CPC, the last page of the petition/written statement/replication/rejoinder are required to be signedby the parties and also by their pleader. All pleadings are requiredto be supported by an affidavit. The affidavit can be given by theManaging Director, Director or Company Secretary or other officerduly authorized by either Board Resolution or Power of Attorney.The affidavit should be on stamp paper of the value as prescribedunder the State Stamp Act of the State where the affidavit isexecuted. The affidavit is required to be notarized either by aNotary Public or by Oath Commissioner.

The date of the affidavit shall always be subsequent to the dateof petition or of the same date. The date of affidavit can never beprior to the date when the petition is ready.

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

if the relief sought by way of amendment would be barred by the law of

limitation, yet the amendment would still be allowable 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 subserving the ultimate

cause of justice and avoiding further litigation should be allowed.

HOW TO DRAFT WRITTEN STATEMENT/ REPLY

ORDER 8 RULE 5 CPC–How to Draft Written Statement/ Reply:

Every allegation of fact in the plaint, if not denied specifically or by necessary

implication, or stated to be not admitted in the pleadings of the defendants, shall be

taken to be admitted.

Denial to be specific:

It shall not be sufficient for a defendant in his written statement to deny

generally the grounds alleged by the plaintiff, but the defendant must deal specifically

with each allegation of fact of which he does not admit the truth, except damages.

Sulekha v. Ashok Kumar. MANU/UP/0389/2016.

The written statement must deal specifically with each allegation of fact

in the plaint and when a defendant denies any such fact; he must not do

so evasively, but answer the point of substance. If his denial of fact is not

specific but evasive, the said fact shall be taken to be admitted. In such an

event, the admission itself being proof, no other proof is necessary.

Badat & Co. v. East India Trading Co., AIR 1964 SC 538

In Mahanagar Telephone Limited v. Suman Sharma,2011(1) AD (Delhi) 331 it was observed as under:

“Suit by the company and instituted by secretary – Suit wasinstituted and filed by the secretary who was a principalofficer of the appellant company. The suit was instituted interms of Order 29 and Rule 1 of CPC. Its dismissal was heldto be unjustified and liable to be set aside.”

ORDER 29 RULE 1 CPC – Authorisation to file legal proceedings

before Court/tribunal

The Supreme Court in the case of State Bank of Travancore Vs.

Kingston Computers (P) Ltd. MANU/SC/0280/2011 has observed

as under:

“Because the Respondent had not produced any evidence to

prove that Shri Ashok K. Shukla was appointed as a Director

of the company and a resolution passed by the Board of

Directors of the company to file suit against the Appellant

and authorised Shri Ashok K. Shukla to do so”.

The letter of authority issued by Shri Raj K. Shukla, whodescribed himself as the Chief Executive Officer of thecompany, was nothing but a scrap of paper because noresolution was passed by the Board of Directors delegating itspowers to Shri Raj K. Shukla to authorise another person to filesuit on behalf of the company.

ORDER 19 RULE 1 AFFIDAVIT –How Affidavit in support of petition

to be drawn.

Unless the affidavits are properly verified and are in conformity with

the rule, they will be rejected by the Court. MANU/BH/0026/1962:

MANU/WB/0079/1968: MANU/MH/0004/1964 :

Where the matter deposed to is not based on personal knowledge, but

on information, the source of information should be clearly disclosed

MANU/SC/0016/1952 : 1952CriLJ1269 : MANU/WB/0143/1956 :

AIR1956Cal496 .

THE PROVISIONS OF CPC ARE APPLICABLE TO CLB/NCLT

The court further held that provisions of CPC are

applicable to the proceedings pending before CLB. Krithika

Mullengada Vs. Wipro Ltd . 2012 (108) CLA 28 Kar DB.

INDIAN PENAL CODE:

In case it is found that the Opposite Party has deliberatelymade false statement or filed forged and fabricateddocuments (which very often occurs), paper, return, theaggrieved party may, besides moving an application fordismissal of the petition, also file an application U/s 340 ofCr.P.C. read with Section 192 of IPC.

Section 340 of Cr.P.C. provides that the party, who has madedeliberately false statement or created false evidence, maybe punished with imprisonment upto seven years and alsowith fine. Besides the above, by virtue of the judgment of theHon’ble Supreme Court in the case of S.P. Chengalvarya, thepetition could be dismissed by NCLT without waiting for thewhole trial to complete.

Section 405 of IPC define Criminal Breach of Trust to say thatif a person, who has been entrusted with any property, whichinclude money and if dishonestly misappropriate the same heshall be liable for the offence of Criminal Breach of Trustpunishable U/s 406 with imprisonment for a term which mayextend to three years or with fine or both.

Section 408 of IPC

Criminal breach of trust by clerk or servant. – Whoever, being aclerk or servant or employed as a clerk or servant, and being inany manner entrusted in such capacity with property, or withany domain over property, commits criminal breach of trust inrespect of that property, shall be punished with imprisonmentof either description for a term which may extend to sevenyears, and shall also be liable to fine.

Section 409 of IPC

Criminal breach of trust by public servant, or by banker, merchantor agent. – Whoever, being in any manner entrusted withproperty, or with any dominion over property in his capacity of apublic servant or in the way of his business as a banker,merchant, factor, broker, attorney or agent, commits criminalbreach of trust in respect of that property, shall be punished withimprisonment for life, or with imprisonment of either descriptionfor a term which may extend to ten years, and shall also be liableto fine.

The difference between Section 405 and Section 409 – theimprisonment U/s 409 is for a period of life whereas in case ofCriminal Breach of Trust, it is only three years.

Section 420 OF IPC

Section 420 in a simple way says – whoever withdishonest intention, induces the person deceived todeliver any property to any person, or to alter or destroythe valuable security to cause any wrongful gain tohimself and cause wrongful loss to the other, such personshall be deemed to have committed an offence ofcheating punishable with imprisonment extendable uptoa period of seven years also with fine.

Section 463 of IPC

Forgery. – Whoever makes any false documents or falseelectronic record or part of a document or electronicrecord, with intent to cause damage or injury, to thepublic or to any person, or to support any claim or title,or to cause any person to part with property, or to enterinto any express or implied contract, or with intent tocommit fraud or that fraud may be committed, commitsforgery and shall be punishable u/s 468 of IPC withimprisonment for a term of seven years and also withfine.

IMPORTANT PRINCIPLES OF LAW AND PROCEDURE

The provisions of new law shall not apply in case of action has takenplace when the old law was applicable:

In Katikara Chintamani Dora v. Guntreddi Annamanaidu

MANU/SC/0336/1973 : (1974) 1 SCC 567, this Court held:

“It is well settled that ordinarily, when the substantive law isaltered during the pendency of an action, rights of the parties aredecided according to law, as it existed when the action was begununless the new statute shows a clear intention to vary such rights(Maxwell on Interpretation, 12th Edn. 220). That is to say, "in theabsence of anything in theAct, to say that it is to haveretrospective operation, it cannot be so construed as to have theeffect of altering the law applicable to a claim in litigation at thetime when the Act is passed".

EVERY SUBSTANTIAL LAW IS PROSPECTIVE.

The Supreme Court in the case of Zile Singh v. State of Haryana

MANU/SC/0876/2004:(2004)8SCC1, examined the various

authorities on statutory interpretation and concluded as under:-

“It is a cardinal principle of construction that every statuteis prima facie prospective unless it is expressly or bynecessary implication made to have a retrospectiveoperation.”

Unless there are words in the statute sufficient to show the intention of the legislature to affect existing rights, it is deemed to be prospective only.

Statutory returns have no evidential value unless supported

by documents/evidence:

Srichand Bajaj Vs. Bajaj Promoters Ltd 2006(75) CLA 303 and

also Harish K Berry Vs. S Berry Automotive Udyog (P) Ltd., 2005

(64) CLA 144.

A mere entry in the Register of Members does not enable a member to

claim membership: 2001 (44) CLA 36.

Duty to speak, contradict or deny

If the party has written number of letters and other party has

not replied back, the party not replying to the letters, forfeits his

rights to contend otherwise. M/s Arosan Enterprises Vs. Union of

India 1999 (VIII) SLT 104 and Delhi Jal Board Vs. Kaveri

Infrastructure (P) Ltd., 2014 (206) DLT 136.

A person cannot convey better title than what he himself has.

A general proposition of law is that no person can confer on

another a better title than he himself has. [Reference in this regard

may be made to the decisions of this Court in Mahabir Gope v.

Harbans NArain Singh MANU/SC/0059/1952 : 1952 SCR 775;

Asaram v. Mst. Ram Kali 1958 SCR 986 and All India Film

Corporation Ltd. v. Raja Gyan Nath MANU/SC/0403/1969 : (1969)

3 SCC 79.]

The figures shown in Income Tax Return is

admission:

The Supreme Court in Uttam Singh Dugal & Co. Ltd. v. Union

Bank of India MANU/SC/0485/2000 : [2000] 39 CLA

l/[2000] 102 Comp Cas 118/[2000] 7 SCC 120, observed 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.

Waiver and Acquiscence:

The principles of acquiescence holds 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.

U.P. Jal Nigam v. Jaswant Singh MANU/SC/5073/2006 :

(2006) 11 SCC 464.

Person signing documents cannot deny knowledge.

When a person signs a documents, presumption is that he

has read the documents properly and understood it and only

then affixed his signatures thereon, unless there is a proof of

force or fraud. Such presumption is much stronger in case of

businessmen. If there is no allegation of force or fraud, such

contention cannot be accepted. Grasim Industries Ltd Vs.

Agarwal Steel 2010(1) SCC 83.

Fraud vitiates all solemn acts:

It is now well settled that fraud vitiated all solemn act. Any order

or decree obtained by practicing fraud is a nullity.

(a)Ram Chandra Singh v. Savitri Devi and Ors.

MANU/SC/0802/2003 : (2003)8SCC319 followed in

(b) Vice Chairman, Kendriya Vidyalaya Sangathan and Anr. v.

Girdhari Lal Yadav ;

(c) State of A.P. and Anr. v. T. Suryachandra Rao

MANU/SC/0431/2005 : AIR2005SC3110.

Maintainability of petition:

The Supreme Court has held that when the issue of maintainability

is pending, no issue on merit should be considered and hence, the

maintainability of the application should be first decided before

considering the reliefs sought for in the application. In T.K.

Lathika v. Seth Karsandas Jamnadas MANU/SC/0535/1999.

Plea taken for the first time in replication:

While canvassing the proposition that any plea taken by the plaintiff in the

replication to which the defendants have no opportunity to reply

inconsistent with the original pleading should be refused to be taken on

record and if taken shall be liable to be struck off and taken off the file,

learned counsel has relied upon Anant Constructions Pvt. Ltd. v. Ram

Niwas MANU/DE/0407/1994 : 1994IVAD(Delhi)185 wherein it was

observed that a plea which is foundation of the plaintiff's case or essentially

a part of cause of action of plaintiff, in absence whereof the suit will be liable

to be dismissed or the plaint liable to be rejected cannot be introduced for

the first time by way of replication.

Vexatious, frivolous and mischievous litigation:

The Supreme Court in the case of Dalip singh Vs. State of UP 2010(2)

SCC 114 has held as under:-

“In the last 40 years, a new creed of litigants has cropped

up. Those who belong to this creed do not have any respect for

truth. They shamelessly resort to falsehood and unethical means

for achieving their goals. In order to meet the challenge posed by

this new creed of litigants, the courts have, from time to time,

evolved new rules and it is now well established that a litigant,

who attempts to pollute the stream of justice, or two touches the

pure fountain of justice with tained hands, is not entitle dto any

relief, interim or final.”

In cash transaction, the party who alleges, there is heavy

burden on him about payment in cash.

Mahesh Kumar Wadhwa Vs. Bimal Luthra

MANU/DE/1830/2008 : 2009 (107) DRJ 271 holding, though in

the context of grant of leave to defend under Order 37 of the CPC,

that when a party enters into a transaction involving large sums of

money in cash through non bank channels those transactions will

always remain open to challenge and the burden heavily lies on the

party to prove that he had entered into the said transaction;

LIFTING OF CORORATE VEIL

It is very seen that the Government Authorities for realization of

government dues or even parties for the purpose of recovery of their dues

from the government, initiate proceedings against the working directors

of the company – though the judgment and decree is only against the

company and not against the Director in his personal capacity.

State of UP Vs. Renusagar MANU/SC/0505/1988

New Horizon Ltd Vs. UOI MANU/SC/0564/1995.

LIC VS. ESCORTS MANU/SC/0015/1985.

Juggilal Kamlapat Vs. CIT MANU/SC/0091/1968.

Bajrang Pd Jalan Vs. Mahabir Pd Jalan Vs. 1999 AIR Cal

155

JB Exports Vs. BSES Rajdhani Power Ltd

MANU/DE/0880/2006

Singer India Limitd Vs. CM Chadha MANU/SC/0626/2004=

AIR 2004 SC 4368

Vipul Gupts Vs. Trident Projects Ltd

MANU/DE/0082/2009= 2009(157) DLT 1.

If the company is represented through Directors or in other

words, the petition or reply has been filed through directors of

the company, no execution petition can be filed against such

Directors for realisation of the amount under the money

decree passed against the company of which the person is

director because he is signing the petition or written

statement in the capacity of a director and not in his personal

capacity. Dr Rakha Kamat Vs. Nath steel Equipments 2010

(4) Current Civil Cases 34.

NO INTERIM RELIEF, IF NO CHALLENGE IN MAIN PRAYER.

It is well settled that no Order can be passed on any

interlocutory application, if there is no prayer in the Main

Prayer/Final Prayer in the Petition – no relief can be granted at

interlocutory stage which are beyond scope of suit – prayers

made for interlocutory application in present case outside scope

of suit – same cannot be entertained at such stage – no order

can be passed on such application except Order to expedite suit.

MANU/WB/0470/2002. MANU/SC/0086/1999.

Where the company law Board by impugned order had restrained

the appellant and its Board of directors from implementing the

decision take in the Board of Directors meeting and the decision

taken by the Board of Directors have not been challenged in the

main petition, no relief can be granted. Shree Ram Urban

Infrastructure Ltd Vs. R K Dhall 2010(98)CLA (Snr) 3 (Bom).

Even where a person is not a member but he has

indeffasible right to be a member, is entitled to

file a company petition .

SVT Spinning Mills (P) Ltd Vs. M Palanisami 2009(95)

SCL 112., Gulab rai Kalidas Naik Vs. Laxmidas Lallubhai

Patel 1947 (47) Company Cases 151.

You may access the Presentations and Articles at our website

@pkmgcorporatelaws.com

THANK YOU

PKMG LAW CHAMBERS