Practice Procedure in the Tribunal Aspects one must

Practice & Procedure in the Tribunal – Aspects one must know 1

DRAFTING OF � Concise narration of material facts only. Full particulars of fraud, undue influence and coercion to be stated. � Specific instances of acts of Oppression and Mismanagement. � In case of winding up petitions, specific averments as to admission of liability/quantified debt. � Formal Paragraphs to be concisely made out as per the statutory form no. 1 provided in the Regulation 37 of CLB Regulations, 1991. üPetition should be accompanied by an affidavit sworn before the person specified in Section 558 of the Companies Act, 1956 / Section 355 of the Companies Act, 2013; üPlural reliefs – A petitioner shall be entitled to seek one or more reliefs provided that they are consequential to one another{R. 20 of CLB Regulations, 1991} 2

RELIEFS INTERIM RELIEFS: � Interim relief should not exceed the final relief. � The Interim relief should not amount to grant of the final relief. � Purpose is to maintain the last non-contested status quo. FINAL RELIEFS: � Vast powers under Section 402. � Order to conduct the Company in a manner not prejudicial to the interest of members and to public interest; � Order restitution for losses caused to the company. � Order to put to an end the matters complained of including valuation of shares and buying and selling of shares. 3

POWERS OF TRIBUNAL Powers of Tribunal –S. 242 of the Act, 2013: � In Sangramsinh P. Gaekwad v. Shantadevi P. Gaekwad, (2005) 11 SCC 314, the Hon’ble Supreme Court held that the power of the court to grant relief in a petition under Section 397 is of wide amplitude and that the court can grant appropriate relief even if no case of oppression is made out. � The same principles were reiterated in a decision of Hon’ble Supreme Court in M. S. D. C Radharamanan v. M. S. D. Chandrasekara Raja and Anr, AIR 2008 SC 1738 wherein it was pronounced that jurisdiction of the Company Law Board has been couched in wide terms as diverse reliefs can be granted by it to keep the company functioning. 4

AMENDMENT AND REVIEW AMENDMENT: � Amendments can be carried out by filing an application under Regulation 44 of the CLB Regulations, 1991 read with Order 6 Rule 17 of CPC, 1908 before. � Amendments to be liberally granted, subject to rider that one cannot withdraw admissions or set up an entirely new case. � Nothing prohibits the Tribunal from looking at subsequent events in a petition under sections 397 and 398 of the Companies Act while granting amendment. REVIEW: � The CLB does not have the power to review/ recall its own order unless such order was obtained through fraud or misrepresentation. � The parameters of review are given under Section 114 Read with Order 47 Rule 1, Civil Procedure Code, 1908. � They are discovery of a new and important matter, which despite due diligence could not have been discovered earlier. Also, error apparent on the face of the 5 order.

APPLICABILITY OF CPC & Cr. PC � The Tribunal and Appellate Tribunal can follow any reasonable procedure and are not bound but only guided by the procedure laid down in CPC, 1908. � Departure in Rule 6 of the Company (Courts) Rules, 1959 states that the practice and procedure of the Court and the provisions of the Code, so far as applicable, shall apply to all proceedings under the Act and these rules. � The procedure is to be guided by the principles of natural justice, fair play and adherence to the objects of the provisions. � Section 424(2) of the Companies Act, 2013 gives to the Tribunal and Appellate Tribunal the same powers as are vested in a civil court under the CPC, 1908. This section is pari-materia Section 10 E (4 C) of the Companies Act, 1956. � These powers are limited to discovery of documents and enforcing the attendance of witnesses etc. � Any order made by the Tribunal or the Appellate Tribunal may be enforced by that Tribunal as like a decree of a court. {S. 424(3)} � In case perjury is made out then Tribunal and Appellate Tribunal is to be treated as Criminal Court for the purposes of Section 195 and Chapter 36 of Cr. PC, 1973. {S. 424(4)} 6

EVIDENCE ACT � Tribunal has powers under Section 10 E (4 C) of the 1956 Act to order discovery of documents and examination of witnesses on oath. This is now Section 424(1) of the 2013 Act. � The reason why this provision is sparingly used is that petitions are winding up, oppression and mismanagement, rectification, for revival of sick companies etc. are based on statutory records and documents, the existence of which are hardly ever in dispute. � Should the Tribunal consider that on the basis of the affidavits no conclusion can be drawn, it has the power to record oral evidence. � A party can make an application for cross-examination of a witness and the Tribunal can allow the prayer depending on facts and circumstances of a case. 7

CONTEMPT � The CLB, being a 'court' subordinate to the High Court, contempt petition lies for deliberate and wilful acts of a party in terms of Section 10 of the Contempt of Courts Act, 1971. � The period of limitation is one year from the date on which the contempt is alleged to have been committed, as per Section 20 of the Act. � Though express provisions are not provided, the CLB, under Regulations 44 and 47 of the CLB Regulations has inherent power to make orders as might be necessary for the ends of justice or to prevent abuse of process of the Bench. � Under the Companies Act, 2013, the Tribunals have same power/jurisdiction as the High courts to punish for their contempt under Section 425. � If two views are possible, the courts should take a lenient view and lean towards the view which does not hold the alleged contemnor liable. � Power includes power to declare all contumacious acts void. 8

MAINTAINABILITY QUALIFICATION UNDER SECTION 399: � Member applying should hold at least one-tenth of the paid up share capital of the company or constitute one-tenth of the total number of members. � The percentage of shareholding or whether a member constitutes at least onetenth of the total number of members in a company is to be constituted before the alleged acts of oppression or mismanagement took place. EXISTENCE OF ARBITRATION AGREEMENT: � Conflicting opinion on maintainability of a petition under Section 397 and 398 in case of existence arbitration agreement between the parties. � Largely been held that disputes under Section 397 and 398 not capable of being arbitrated considering the nature and scope of remedies sought. LAW OF LIMITATION, DELAY AND LACHES: � The law of limitation does not strictly apply but the courts are very of unexplained delay and laches as it reflect possible mala fide and afterthought. 9

APPEAL � Appeal can be filed to the High Court against any order of the Company Law Board within sixty days from the communication of order to the party under Section 10 -F of the Indian Companies Act, 1956. � No provision of appeal to the Supreme Court from an order of High Court but Special Leave Petition under Article 136 of the Constitution can be filed. � Appeal can be filed from an order of the Tribunal to the Appellate Tribunal within 45 days from the date on which copy of order is made available to the party under Section 421 of the Companies Act, 2013. � Appeal can be filed from an order of the Appellate Tribunal to the Supreme Court on any question of law within 60 days from the date on which copy of order is made available to the party under Section 423 of the Companies Act, 2013. ü Mixed questions of law and fact can also be gone into. ü A question of facts cannot be gone into except when the finding is based on wrong appreciation of evidence, in which case it becomes a question of law. 10

ALTERNATE DISPUTE RESOLUTION � The role of mediation in a dispute under section 397 and 398 of the Companies Act has been examined and propagated by Justice A. K. Sikri in his judgment in Vikram Bakshi v. Sonia Khosla, decided on 8. 5. 2014. � Companies Act, 1956 had no provision of settlement of disputes by way of alternate dispute resolution mechanism. � The Companies Act, 2013 under Section 442 provides for setting up of mediation and conciliation panels for mediation between the parties during pendency of any proceeding before the Central Government or the Tribunal or the Appellate Tribunal. 11

� RECTIFICATION OF REGISTER Register of Members – Section 59 If name of any person is entered or omitted without any sufficient cause or if a default is made, the aggrieved person can appeal to the Tribunal for rectification of register. §The Tribunal may, after hearing either dismiss the appeal or direct that the transfer or transmission shall be registered by the company within a period of ten days of the receipt of the order or directification of the records or may direct the company to pay damages, if any, sustained by the party aggrieved. {S. 59(2)} � ROC Register – Section 87 (Pari- Materia to S. 141 of 1956 Act) The Central Government have power to rectify the register of charges. In the event of failure on the part of the borrowing company in getting the particulars of charge registered, Section 141 of the erstwhile Act of 1956 entitled any person interested in the charge to make an application to the Company Law Board for rectification of Register of charge or for grant of extension of time for filing the particulars of charge with the Registrar of Companies. ü Ministry of Corporate Affairs through its notification dated 21. 05. 2014 have delegated Central Government’s power to Regional Director and Tribunal may not be approached for it. 12

Krishnendu Datta, Advocate C: +91 -9810138786 E: krishnendu@kdatta. in kdatta 99@gmail. com 13