uttamHATHI
Facts and Evidence; Rule of Pleading
Introduction
One start by filing a plaint, with the competent court, clearly setting out the material facts.[3] Following this, the Court will send a notice to the defendant[4] along with a copy of the documents filed. If defendants choose to deny the claims, they can file a written statement[5] with their version of the material facts. The plaint and the written statement together will be referred to as “pleadings”, the drafting of which is governed by the Civil Procedure Code, 1908. Order 6, Rule 2 of the same states that;
 
“Every pleading shall contain, and contain only, a statement in concise form of the material facts on which the party relies for his claim or defence, as the case may be, but not the evidence by which they are to be proved”
 
The general rules of pleadings[6] lay down what a pleading should contain, and are derived from the statute quoted above. The rules, in short, are as follow;
facts not law;
facts which are material;
facts, not evidence; and
all of the above in a concise form
 
This article aims to clarify the distinction between the material facts[7] and the evidence required to prove them, i.e. facts to be proved vs. evidence by which they are proved, as required by the 3rd rule of pleading.
 
Theoretical Difference 
Say a claim that your husband did not commit suicide against the conflicting claim of the Insurance Company that he did, will become the material facts. These are commonly referred to as the facts in issue.[8] In short, these are the facts that need to be proven or disproven, to win or defend the case. Legal literature calls these the facta probanda, i.e. the facts to be proved, and limits them to the ‘material facts’ only.[9] On the other hand, the particulars or the evidence through which we prove these facts are called the facta probantia.
 
A very basic example would be a breach of contract. If two people sign a contract, involving the sale of shares in a company for payment in cash, then non-payment of cash would be the fact, with the signed contract document being the evidence.[10]
 
Elaborating further, suppose there is a plea (i.e. pleading) alleging several irregularities in the way an election of candidates to the Legislative Assembly of Himachal Pradesh took place.[11] This will not require the plaintiff to mention specifically who fixed the voting machines, what the irregularities in the voter’s list were etc. in the “plaint”[12]. As all of those are evidentiary facts, i.e. facta probantia. So the facta probanda will only include allegations of corrupt practices, and other such irregularities and illegalities.
 
Taking another example, if the Insurance Company from before claims that your husband was depressed and had been in a miserable state for weeks before his death, and had even bought a pistol the day before his death then they must not put any of these facts in the pleadings. All of these facts will constitute evidence relied upon to prove the facts, i.e. the facta probantia. All that you have to claim, in the plaint, is that your husband died of suicide, i.e. the facta probanda.
 
Blurred Lines
It must be noted that in 1994, the Supreme Court considered facta probanda to be inclusive of both ‘material facts’ and “particulars” while keeping only ‘facts proving evidence’ as the facta probantia.[13] Then, in 2007, it interpreted facta probanda as simply ‘material fact’ while facta probantia as ‘particulars or evidence’.[14]
This distinction is important because it highlights the narrower acceptance of ‘material facts’. The distinction between ‘material facts’ and ‘particulars’ being one of degree, its application changes based on the circumstances of each case, and the nature and content of the documents.[15] It is similarly distinguished under the 2nd Rule of Pleading[16] which requires the facts stated in the pleading to be ‘material’.
 
For instance, the Supreme Court defined this difference as the extent of details provided by the facts, i.e. the ‘degree’ of detail. So in a case of breach of contract, the material facts will be covered by claiming that there was a document which legally obligated both parties to do certain things. The particulars will go into details such as the date on which it was signed, whether it was witnessed by anyone, what clauses the contract contained, etc. These are not the basic facts that must be pleaded by either side to prove their reason for filing the suit or to prove their defense.[17] Hence, such details are added at later stage of the suit.
 
But some cases aren’t as straightforward. They require a certain level of detail with respect to the facts alleged in the pleading itself, which would normally be considered ‘particulars’ under facta probantia.
 
Allowing for this extension of ‘material facts’ to include ‘particulars’, the Code provides for suits in which ‘condition of mind’, ‘notice’, and ‘implied contracts’ must be alleged with some supporting facts which go beyond the definition of ‘material facts’. This can be seen as a practical application of the general rules of pleading, extensively elaborated upon below.
 
Practical Application of the general principle
The Civil procedure code provides for rules 10, 11 and 12 under Order 6 which form part of the extension to the third rule of pleading. These rules provide for certain instances wherein this general rule may not be strictly followed. ‘Particular fact’ is a creation of these three sections, which are used to explain where the ‘material facts’ of the case have to be coupled with their ‘particulars’. The rules are as follows:
 
Condition of mind[18]
Whenever one is alleging a certain condition of mind; malice, fraudulent intention, knowledge etc, the same is alleged as a fact, without mentioning the circumstances which it is to be inferred from[19]. Unlike a pleading for fraud, here a simple allegation is insufficient to prove the claim.
For instance, the Supreme Court in the case of Bishundeo Narain v. Seogeni Rai[20] specified that in cases regarding fraud, undue influence, and coercion the plaint must carry in it full particulars of the case. So if ‘A’ is forcing ‘B’ to sign over his property to A by pulling a gun on him in a restaurant, the plaint must mention the fact of the gun placed on B’s head which shall establish the fact of undue influence. The CCTV footage may be used as evidence to prove the same at a later stage.
The reason behind providing particulars in such cases is the interpretations of rules 4 and 10 of Order 6 of the Code, which provides that if an allegation concerns a matter not connected with the condition or state of mind, then it is necessary to provide particulars thereof[21]. This can be better understood through an illustration.
Suppose a person is driving negligently and causes damage to property as a result of his rash driving.Then what is in question here is his ‘state of mind’, which was negligent. Alternatively, in a scenario where a contract to deliver goods in a certain manner is breached by the driver, a general allegation of negligenceon his part will not be enough. Particulars will have to be provided to establish both, the contract, and the breach caused by his negligence.
 
Notice[22]
‘Notice’ to the party is pleaded as simply claiming that it was duly provided to the other party. Only those ‘notices’ are pleaded to the other party which are necessary in relation to the case, which are alleged as facts. However, the courts have expanded the interpretation of section 80 of the Code to mean divulging certain facts in a notice.
This concept was evolved in the cases of Dhian Singh Sobha Singh v. Union of India[23] and State of Madras v. C. P. Agencies[24], wherein the notice must sufficiently state the cause of action and the precise reliefs asked for it. Thus, if by a negligent act of the railway authority some goods have been damaged in transportation, the notice must state the particulars off the act. These particulars shall lay out the terms which were given in the contract and then the details of the act which led to the damage[25].
 
Implied Contracts[26]
Under this rule, implied contracts and communications/circumstances between individuals are alleged as facts. Then the set of communications/circumstances, if implied, are alleged. A plaint for an implied contract shall carry with it particulars, which are required in addition to the general allegation of the fact of the contract being breached, or otherwise.
For instance, in the case of Haji Mohammed Ishaq Md. Sk. … vs Mohamed Iqbal & Mohamed Ali & Ors[27], an implied contract for part payment of the bags of tobacco delivered was established. The particulars provided to the court were the delivery and receipt of the goods, and the payment of money for the goods delivered. Thus, such conduct proved the existence of the implied contract.
 
Harms
In a scenario where these rules are not adhered to, there are two possible outcomes. The first is that the plaint is struck out where no material fact is pleaded. For instance, where a man claiming to be an Earl of Sterling pleads evidence to prove he is the Earl without ever alleging the same, i.e. no material fact is pleaded thus his plea was struck out in its entirety.[28]
The second, is that evidence cannot be lead on a material fact which has not been plead. For instance, a defendant cannot give evidence on the claim that he should receive certain lands as a gift from the plaintiff as he did not claim it in his ‘pleading’.[29]
 
Conclusion
We see that the Supreme Court has clarified the need for these rules of pleading. Essentially, they are required to help the courts narrow down the dispute between the parties, and to give clear notice to the other party that a particular question will be raised.[30] Hence, the pleadings should clearly set out the material facts upon which evidence will be lead.
This requires the court to actually ensure parties restrict their pleadings to the material facts as clearly elaborated upon above. So in a scenario where no material fact is pleaded, the plea may be struck out by the court.[31] In a scenario where a material fact is not pleaded, evidence for it cannot be given at a later stage.[32]
This makes sense given the volume of cases our judicial system is burdened with and the shortage of lawyers, judges, and other judicial staff required to deliver some form of justice. So to actually give relief to those approaching courts, these rules clearly lay down what amount of detail and evidence has to be presented to begin further proceedings. Hence, by restricting the framework of the future proceedings, the court can allocate appropriate resources accordingly.
In conclusion, we see that any such procedural code will be essential to the substantive law it attempts giving effect to. Without these general rules, there would be no end to the amount of facts, evidence, and laws pleaded in the ‘plaint’ or the ‘written statement’, which would defeat the very purpose of the ‘pleading’ itself.
 
 
[1] Life Insurance Company v. Terry 82 U.S. 580 (15 Wall. 580, 21 L.Ed. 236), here the wife is able to enforce her claim against the Insurance Company as the clause does not cover accidental death caused by the hands of the deceased.
[2] Competency being determined by different parts of the Code of Civil Procedure, 1908 (henceforth, ‘the Code’) read with individual State Courts Acts which list out the geographical, monetary, and subject matter limitations of each Court.
[3] This counts as an ‘institution of suit’ under Section 26 of the Code, which requires the person starting it to submit a written presentation of material facts known as a “plaint”.
[4] The Court is required to do this under Section 27 of the Code. This is done to let the person, against whom the charges are made, know what they are being charged with and give them a chance to dispute the material facts.
[5] A written statement is the defendant’s chance to dispute the facts that you are claiming to be true, they are dealt with under Order 8 of the Code.
[6] Rules must be referred to in that order, just like Newton’s or Euler’s Laws of Motion.
[7] There is a distinction between ‘material facts’ and ‘particulars’ which is created by a part of Order 6 Rule 2 under the the 2nd rule of pleading. “Material facts are the…basic facts which must be pleaded by [either side] …to prove [their] cause of action or defense” as stated in the case of Harkirat Singh v. Amrinder Singh (2005) 13 SCC 511.
[8] The clash of facts before the case goes to trial are what form the issues of a case, hence they are referred to as the “facts in issue”.
[9] Virender Nath v. Satpal Singh, (2007) 3 SCC 617.
[10] The Indian Contract Act, 1872 governs all matters relating to the substantive laws of contracts.
[11] Virender Nath v. Satpal Singh, (2007) 3 SCC 617.
[12] See, supra note 3.
[13] Mohan Rawale v. Damodar Tatyaba, (1994) 2 SCC 392, at pp.399
[14] Virender Nath v. Satpal Singh, (2007) 3 SCC 617, at pp.631-32.
[15] Mohan Rawale v. Damodar Tatyaba, (1994) 2 SCC 392, at pp.401 para.25
[16] See, supra note 7.
[17] Ibid
[18] Order 6, Rule 10 of the Code of Civil Procedure, 1908.
[19] Order 6, Rule 10 of the Code of Civil Procedure, 1908.
[20] 1951 AIR 250
[21] Sahu Vanaspati Traders vs Union of India (Uoi) on 5 March, 1965, AIR 1966 All 333
[22] Order 6, Rule 11 of the Code of Civil Procedure, 1908
[23] AIR 1958 SC 274
[24] AIR 1960 SC 1309
[25] Sahu Vanaspati Traders vs Union Of India
[26] Order 6, Rule 12 of the Code of Civil Procedure, 1908. An implied contract is one which is not created by signing a single document containing all the terms and conditions, rather one which is derived from multiple communications between the parties through letters, e-mails, chats, etc.
[27] 1978 AIR 798
[28] Digby v. Alexanderm 8 Bing. 416, 430.
[29] Siddik Mohamed Shah v. Mst. Saran, AIR 1930 PC 57; State of West Bengal v. Mir Fakir Mohammad, AIR 1977 Cal 29
[30] Raj Narain v. Indira Nehru Gandhi, (1972) 3 SCC 850, at pp.858 para.19
[31] Digby v. Alexanderm 8 Bing. 416, 430.
[32]State of West Bengal v. Mir Fakir Mohammad, AIR 1977 Cal 29

Introduction
One start by filing a plaint, with the competent court, clearly setting out the material facts.[3] Following this, the Court will send a notice to the defendant[4] along with a copy of the documents filed. If defendants choose to deny the claims, they can file a written statement[5] with their version of the material facts. The plaint and the written statement together will be referred to as “pleadings”, the drafting of which is governed by the Civil Procedure Code, 1908. Order 6, Rule 2 of the same states that;
 
“Every pleading shall contain, and contain only, a statement in concise form of the material facts on which the party relies for his claim or defence, as the case may be, but not the evidence by which they are to be proved”
 
The general rules of pleadings[6] lay down what a pleading should contain, and are derived from the statute quoted above. The rules, in short, are as follow;
facts not law;
facts which are material;
facts, not evidence; and
all of the above in a concise form
 
This article aims to clarify the distinction between the material facts[7] and the evidence required to prove them, i.e. facts to be proved vs. evidence by which they are proved, as required by the 3rd rule of pleading.
 
Theoretical Difference 
Say a claim that your husband did not commit suicide against the conflicting claim of the Insurance Company that he did, will become the material facts. These are commonly referred to as the facts in issue.[8] In short, these are the facts that need to be proven or disproven, to win or defend the case. Legal literature calls these the facta probanda, i.e. the facts to be proved, and limits them to the ‘material facts’ only.[9] On the other hand, the particulars or the evidence through which we prove these facts are called the facta probantia.
 
A very basic example would be a breach of contract. If two people sign a contract, involving the sale of shares in a company for payment in cash, then non-payment of cash would be the fact, with the signed contract document being the evidence.[10]
 
Elaborating further, suppose there is a plea (i.e. pleading) alleging several irregularities in the way an election of candidates to the Legislative Assembly of Himachal Pradesh took place.[11] This will not require the plaintiff to mention specifically who fixed the voting machines, what the irregularities in the voter’s list were etc. in the “plaint”[12]. As all of those are evidentiary facts, i.e. facta probantia. So the facta probanda will only include allegations of corrupt practices, and other such irregularities and illegalities.
 
Taking another example, if the Insurance Company from before claims that your husband was depressed and had been in a miserable state for weeks before his death, and had even bought a pistol the day before his death then they must not put any of these facts in the pleadings. All of these facts will constitute evidence relied upon to prove the facts, i.e. the facta probantia. All that you have to claim, in the plaint, is that your husband died of suicide, i.e. the facta probanda.
 
Blurred Lines
It must be noted that in 1994, the Supreme Court considered facta probanda to be inclusive of both ‘material facts’ and “particulars” while keeping only ‘facts proving evidence’ as the facta probantia.[13] Then, in 2007, it interpreted facta probanda as simply ‘material fact’ while facta probantia as ‘particulars or evidence’.[14]
This distinction is important because it highlights the narrower acceptance of ‘material facts’. The distinction between ‘material facts’ and ‘particulars’ being one of degree, its application changes based on the circumstances of each case, and the nature and content of the documents.[15] It is similarly distinguished under the 2nd Rule of Pleading[16] which requires the facts stated in the pleading to be ‘material’.
 
For instance, the Supreme Court defined this difference as the extent of details provided by the facts, i.e. the ‘degree’ of detail. So in a case of breach of contract, the material facts will be covered by claiming that there was a document which legally obligated both parties to do certain things. The particulars will go into details such as the date on which it was signed, whether it was witnessed by anyone, what clauses the contract contained, etc. These are not the basic facts that must be pleaded by either side to prove their reason for filing the suit or to prove their defense.[17] Hence, such details are added at later stage of the suit.
 
But some cases aren’t as straightforward. They require a certain level of detail with respect to the facts alleged in the pleading itself, which would normally be considered ‘particulars’ under facta probantia.
 
Allowing for this extension of ‘material facts’ to include ‘particulars’, the Code provides for suits in which ‘condition of mind’, ‘notice’, and ‘implied contracts’ must be alleged with some supporting facts which go beyond the definition of ‘material facts’. This can be seen as a practical application of the general rules of pleading, extensively elaborated upon below.
 
Practical Application of the general principle
The Civil procedure code provides for rules 10, 11 and 12 under Order 6 which form part of the extension to the third rule of pleading. These rules provide for certain instances wherein this general rule may not be strictly followed. ‘Particular fact’ is a creation of these three sections, which are used to explain where the ‘material facts’ of the case have to be coupled with their ‘particulars’. The rules are as follows:
 
Condition of mind[18]
Whenever one is alleging a certain condition of mind; malice, fraudulent intention, knowledge etc, the same is alleged as a fact, without mentioning the circumstances which it is to be inferred from[19]. Unlike a pleading for fraud, here a simple allegation is insufficient to prove the claim.
For instance, the Supreme Court in the case of Bishundeo Narain v. Seogeni Rai[20] specified that in cases regarding fraud, undue influence, and coercion the plaint must carry in it full particulars of the case. So if ‘A’ is forcing ‘B’ to sign over his property to A by pulling a gun on him in a restaurant, the plaint must mention the fact of the gun placed on B’s head which shall establish the fact of undue influence. The CCTV footage may be used as evidence to prove the same at a later stage.
The reason behind providing particulars in such cases is the interpretations of rules 4 and 10 of Order 6 of the Code, which provides that if an allegation concerns a matter not connected with the condition or state of mind, then it is necessary to provide particulars thereof[21]. This can be better understood through an illustration.
Suppose a person is driving negligently and causes damage to property as a result of his rash driving.Then what is in question here is his ‘state of mind’, which was negligent. Alternatively, in a scenario where a contract to deliver goods in a certain manner is breached by the driver, a general allegation of negligenceon his part will not be enough. Particulars will have to be provided to establish both, the contract, and the breach caused by his negligence.
 
Notice[22]
‘Notice’ to the party is pleaded as simply claiming that it was duly provided to the other party. Only those ‘notices’ are pleaded to the other party which are necessary in relation to the case, which are alleged as facts. However, the courts have expanded the interpretation of section 80 of the Code to mean divulging certain facts in a notice.
This concept was evolved in the cases of Dhian Singh Sobha Singh v. Union of India[23] and State of Madras v. C. P. Agencies[24], wherein the notice must sufficiently state the cause of action and the precise reliefs asked for it. Thus, if by a negligent act of the railway authority some goods have been damaged in transportation, the notice must state the particulars off the act. These particulars shall lay out the terms which were given in the contract and then the details of the act which led to the damage[25].
 
Implied Contracts[26]
Under this rule, implied contracts and communications/circumstances between individuals are alleged as facts. Then the set of communications/circumstances, if implied, are alleged. A plaint for an implied contract shall carry with it particulars, which are required in addition to the general allegation of the fact of the contract being breached, or otherwise.
For instance, in the case of Haji Mohammed Ishaq Md. Sk. … vs Mohamed Iqbal & Mohamed Ali & Ors[27], an implied contract for part payment of the bags of tobacco delivered was established. The particulars provided to the court were the delivery and receipt of the goods, and the payment of money for the goods delivered. Thus, such conduct proved the existence of the implied contract.
 
Harms
In a scenario where these rules are not adhered to, there are two possible outcomes. The first is that the plaint is struck out where no material fact is pleaded. For instance, where a man claiming to be an Earl of Sterling pleads evidence to prove he is the Earl without ever alleging the same, i.e. no material fact is pleaded thus his plea was struck out in its entirety.[28]
The second, is that evidence cannot be lead on a material fact which has not been plead. For instance, a defendant cannot give evidence on the claim that he should receive certain lands as a gift from the plaintiff as he did not claim it in his ‘pleading’.[29]
 
Conclusion
We see that the Supreme Court has clarified the need for these rules of pleading. Essentially, they are required to help the courts narrow down the dispute between the parties, and to give clear notice to the other party that a particular question will be raised.[30] Hence, the pleadings should clearly set out the material facts upon which evidence will be lead.
This requires the court to actually ensure parties restrict their pleadings to the material facts as clearly elaborated upon above. So in a scenario where no material fact is pleaded, the plea may be struck out by the court.[31] In a scenario where a material fact is not pleaded, evidence for it cannot be given at a later stage.[32]
This makes sense given the volume of cases our judicial system is burdened with and the shortage of lawyers, judges, and other judicial staff required to deliver some form of justice. So to actually give relief to those approaching courts, these rules clearly lay down what amount of detail and evidence has to be presented to begin further proceedings. Hence, by restricting the framework of the future proceedings, the court can allocate appropriate resources accordingly.
In conclusion, we see that any such procedural code will be essential to the substantive law it attempts giving effect to. Without these general rules, there would be no end to the amount of facts, evidence, and laws pleaded in the ‘plaint’ or the ‘written statement’, which would defeat the very purpose of the ‘pleading’ itself.
 
 
[1] Life Insurance Company v. Terry 82 U.S. 580 (15 Wall. 580, 21 L.Ed. 236), here the wife is able to enforce her claim against the Insurance Company as the clause does not cover accidental death caused by the hands of the deceased.
[2] Competency being determined by different parts of the Code of Civil Procedure, 1908 (henceforth, ‘the Code’) read with individual State Courts Acts which list out the geographical, monetary, and subject matter limitations of each Court.
[3] This counts as an ‘institution of suit’ under Section 26 of the Code, which requires the person starting it to submit a written presentation of material facts known as a “plaint”.
[4] The Court is required to do this under Section 27 of the Code. This is done to let the person, against whom the charges are made, know what they are being charged with and give them a chance to dispute the material facts.
[5] A written statement is the defendant’s chance to dispute the facts that you are claiming to be true, they are dealt with under Order 8 of the Code.
[6] Rules must be referred to in that order, just like Newton’s or Euler’s Laws of Motion.
[7] There is a distinction between ‘material facts’ and ‘particulars’ which is created by a part of Order 6 Rule 2 under the the 2nd rule of pleading. “Material facts are the…basic facts which must be pleaded by [either side] …to prove [their] cause of action or defense” as stated in the case of Harkirat Singh v. Amrinder Singh (2005) 13 SCC 511.
[8] The clash of facts before the case goes to trial are what form the issues of a case, hence they are referred to as the “facts in issue”.
[9] Virender Nath v. Satpal Singh, (2007) 3 SCC 617.
[10] The Indian Contract Act, 1872 governs all matters relating to the substantive laws of contracts.
[11] Virender Nath v. Satpal Singh, (2007) 3 SCC 617.
[12] See, supra note 3.
[13] Mohan Rawale v. Damodar Tatyaba, (1994) 2 SCC 392, at pp.399
[14] Virender Nath v. Satpal Singh, (2007) 3 SCC 617, at pp.631-32.
[15] Mohan Rawale v. Damodar Tatyaba, (1994) 2 SCC 392, at pp.401 para.25
[16] See, supra note 7.
[17] Ibid
[18] Order 6, Rule 10 of the Code of Civil Procedure, 1908.
[19] Order 6, Rule 10 of the Code of Civil Procedure, 1908.
[20] 1951 AIR 250
[21] Sahu Vanaspati Traders vs Union of India (Uoi) on 5 March, 1965, AIR 1966 All 333
[22] Order 6, Rule 11 of the Code of Civil Procedure, 1908
[23] AIR 1958 SC 274
[24] AIR 1960 SC 1309
[25] Sahu Vanaspati Traders vs Union Of India
[26] Order 6, Rule 12 of the Code of Civil Procedure, 1908. An implied contract is one which is not created by signing a single document containing all the terms and conditions, rather one which is derived from multiple communications between the parties through letters, e-mails, chats, etc.
[27] 1978 AIR 798
[28] Digby v. Alexanderm 8 Bing. 416, 430.
[29] Siddik Mohamed Shah v. Mst. Saran, AIR 1930 PC 57; State of West Bengal v. Mir Fakir Mohammad, AIR 1977 Cal 29
[30] Raj Narain v. Indira Nehru Gandhi, (1972) 3 SCC 850, at pp.858 para.19
[31] Digby v. Alexanderm 8 Bing. 416, 430.
[32]State of West Bengal v. Mir Fakir Mohammad, AIR 1977 Cal 29

Discrimination in housing cooperative societies law
In 2000, St Anthony Cooperative Housing Society in Chembur, established in 1925, sought to prevent anyone other than Roman Catholics from living there by amending its byelaws. When the case reached the Bombay High Court, Justice D Y Chandrachud ruled against the society, nothing that the principle of open membership was at the very foundation of co-operative housing. [https://indiankanoon.org/doc/270169/]

In 1999, the high court had quashed a similar move by the Talmakiwadi Co-operative Housing Society in Tardeo – registered in 1941 – to allow only Kanara Saraswat Brahmins, who trace their roots to Karnataka. The court rejected the validity of the society’s discriminatory byelaw, citing Section 22 (1) (a) of the Maharashtra Co-operative Societies (MCS) Act, which makes it illegal to refuse membership to a co-operative society to any person who is eligible under the Indian Contract Act, 1972. Section 23 of the MCS Act, which deals with “open membership,” also makes it illegal for a society to refuse anyone membership on ‘frivolous’ grounds.

Another case in which the court turned down a society’s appeal for exclusivity is that of the Zoroastrian Radih Society, promoters of the Parsi enclave of Behram Baug in Oshiwara, Jogeshwari (West). In 2011, the society, which owns the land, lost a case in the high court against Pervin Nariman Jogina, a resident of the society who had allowed her non-Parsi daughter-in-law to live in her flat. “The statutory provisions of the Maharashtra Ownership Flats Act, 1963, and the Maharashtra Co-operative Societies Act, 1960, are binding on the society and any byelaw or restriction to the contrary would be hit by those provisions,” the court had observed.

However, this trend was reversed in 2005, when the Zoroastrian Co-operative Housing Society, Ahmedabad, moved the Supreme Court, challenged a Gujarat High Court ruling that the society’s byelaws, which restricted membership to Parsis, were illegal, according to property lawyer Vinod Sampat.

Formed under the Bombay Co-operative Societies Act 1925, the society was later brought under the Gujarat Co-operative Societies Acts of 1962. The apex court ruled that since the members of the Parsi community had come together to form the co-operative society, they could aspire to keep it exclusive. “We uphold the right of the society to insist that the property has to be dealt with only in terms of the byelaws of the society and assigned, either wholly or in parts, only to persons qualified to be members of the society in terms of its byelaws,” the court ruled.

Taking advantage of this ruling, the Talmakiwadi Housing Society, in its annual general meeting the same year, passed a resolution to restore its discriminatory byelaws and cancel its open-membership policy, with an overwhelming majority of its members in favour of doing so.

https://www.hindustantimes.com/mumbai/discrimination-in-housing-in-mumbai-a-city-of-migrants-prejudice-begins-at-home/story-OSFfYk2uKIlZcnanmdebvO.html

NCLT Timelines

Published in Articles - Business Law February 25 2019

S. No.

Topic/ Activity

Timeline

1.

Insolvency resolution process period – Section 5(14)

means the period of one hundred and eighty days beginning from the insolvency commencement date and ending on one hundred and eightieth day.

2.

Initiation of corporate insolvency resolution process by financial creditor – ascertainment of the existence of a default – Section 7(4)

The Adjudicating Authority shall, within 14 days of the receipt of the application, ascertain the existence of a default from the records of an information utility or on the basis of other evidence furnished by the financial creditor.

3.

Initiation of corporate insolvency resolution process by financial creditor – rejection of application for initiating corporate insolvency resolution process – Section 7(5)

The Adjudicating Authority shall, before rejecting the application, give a notice to the applicant to rectify the defect in his application within 7 days of receipt of such notice from the Adjudicating Authority

4.

Initiation of corporate insolvency resolution process by financial creditor – communication of order – Section 7(7)

The Adjudicating Authority shall communicate—

(a) the order regarding a default has occurred, the application is complete, and there is no disciplinary proceedings pending against the proposed resolution professional, to the financial creditor and the corporate debtor;

(b) the order regarding default has not occurred or the application is incomplete or any disciplinary proceeding is pending against the proposed resolution professional, to the financial creditor,

within 7 days of admission or rejection of such application, as the case may be.

5.

Insolvency resolution by operational creditor – corporate debtor response to demand notice – Section 8(2)

The corporate debtor shall, within a period of 10 days of the receipt of the demand notice or copy of the invoice, bring to the notice of the operational creditor—

(a) existence of a dispute, if any, and record of the pendency of the suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute;

(b) the repayment of unpaid operational debt—

(i) by sending an attested copy of the record of electronic transfer of the unpaid amount from the bank account of the corporate debtor; or

(ii) by sending an attested copy of record that the operational creditor has encashed a cheque issued by the corporate debtor.

6.

Application for initiation of corporate insolvency resolution process by operational creditor – filing application before the Adjudicating Authority for initiating a corporate insolvency resolution process – Section 9(1)

After the expiry of the period of 10 days from the date of delivery of the notice or invoice demanding payment, if the operational creditor does not receive payment from the corporate debtor or notice of the dispute, the operational creditor may file an application before the Adjudicating Authority for initiating a corporate insolvency resolution process.

7.

Application for initiation of corporate insolvency resolution process by operational creditor – Admission or rejection of application by Adjudicating Authority – Section 9(5)

The Adjudicating Authority shall, within 14 days of the receipt of the application, by an order—

(i) admit the application and communicate such decision to the operational creditor

(ii) reject the application and communicate such decision to the operational creditor and the corporate debtor

The Adjudicating Authority, shall before rejecting an application under clause (ii) give a notice to the applicant to rectify the defect in his application within 7 days of the date of receipt of such notice from the Adjudicating Authority

8.

Initiation of corporate insolvency resolution process by corporate applicant – Section 10(4)

The Adjudicating Authority shall, within a period of 14 days of the receipt of the application, by an order—

(a) admit the application, if it is complete; or

(b) reject the application, if it is incomplete:

Provided that Adjudicating Authority shall, before rejecting an application, give a notice to the applicant to rectify the defects in his application within 7 days from the date of receipt of such notice from the Adjudicating Authority.

9.

Time-limit for completion of insolvency resolution process – Section 12

General

the corporate insolvency resolution process shall be completed within a period of 180 days from the date of admission of the application to initiate such process

Extension

• The resolution professional shall file an application to the Adjudicating Authority to extend the period of the corporate insolvency resolution process beyond 180 days, if instructed to do so by a resolution passed at a meeting of the committee of creditors by a vote of 75% of the voting shares;

• If the Adjudicating Authority is satisfied that the subject matter of the case is such that corporate insolvency resolution process cannot be completed within 180 days, it may by order extend the duration of such process beyond 180 days by such further period as it thinks fit, but not exceeding 90 days;

• Any extension of the period of corporate insolvency resolution process under this section shall not be granted more than once

10.

Public announcement – Section 15 read with Regulation 6

• An insolvency professional shall make a public announcement not later than 3 days from the date of his appointment as an interim resolution professional;

• The public announcement shall provide the last date for submission of proofs of claim, which shall be 14 days from the date of appointment of the interim resolution professional.

11.

Appointment and tenure of interim resolution professional – Section 16

• The Adjudicating Authority shall appoint an interim resolution professional within 14 days from the insolvency commencement date;

• Where the application for corporate insolvency resolution process is made by an operational creditor and no proposal for an interim resolution professional is made, the Adjudicating Authority shall make a reference to the Board for the recommendation of an insolvency professional who may act as an interim resolution professional;

• The Board shall, within 10 days of the receipt of a reference from the Adjudicating Authority, recommend the name of an insolvency professional to the Adjudicating Authority against whom no disciplinary proceedings are pending;

• The term of the interim resolution professional shall not exceed 30 days from date of his appointment.

12.

Verification of claims – Regulation 13

The interim resolution professional or the resolution professional, as the case may be, shall verify every claim, as on the insolvency commencement date, within 7 days from the last date of the receipt of the claims, and thereupon maintain a list of creditors containing names of creditors along with the amount claimed by them, the amount of their claims admitted and the security interest, if any, in respect of such claims, and update it.

13.

Making available any financial information so required by the committee of creditors – Section 21(10)

• The committee of creditors shall have the right to require the resolution professional to furnish any financial information in relation to the corporate debtor at any time during the corporate insolvency resolution process;

• The resolution professional shall make available any financial information so required by the committee of creditors within a period of 7 days of such requisition.

14.

First meeting of committee of creditors – Section 22(1) read with Regulation 17

• The interim resolution professional shall file a report certifying constitution of the committee to the Adjudicating Authority on or before the expiry of 30 days from the date of his appointment;

• The interim resolution professional shall convene the first meeting of the committee within 7 days of filing the report under this Regulation;

• The first meeting f the committee of creditors shall be held within 7 days of the constitution of the committee of creditors.

However, it is pertinent to note here that, as per section 16(5) of the Code, the term of the interim resolution professional shall not exceed 30 days from date of his appointment and whereas Regulation 17(1) of the CIRP Regulations provides 30 days time for filing report certifying constitution of Committee and thereafter convening the meeting of Committee within 7 days thereafter.

Thus, the report certifying constitution of committee shall be submitted with Adjudicating Authority in such a manner that the first meeting of committee shall be convened within the period of 30 days from the date of appointment of interim resolution professional i.e. before the expiry of the office of interim resolution professional.

15.

Notice for meetings of the committee – Regulation 19

• A meeting of the committee shall be called by giving not less than 7 days’ notice in writing to every participant, at the address it has provided to the resolution professional and such notice may be sent by hand delivery, or by post but in any event, be served on every participant by electronic means;

• The committee may reduce the notice period from 7 days to such other period of not less than 24 hours, as it deems fit.

16.

Appointment of registered valuers – Regulation 27

The interim resolution professional shall within 7 days of his appointment, appoint two registered valuers to determine the liquidation value of the corporate debtor

17.

Replacing the interim resolution professional – Section 22(4) and (5)

• The committee of creditors, may, in the first meeting, by a majority vote of not less than 75% of the voting share of the financial creditors, either resolve to appoint the interim resolution professional as a resolution professional or to replace the interim resolution professional by another resolution professional;

• Where the committee of creditors resolves to replace the interim resolution professional, it shall file an application before the Adjudicating Authority for the appointment of the proposed resolution professional;

• The Adjudicating Authority shall forward the name of the resolution professional proposed above to the Board for its confirmation and shall make such appointment after confirmation by the Board;

• Where the Board does not confirm the name of the proposed resolution professional within 10 days of the receipt of the name of the proposed resolution professional, the Adjudicating Authority shall, by order, direct the interim resolution professional to continue to function as the resolution professional until such time as the Board confirms the appointment of the proposed resolution professional.

18.

Transfer of debt due to creditors – Regulation 28

• In the event a creditor assigns or transfers the debt due to such creditor to any other person during the insolvency resolution process period, both parties shall provide the interim resolution professional or the resolution professional, as the case may be, the terms of such assignment or transfer and the identity of the assignee or transferee;

• The resolution professional shall notify each participant and the Adjudicating Authority of any resultant change in the committee within 2 days of such change.

19.

Information Memorandum – Regulation 36

The interim resolution professional or the resolution professional, as the case may be, shall submit an information memorandum in electronic form to each member of the committee and any potential resolution applicant containing—

(a) at least the matters listed in paragraphs (a) to (i) of sub-regulation (2), before its first meeting; and

(b) matters listed in paragraphs (j) to (l) of sub-regulation (2), within 14 days of the first meeting.

Matters specified in Regulation 36(2):

The information memorandum shall contain the following details of the corporate debtor—

(a) assets and liabilities, as on the insolvency commencement date, classified into appropriate categories for easy identification, with estimated values assigned to each category;

(b) the latest annual financial statements;

(c) audited financial statements of the corporate debtor for the last two financial years and provisional financial statements for the current financial year made up to a date not earlier than 14 days from the date of the application;

(d) a list of creditors containing the names of creditors, the amounts claimed by them, the amount of their claims admitted and the security interest, if any, in respect of such claims;

(e) particulars of a debt due from or to the corporate debtor with respect to related parties;

(f) details of guarantees that have been given in relation to the debts of the corporate debtor by other persons, specifying which of the guarantors is a related party;

(g) the names and addresses of the members or partners holding at least one per cent stake in the corporate debtor along with the size of stake;

(h) details of all material litigation and an ongoing investigation or proceeding initiated by Government and statutory authorities;

(i) the number of workers and employees and liabilities of the corporate debtor towards them;

(j) the liquidation value;

(k) the liquidation value due to operational creditors; and

(l) other information, which the resolution professional deems relevant to the committee.

20.

Approval of resolution plan – Regulation 39

A resolution applicant shall endeavour to submit a resolution plan prepared in accordance with the Code and these Regulations to the resolution professional, 30 days before expiry of the maximum period permitted under section 12 for the completion of the corporate insolvency resolution process

21.

Mandatory contents of the resolution plan – liquidation value due to operational creditors – payment in priority to any financial creditor – Regulation 38(1)(b)

A resolution plan shall identify specific sources of funds that will be used to pay the liquidation value due to operational creditors and provide for such payment in priority to any financial creditor which shall in any event be made before the expiry of 30 days after the approval of a resolution plan by the Adjudicating Authority

 


NCLAT dismisses appeal filed by Promoter and Director (‘Appellant’) of Impex Metal & Ferro Alloys Ltd. (‘Corporate Debtor’), challenging NCLT order wherein Corporate Insolvency Resolution Process (‘CIRP’) pursuant application u/s 7 of the Insolvency and Bankruptcy Code, 2016 (‘the Code’) was initiated; Takes note of Appellant’s claim that State Bank of India (‘Respondent’/ ‘SBI’) was bound to follow the statutory mandate laid vide RBI Circulars and thus application u/s 7 of Code, as preferred by SBI defeats such guidelines; Peruses Sec. 35 AA and Sec. 35 AB of the Banking Regulation Act, 1949 which inter alia authorizes RBI to take actions for resolution of stressed assets, highlights that Circular June 13, 2017, relied on by the Appellant itself provides for initiating CIRP under the Code for certain ‘identified accounts’; Construes that RBI directions do not suggest interference with the statutory remedy of resolution process under the Code and aforesaid Circulars cannot override the provisions of the Code, which is a special enactment and a complete Code in itself; Upholds statutory right of the Creditors under the Code for initiation of CIRP and states that once the concerned Adjudicating Authority is satisfied w.r.t. (i) existence of debt and default, (ii) completeness of application, it is bound to admit the application:

Re:Impex Metal & Ferro Alloys Ltd
New Delhi NCLAT


Recently, in DDIT v. Unocol Bharat Ltd,1 the Delhi bench of the Income-tax Appellate Tribunal (“Tribunal”) held that disallowance provisions under the Income-tax Act, 1961 (“ITA”) cannot be applied when an international tax treaty provided for deductibility of expenses. The Tribunal ruled that in the absence of language to the contrary in the treaty text, deductibility of expenses would be determined solely by the treaty and not with reference to restrictions under the ITA.

NCLT approves constitution of new Board to takeover ILFS
ilfs
On the lines of Satyam and Maytas, NCLT allows Govt. plea to reconstitute ILFS Board, approves a new 6 member Board to manage the affairs of the company, admits Govt. petition u/S 241 as Co.'s affairs were carried on in a manner prejudicial to public interest ; Mr. Uday Kotak, Mr. Vineet Nair, Mr. G.N. Bajpeyi, Mr. G.C. Chaturvedi, Ms. Malini Shankar and Mr. Nandkishor appointed new Board members; Newly constituted Board to hold meeting by Oct 8 and report to the NCLT, roadmap to resolve issues by next hearing on Oct. 31; Newly constituted board shall elect Chairman themselves.

Transfer of winding-up petition to NCLT w.r.t. matter under IBCode
Bombay HC allows transfer of winding-up petition u/s 434 of the Companies Act, 2013, to the NCLT, in view of the amendment made to Sec.434 w.e.f. June 6, 2018;

Sec.17 of Limitation Act contrary to ‘unbreakability’ principle enshrined u/s 34 of Arbitration Act
SC sets aside Andhra Pradesh HC order, thereby disallows condonation of delay to the Respondents seeking rescue u/s 17 of the Limitation Act, 1963 (‘the Act’) beyond the period prescribed u/s 34(3) of the Arbitration and Conciliation Act, 1996 (‘Arbitration Act’);

NCLT disposes of an application filed by one of the suspended Directors (‘Applicant’) of Ruchi Soya Industries Ltd. (‘Corporate Debtor’), seeking that the Committee of Creditors’ (‘CoC’) decision of disallowing him from participation in CoC meetings be set aside;

On July 23, 2018, the Lok Sabha passed the Negotiable Instruments (Amendment) Bill, 2017. The amendment introduces two new sections, Section 143A and Section 148, which bolster the compensation aspect of Section 138 of the Negotiable Instruments Act, 1881, the provision for dishonour of cheques.

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