TEAM CODE:

4th VITSOL NATIONAL MOOT COURT COMPETITION ON CORPORATE LAW 2022

IN THE SUPREME COURT OF INDIA

IN THE MATTER OF

VAANI LTD. & ORS.

(APPELLANT)

v.

SEOL INVESTMENT PVT. LTD & ANR.

(RESPONDENT)

-WRITTEN SUBMISSION FOR THE APPELANT-

1
 TABLE OF CONTENTS

INDEX OF AUTHORITIES…………………………………………………………………

LIST OF ABBREVIATIONS………………………………………………………………...

STATEMENT OF JURISDICTION………………………………………………………….

SUMMARY OF FACTS……………………………………………………………………....

ISSUES RAISED……………………………………………………………………………..

SUMMARY OF ARGUMENTS……………………………………………………………..

BODY OF ARGUMENTS ………………………………………………………………….

PRAYER……………………………………………………………………………………..

All about Articles of Association (AOA) under Companies Act, 2013 (taxguru.in)

INDEX OF AUTHORITIES

2
Statutes Referred
Sr. No. Statute

1.

2.

3.

4.

Table of Cases
Sr. No. Name of the Case Citation Page no.

1.

2.

3.

4.

5.

Website Referred

LIST OF ABBREVIATIONS

3
STATEMENT OF JURISDICTION

4
SUMMARY OF FACTS

The case deals with the issue between Mr. Anil Seol and Seol Investment Pvt. Ltd. and Vaani Ltd.,
Karta group pvt. Ltd and Karta Trust.
The facts of the case are:-

Introduction of the parties

1. Karta Trust is based in Arcadia, the trustees of this trust include Mr. Arjun Karta and
Mr. Avesh Karta of the Karta business family along with others.

5
 2. Karta Trust is the promoter of Karta Goup Pvt. Ltd. holding 99% of the equity shares
of it. (1% owned by?)
3. In 2010 Karta group Private limited incorporated an unlisted public company by the
name of Vaani ltd. (Hereinafter referred as Vaani), holding 99% of the Voting and
shares in it, the rest 1% was held by the selected employees of Vaani ltd.

Initial start of the relationship

4. Mr. Anil Seol is a known budding successful businessman in Arcadia holding 99% of shares
in Seol Investment Pvt Ltd remaining 1% is held by his father Vikram Seol.
5. The marriage alliance between Mr. Anil Seol of the Seol business family and Mrs.
Meena Karta took place on 26-06-2015. In order to increase trust and bondage
between the two families the Karta Group transferred 17% of its Voting rights and
shares in Vaani ltd. to Seol investment pvt. Ltd. for a price equivalent to the face
value of the shares as of 05-12-2015, later the shares of employees was increased in
Vaani ltd., the Seol Investment pvt. Ltd. increased its share from 17% to 21% by
purchasing shares from the employees of vaani ltd.
6. Currently Karta group private ltd. owns 66% voting and shares in Vaani ltd, 21% is
owned by the Seol Investment pvt. Ltd an entity which is 99% owned by Mr. Anil
Seol, and 13% by the selected employees of Vaani ltd.
7. Mr. Anil Seol was appointed as the Chairman cum CEO of Vaani ltd. by a resolution
passed on 10.05.2017 with effect from 26.05.2017.

Events after the appointment of Anil Seol as Chairman cum CEO

8. Mr. Anil Seol after taking charge decided to shift the focus of company from their
flagship bridge development and PPP projects to Multi-storeyed building projects for
Multi-National Companies. The shift from established business sectors was not being
appreciated by the board, it was also feared that it would harm the reputation and
recognition of the company from the government on various tiers.
9. The major issue was induced from the decision of Mr. Anil Seol to convert the 64%
net tangible asset of the company that are in monetary form and use them for the
ongoing three projects, this was opposed by the Directors of the Board as it was
estimated that this will disrupt the financial stability of the company.
10. Mr. Anil Seol being dissatisfied by the decision of the Board of Directors to not
provide funding for his projects i.e the construction of 3 projects,
a. openly criticised Karta Trust in media,

6
 b. Alleged the control of Karta Trust over Vaani ltd. and of the Article of
Association which according to Mr. Anil Seol is disruptive to the existing law.
These allegations were made before the media without any such discussion with any
board member or any other shareholder. As a result it
11. Mr.Seol as a result was removed from the position of Board Chairman of Vaani Ltd.
This was officially concluded and the Board of Directors finally voted to remove Mr.
Anil Seol from the post of Board Chairman on January 25, 2015.
12. It is pertinent to mention here that on 15-12-2018 Meena Karta filed a police complaint
against her husband Anil Seol alleging domestic violence followed by a petition for Divorce
which is pending.

Events leading to the removal of Anil Seol as CEO

13. Mr Arjun Karta was appointed to the position of the chairman of Vaani ltd by the Board of
Directors. Mr Arjun Karta on November 18, 2019 successfully secured for Vaani ltd the State
of Sourashtra’s [A South western state of Arcadia] tender for developing Kolapur – Sikola
State High Way to be completed by the year 2026. It is expected that the company could
achieve 20% more revenue than now in the upcoming years.
14. The board decided to raise the 49% of this project cost estimated around 6500 crores rupees
through initial public offering of compulsorily convertible debentures in the year 2020 with a
reservation of 15% of the issue in favour of the Chief Executive Officer and employees on a
competitive basis upon the same issue price. The Board also decided to issue sweat equity
shares equivalent to fifteen percent of the then existing paid up equity share capital of Vaani
Ltd at the price equivalent to face value to Mr. Arjun Karta in the year 2021 after the
completion of the IPO.
15. Mr Anil Seol was against the issue of debentures and showcased his dissatisfaction by
tweeting against the project and influencing other directors of the company to vote against the
project and issuance of the securities.
16. These actions by Mr Anil Seol made the board to pass a resolution to remove him from the
position of Chief Executive Officer of Vaani Ltd on December 11, 2019 and appointed
Mr.Anand karta, Son of Avesh karta as the new Chief Executive Officer of Vaani Ltd.

Filing of the case and it’s judicial history

17. Seol Investment Private Ltd and Mr Anil Seol together filed a petition before National
Company Law Tribunal. the NCLT decided in favour of Vaani Ltd, Karta Trust and Karta
Group Private Ltd. Being aggrieved by the decision of NCLT, Seol Investment Private Ltd
and Anil Seol filed an appeal before the NCLAT. NCLAT reversed the decision of NCLT.

7
 18. Vaani Ltd, Karta Trust and Karta Group Private Ltd filed an appeal before the Supreme Court
of India.

ISSUES RAISED:

I. That the removal of Anil Seol from the position of Chairman and Chief Executive Officer of
Vaani Ltd is not illegal.
II. That Articles 45, 86, 98 and 106 of the Articles of Association of Vaani Ltd are oppressive,
unreasonable and in violation of Companies Act, 2013, it’s Rules and allied laws.
III. That the Karta Trust is a promoter of Vaani Ltd, hence, the provisions of Articles of
Association of Vaani Ltd giving unscrupulous power to the Karta Trust shall be declared as
illegal.
IV. That the raising of finance through issue of compulsorily convertible debentures and the
proposed issue of sweat equity shares are oppressive and in violatilon of the Companies Act,
Rules and SEBI Regulations and allied laws

8
SUMMARY OF ARGUMENTS

9
BODY OF ARGUMENTS
I. That the removal of Mr Anil Seol (short Mr Seol) from the position of Chairman and Chief
Executive Officer of Vaani Ltd (short Vaani) is legal and valid.

Directorial dispute cannot form the subject matter of

oppression/mismanagement action u/s 241 of the Act :

1. It is humbly submitted that removal of Mr. Anil Soel as the chairman of the
Board of Directors and Chief Executive Officer is an employment dispute and
thus cannot be considered as a ground to file a petition under u/s 241 of the
Companies Act, 2013. Sectio 241 states
Application to Tribunal for relief in cases of oppression, etc.— (1) Any
member of a

10
 Company who complains that—

(a) The affairs of the company have been or are being conducted
in a manner prejudicial to public

Interest or in a manner prejudicial or oppressive to him or any other

member or members or in a

Manner prejudicial to the interests of the company; or

(b) The material change, not being a change brought about by,
or in the interests of, any creditors,

Including debenture holders or any class of shareholders of the company,

has taken place in the

Management or control of the company, whether by an alteration in the

Board of Directors, or

Manager, or in the ownership of the company‘s shares, or if it has no share

capital, in its membership,

Or in any other manner whatsoever, and that by reason of such change, it is

likely that the affairs of The company will be conducted in a manner
prejudicial to its interests or its members or any class of Members,

May apply to the Tribunal, provided such member has a right to apply under
section 244, for an order Under this Chapter.
2. The above states section makes it clear that an application to the Tribunal can
be made by the minority shareholders u/s 241 only if the affairs of the
company are being conducted by the majority in an oppressive manner or in a
manner prejudicial to the public interest. Removal of an employee appointed
on remuneration cannot be said as conducting the affairs of the company.

11
 Unless an action is vitatied with fraud or unfairness and affects the economic
interest of the minority shareholders or the company, action u/s 241 cannot be
constituted. 
3. The counsel relies upon S.P. Jain v. Kalinga Tubes,1 Hanuman Prasad
BagH v. Bagri Cereals Pvt Ltd.2, Atmaram Modi v. ECL Agrotech Ltd.,3) to
establish that where a directorial dispute has no nexus with the shareholders'
proprietary rights, the same cannot be entertained under oppression and
mismanagement.
4. The majority shareholders exercising their rights for the benefit of the
company cannot be termed as oppressive. Hence, removal of Mr. Anil Soel as
Chairman cum Chief Executive Officer in conformity with the provisions of
the Act cannot be a grievance for the minority shareholders as no economic
interest is involved. It is clear that the Respondents have made an attempt to
disguise the petition as an action in public interest, when in reality the Petition
was filed for the personal interest of Mr. Anil Soel. 
5. In conclusion, removal of Anil Soel by the board is perfectly legal as it
follows the procedure established by law and is in confirmity with the Articles
of Association of Vaani Ltd.
6. The Removal of the CEO and Chairman of Vaani is governed by Article 106 of the
Articles of Associations of Vaani (Short Articles), which states that removal is
decided by affirmative vote of all Directors appointed pursuant to Article 86. 4

No requirement for formation of Selection Committee:

7. The words ‘The same process shall be followed for the removal of the
incumbent Chairman and Chief Executive Officer.5’ is indicative of the fact
that removal of a Chairman is subject to Article 98, which requires that
affirmative vote of all the directors appointed pursuant to Article 86, and not
about constituting another selection committee for removal of the incumbent
chairman.

1
(1965) 2 SCR Pg 720
2
(2001) 4 SCC 420
3
(1999) 98 Comp Cas 463 (CLB
4
Supra
5
Supra

12
 8. This process has been ratified by the Supreme Court in the case Tata
Consultancy Services Ltd. v. Cyrus Investments (P) Ltd.6,

125.  It is absurd to interpret Article 118 to mean that

Selection Committee is to be constituted for the removal of
an incumbent Chairman. The necessity for taking recourse
to the affirmative voting right under Article 121 is what is
meant by the expression “the same process” appearing in
the second part of Article 118.

9. Thus this process has been held valid by the Hon’ble Apex Court as the article
118 of the Tata Sons Articles of Associations is same as the Article 106 of the
Articles. Thus the Validity of the process is not any dispute.
10. The Appellants will prove it in 2 separate arguments that the removal of Mr
Seol was legal. Firstly, dealing with his removal as a Chairman and then his
removal in the capacity of CEO.

Removal as Chairman

11. That Mr Seol was appointed as the chairman of the board on 10.05.2017 by a
resolution of the board of Directors. 7 The word chairman isn’t defined in neither in
the companies act nor in its allied rules, however pursuant to section 104 the
definition of “The chairman of the meeting” is defined in section 104 of the
Companies Act as follows :
“(1) Unless the articles of the company otherwise provide, the members
personally present at the meeting shall elect one of themselves to be the
Chairman thereof on a show of hands.
12. The term “chairman of the meeting” 8 (Short Chairman) makes it clear that s/he is
chosen from amongst the members of the board of directors. This implicates that
before the appointment of Mr Seol as the chairman of the company, he was already a
director of Vaani Ltd. The appointment of Mr Seol is a chairman was done as per the
rules given in the Article 1069 of the Articles.
13. Mr Seol immediately after started to shift the main business model of the company
from PPP model to building MNC projects10. This move caused dissatisfaction

6
(2021) 9 SCC 449 : 2021 SCC OnLine SC 272 at page 555

7
Para 3, moot proposition
8
The Companies Act, 2013, S.104
9
The Articles of Association of Vaani, Art. 106
10
The moot proposition,Para 3.

13
 amongst the directors of the company, but no action was taken by them. Mr Seol had
signed 3 projects for Vaani in that regard and wanted the utilization of utilise all the
monetary assets and capital reserve of the company which at that time was valued
as 64% of the net tangible assets of the company to the ongoing three projects of
the company.11
14. That this move by Mr Seol of utilizing a large share of the liquidated assests of
Vaani was met with disagreement from the directors. When the agenda to pass
the funds was put before the board of directors, it was dismissed by the Board
of Directors as it would have seriously affected the financial stability of the
company.12
15. That Mr Seol was impacted by this action of the board, which was perfectly
within the perview of the powers of the board to decide. Mr Seol instead of
taking the matter before the Board and petitioning them as peers,
“openly criticised in the media on 05-12-2018 about the existence of hefty
control of Karta Trust over the management of Vaani Ltd …..:
16. At this point it is pertinent to mention that the chairman 13 is selected from
amongst the board of Directors by a simple vote of majority. Meaning that he
has a fiduciary responsibility with Board. Further , if the board of directors are
dissatisfied with the actions of the chairman14, they can remove him as per the
provisions of the Articles15.
17. The BOD form single cohesive unit to protect the economic rights of the
shareholders as a group, and based on their trust, they elect a “chairman” 16.
This election showcases their trust with a particular director, in this case Mr
Seol. Their collective duty to protect the economic rights of the shareholders
and the company. Therefore when this trust is damaged by the actions of Mr
Seol by carrying out various actions such as
i. Criticising the decision of the board.17
ii. Issuing remarks in the media 18

11
Supra
12
Supra
13
The companies Act, S. 104
14
Supra
15
The Articles of Association, S.106
16
Supra
17
The moot Proposition, Para 3
18
Supra

14
 These actions showcase that the company is not acting as one unit to the
public and badly affects the company’s public image. Ultimately these actions
could created a trust deficit between the clients of Vaani and its clients 19.
Therefore punitive actions against the indiscretion caused by Mr Seol became
necessary in order to discipline him AND as a result the board by resolution
removed him from the position of “Chairman” in accordance with the method
prescribed by the relevant laws.20

Removal as CEO
18. That it is pertinent to mention that even though the Mr Seol was removed as a
chairman, he continued to be the CEO and a director of the board of Vaani.
19. That the Appellants humbly submit before the Hon’ble Court that the
Respondent still continued to make attempts to sabotage the workings of the
Board, as a result of which he was removed from the position of the CEO.21
20. That, after the removal of the Respondent as the Chairman, one Mr Arjun
Karta (Short Mr Karta) was elevated to the position of the “Chairman”. Mr
Karta on November 18, 2019 successfully secured the State of Sourashtra’s [A
South western state of Arcadia] tender for developing Kolapur – Sikola State High
Way to be completed by the year 2026. 22 The company expected to achieve 20%
more revenue than previously in the upcoming years.
21. That in order to achieve funding for the abovementioned project the board decided
to issue debentures and Sweat Equity shares. Mr Seol was dissatisfied by this action
of the Board and “tweeted against this PPP project”. This action was another
example of gross violation the trust of the directors and was taken seriously by the
Directors. The Board relieved the Respondent off the post of CEO of Vaani for
“acting against the interest of the Vaani Ltd”. 23

19
The Moot Proposition, Para 3, “They also feared that this step may badly affect the reputation and
recognition of the company at different government level.”
20
The Moot Proposition, Para 4, “the nominated directors initiated and passed a resolution to remove
Mr.Anil Seol from the position of Chairman of the Board on January 25, 2019.”
21
See The Moot Proposition, Para 4 “tweeted against this PPP project”
22
Supra
23
See The Moot Proposition, Para 4, reasons for removal “Mr. Anil Seol is acting against the interest of the
Vaani Ltd and Anil Seol is a promoter of Seol Engineering Ltd which was prohibited by SEBI from accessing
the capital market for 2 years from January 02, 2019.”

15
Issue 2: Whether Articles 45, 86, 98 and 106 of the Articles of Association of Vaani Ltd
are oppressive, unreasonable and in violation of Companies Act, 2013, it’s Rules and
allied laws?

It is humbly submitted before the Hon’ble Court that Articles of Association

(hereinafter referred to AoA) of Vaani Ltd is not oppressive, unreasonable or in
violation of the Companies Act, it’s rules and allied laws.     

15. The Appellants humbly submit before the Hon’ble Court that the Articles of
Associations have been defined in section 2(5) of the Companies Act, 2013 and
explained in Section 5.
14.  The Articles regulate the internal management of the
Company and define the powers of its officers. They also establish
a contract between the Company and the members and between
the members inter se. The contract governs the ordinary rights and
obligations incidental to membership in the Company. In the
absence of any provisions contained in the Indian Companies Act
which prohibit a Company from forfeiting a share for failure on the
part of the member to carry out an undertaking or an engagement
the Articles of a Company which provide that in certain events
membership rights of the shareholder including his right to the
share will be forfeited are binding.24
16. The Appellants humbly submit to this Hon’ble Court on the basis of the
authorities cited in Para 1525, that the Respondents at the time of initial share
transfer, done on 05-12-2015 of 17% of the Karta family shares to Mr Seol at face
value, agreed to the contents of the Articles26. However, at the time of the initial
purchase they did not object to any one of the Articles in question27. This challenge
to the Articles was only done when funding for Mr Seol’s dream project was denied
by the Board of Directors and this challenge was in the media 28 and not by the
process given in the Companies Act 29. It was only after the removal of Mr Seol, first as
the chairman and then as a CEO, did the respondents challenge the contents of the
articles of Associations before the courts.
24
Naresh Chandra Sanyal v. Calcutta Stock Exchange Assn. Ltd., (1971) 1 SCC 50 at page 56

25
The Appellants memorial
26
Articles of Associations, Art. 45,86,98 & 106.
27
Supra
28
See The Moot Proposition, Para 3, “openly criticised in the media on 05-12-2018”.
29
The Companies Act, 2013,S.14. This Section gives the process of amendment to the articles of Associations.

16
 17. That it is pertinent to mention here that this challenge came after of almost 5 years
since the Respondents became shareholders of Vaani. The Respondents before the
challenge before the NCLT30, did not raise objections to the articles of associations
either before the Board of directors or the Courts of the country.
18. Furthermore, Mr Seol later went on to increase the shares from 17% to 21%, an
increase of 4%.31 This decision was made by the Respondents after years since they
had initially purchased the shares of Vaani. It is humbly submitted that this action by
the Respondents solidified their trust in the Articles.
19. Mr Seol became the chairman-cum-CEO of Vaani on 10.05.2017 by a resolution
of the board of directors. He continued to hold that position till January 12, 2019,
when he was removed from the position of Chairman. In this period there was no
attempt by the Respondents to change the articles of association. It is pertinent to
mention here that as Chairman of the board Mr Seol had enough opportunity to
make representations to recommend to the Board to change the articles of
association of the company, however no such action was taken up by him. Only
when the Board of Directors, in order to protect the financial stability of the
company,32 turned down the proposal recommended by Mr Seol, did he say
anything about the articles of association. Therefore, the Respondents having been
part of the company in his capacity of a director, CEO and Chairman, have never
previously challenged the Articles of Association nor criticised it before the media
rather than taking their concerns before the board of directors.
20. The Appellants humbly submit before this Hon’ble Court on the basis of the
evidence cited in Paragraph number 19 33 of this memorial, that the actions of the
Respondents challenging the articles of associations are malafide and done in order
to further the personal purpose of Mr Seol. No challenge to the Articles of
Association has been made previously before the board of directors nor has there
been any recommendation by the Respondents to amend them.

Anil Soel agreed to the AoA by purchasing shares of Vaani Ltd:

30
The moot Proposition, Para 5, “Challenge before the NCLT initiated by Seol Investmnet Pvt Ltd”
31
The moot Proposition, Para 2
32
The moot Proposition, Para 3, “directors in the Board without giving their affirmative voting in favour in
the board meeting stating that this will affect the financial stability of the company.”
33
The Appellant’s Memorial, Para 19

17
 21. It is humbly submitted that AoA is nothing but an agreement between the
Company and the Shareholders, hence whoever becomes a shareholder agrees to
the AoA of the Company. A shareholder cannot raise a greivance saying that the
Articles are oppressive or prejudicial to the interest after themselves entering into
an agreement. Section 10 of the Companies Act states:
10. Effect of memorandum and articles.—
(1) Subject to the provisions of this Act, the memorandum and articles shall,
when registered, bind the company and the members thereof to the same
extent as if they respectively had been signed by the company and by each
member, and contained covenants on its and his part to observe all the
provisions of the memorandum and of the articles.
22. The Counsel relies  upon Borland's Trustee v. Steel Brothers & Co. Ltd., 34
,
Inland Revenue Commissioners v. Crossman,35 Albert Philips and Albert
Philips Ltd. v. Manufacturers' Securities Ltd.,36 and Brown v. British Abrasive
Wheel Company Ltd37to say that the Articles of Association is a contract between
the shareholders and the company and once it is a contract, the shareholders are
bound by it because rights and obligations emerge from such contract. In this case,
the Respondents acquired and purchased the shares of the Company despite
knowing the provisions of the AoA which has been in existence as on the date
they have come into the Company, the same shareholders cannot expect a right
more than what has been accrued to them by virtue of articles of association.
Similarly, exercise of some action under the Articles to which Mr. Anil Soel
agreed will never become a ground to raise grievance under Section 241. 
23. The Appellants submits that this petition was filed by Mr.Anil Soel to pursue his
personal vendetta against the company so as to tarnish the reputation Vaani Ltd on
being removed as the chairman of the board of directors of the Company and
Chief Executive officer of Vaani Ltd. The AoA of Vaani Ltd was in existence at
the time Mr. Anil Soel purchased shares of the Vaani Ltd. If Mr. Anil Soel found
the provisions of AoA to be oppressive and prejudicial to the minority
shareholders, then a complaint should have been made at the time of acquiring the
shares. Therefore, filing of petition by Mr. Anil Soel after his removal as a
34
(1901) 1 Ch 279
35
(1937) AC 26
36
(1917) 116 LT 290
37
., (1919) 1 Ch 290
18
chairman and chief executive officer is indicative of the fact that is petition is filed
to pursue his personal and not for the interest of company or minority
shareholders.
24.

19
PRAYER
Wherefore it is prayed, in light of the issues raised, arguments advanced, and authorities cited, that
this Hon’ble Court may be pleased to:
1.
And Pass any other Order, Direction, or Relief that it may deem fit in the Best Interests of Justice,
Fairness, Equity and Good Conscience.
For This Act of Kindness, the Appellant Shall Duty Bound Forever Pray.

Sd/-
(Counsel for the Appellant)

20