--- title: "Company formation, governance and contracts, Ernakulam" description: "Company formation, SaaS and software agreements, shareholders’ agreements, partner and director disputes, and commercial recovery for Kerala businesses." url: "https://advaslam.com/practice/business-banking-ipr/matters/formation-governance-contracts/" image: "https://advaslam.com/og.png" --- Business, banking, IPR & tax # Company formation, governance and contracts Business law for companies, LLPs and partnership firms in Kerala: setting up and running the entity, the contracts it signs — including SaaS, software and licence agreements — disputes between partners, shareholders and directors, and recovering commercial dues through a demand notice or an Order 37 summary suit. 26 matters from the Business, banking, IPR & tax index. Each entry sets out the problem, the law, the forum, the procedure, the documents usually needed and the limitation clock. General information only — verify the current position on your facts before acting. **Contents** Company, LLP and partnership formation and compliance 1. SPICe+ private limited incorporation — paperwork support 2. LLP formation (LLP Act) — drafting + filing support 3. One Person Company (OPC) — suitability + papers 4. DIR-12 director change / resignation — filing pack 5. DIN-KYC annual compliance — reminder + filing support 6. Board / general meeting minutes — drafting pack 7. STK-2 strike-off (dormant company closure) Shareholders’ agreements, founder vesting and ESOP 1. Shareholders Agreement (SHA) — drafting for founders 2. Founder vesting and ESOP — term-sheet drafting support Partner, shareholder and director disputes 1. Shareholder and director disputes — Section 241 oppression and mismanagement brief 2. Partnership deed and partner disputes — capital, profit and exit clauses SaaS, software, licence and vendor agreements 1. SaaS and software agreements — SLA drafting and review 2. Software, brand and content licence agreements — drafting 3. Vendor agreement with LD — drafting 4. Franchise agreement — vetting for franchisee/franchisor 5. NDA — drafting for business talks 6. Commercial lease — drafting / vetting (office/shop) 7. Appointment letter — drafting for shops/SMEs 8. Consultant vs employee — misclassification audit 9. Security cheque in contracts — clause + risk note 10. Seller hold / holdback in business/asset sale — clause Commercial recovery: demand notice, Order 37 and Section 12A mediation 1. Demand Promissory Note (DPN) — recovery backbone 2. Commercial demand notice — drafting before suit 3. Order 37 summary suit — plaint drafting (Ernakulam) 4. Order 37 leave-to-defend — defence drafting 5. Sec 12A Commercial Courts pre-institution mediation ## Company, LLP and partnership formation and compliance ### SPICe+ private limited incorporation — paperwork support Founder wants Pvt Ltd with correct name, objects, capital, directors. What it involvesFirst-time founders, professionals starting consultancy, family business corporatisation. Relevant lawCompanies Act 2013, SPICe+ Rules, DIN Rules. ForumMCA portal / ROC Ernakulam (filing); courts not involved at this stage. Procedure & stageName search → DSC/DIN → MOA/AOA objects → SPICe+ A/B, AGILE-PRO, INC-9 → incorporation certificate, PAN/TAN. RemedyCertificate of incorporation; current-account/KYC enablement. High Court connectionNone at formation; HC writ only if ROC refuses registration on legal ground Documents normally requiredPAN/Aadhaar, photo, address proof, NOC for registered office, utility bill, draft objects. LimitationNo limitation; DIN-KYC (once every three years from 31.03.2026 – Rule 12A as amended) controls directorship later. **Related:** LLP vs OPC choice; SHA below. **Can an advocate handle my company’s incorporation?** Yes – the paperwork, drafting of the objects and MOA/AOA, and the filing are handled directly; audit and CA/CS certification, where applicable, remain with a CA or CS. ### LLP formation (LLP Act) — drafting + filing support Partners want limited liability with light compliance. What it involvesProfessionals, contractors, traders, small agencies. Relevant lawLimited Liability Partnership Act 2008, LLP Rules, FiLLiP. ForumMCA/ROC; dispute stage later goes to NCLT/arbitration. Procedure & stageDPIN/DSC → name reservation → FiLLiP → LLP Agreement (Form 3) within 30 days → PAN/TAN. RemedyLLPIN; LLP Agreement governs profit, authority, exit. High Court connectionWrit only for arbitrary ROC refusal; otherwise none. Documents normally requiredPartner KYC, address proofs, office NOC, capital contribution, draft LLP Agreement. LimitationForm 3 – 30 days from incorporation; late fee accrues. **Related:** Partnership deed vs LLP; consultant-misclassification note. **LLP or partnership firm?** LLP limits personal liability and suits startups with contracts; firm is cheaper but partners fully liable – note gives comparison, choice left to client + CA. ### One Person Company (OPC) — suitability + papers A single founder wants a company with a nominee. What it involvesFreelancers scaling, single-owner traders. Relevant lawSec 2(62), Sec 3(1)(c) Companies Act; OPC Rules. ForumMCA/ROC. Procedure & stageOne member + nominee consent (INC-3) → SPICe+ → MOA/AOA with nominee clause → incorporation. RemedyOPC status; conversion is voluntary at any time via INC-6 — paid-up capital/turnover limits that forced conversion were removed w.e.f. 01.04.2021. High Court connectionNil at formation. Documents normally requiredMember + nominee PAN/Aadhaar, consent, office proof. LimitationNo compulsory-conversion deadline — conversion via INC-6 permitted at any time; paid-up capital/turnover limits removed w.e.f. 01.04.2021 (Companies (Incorporation) Rules as amended). **Related:** Vesting not applicable; appointment letter still needed for staff. **Can nominee take money?** No – nominee only steps in on death/incapacity; operating control stays with member. ### DIR-12 director change / resignation — filing pack Director resigned / added; bank asks for updated MCA record. What it involvesPvt Ltd, OPC, LLPs (analogous Form 4/11). Relevant lawSec 149-152, Rule 15; DIR-11/12. ForumMCA/ROC. Procedure & stageBoard meeting → resignation letter + DIR-11 → resolution → DIR-12 + updated registers (MBP-4, DIR-8, brief). RemedyMCA master data corrected; bank/KYC cleared. High Court connectionNil unless ROC marks DIN deactivated – then representation + writ option. Documents normally requiredResignation, board minutes, consent to act (DIR-2), interest disclosure. LimitationDIR-12 – 30 days from appointment/cessation; additional fee after. **Related:** DIN-KYC; minutes. **Resigned director still getting notices?** File DIR-11 promptly and keep dispatch proof. ### DIN-KYC annual compliance — reminder + filing support DIN deactivated for missing KYC; bank/ROC filings stuck. What it involvesAll directors/DPs. Relevant lawRule 12A Companies (Appointment) Rules; DIR-3 KYC. ForumMCA. Procedure & stageAadhaar-PAN-mobile check → KYC form under Rule 12A → fee if late → reactivation. RemedyDIN active; filings resume. High Court connectionNil. Documents normally requiredPAN, Aadhaar, mobile-linked OTP, DSC. LimitationKYC intimation once every three years (Rule 12A as amended by G.S.R. 943(E) dated 31.12.2025, w.e.f. 31.03.2026); directors whose KYC is complete – next due by 30.06.2028; same form used to update mobile/e-mail/address. **Related:** DIR-12; STK-2 for dormant companies. **Deactivated DIN – new appointment possible?** No till reactivated; note gives steps. ### Board / general meeting minutes — drafting pack Loan, director change, share issue held without proper minutes; due diligence objects. What it involvesPvt Ltd, OPC, LLP (meeting record analog). Relevant lawSec 118, SS-1/SS-2; registers. ForumInternal; produced before ROC/bank/court when dispute. Procedure & stageNotice → agenda → attendance → resolution wording → minutes within 30 days → registers update. RemedyClean paper trail; bank/audit acceptance. High Court connectionNil. Documents normally requiredPrior minutes, notices, attendance, resolutions, statutory registers. LimitationMinutes – 30 days of meeting; books preserved 8 years / permanently for minutes. **Related:** Lease authorisation; appointment authorisation. **Back-dated minutes okay?** No – minutes should be drafted at the time, with the correct dates. ### STK-2 strike-off (dormant company closure) Dead company with filings pending; director wants closure. What it involvesNil-business Pvt Ltd / OPC. Relevant lawSec 248, FTE Rules; STK-2. ForumROC. Procedure & stageBoard resolution → NOCs, nil-asset/liability statement (CA certified) → STK-2 → STK-6 publication → dissolution. RemedyName struck off; DIN freed for other use. High Court connectionS.252 appeal to NCLT against ROC order (e.g., dissolution/strike-off affecting persons aggrieved); refusal of the company's own STK-2 application screened separately – referral. Documents normally requiredLast financials, ITR NOC, bank closure, director affidavits, CA certificate. LimitationAll overdue filings cleared first; ROC processing time varies (informational, not promise). **Related:** DIN-KYC; Sec 241 contrast (disputed companies cannot use STK-2). **Liabilities pending – can we strike off?** No – clear creditors first. ## Shareholders’ agreements, founder vesting and ESOP ### Shareholders Agreement (SHA) — drafting for founders Two founders / investor need vesting, exit, deadlock, transfer lock. What it involvesStartups, family-shareholder companies, angel rounds. Relevant lawContract Act 1872; Companies Act (AoA alignment); FEMA if foreign holder. ForumEnforcement via civil court / arbitration; NCLT only for oppression angle. Procedure & stageTerm sheet → cap-table check → SHA (issue, transfer, ROFR/ROFO, drag/tag, board, reserved matters, deadlock, exit, non-compete limited to Sec 27) → align AoA. RemedyContractual enforcement, injunction, damages; arbitration if clause. High Court connectionS.11 HC for arbitrator appointment if arbitration clause; S.9 District/HC interim Documents normally requiredShareholding list, investment terms, draft AoA, ID/KYC. LimitationSign before money moves; stamp duty on execution under the Kerala Stamp Act. **Related:** Vesting schedule; seller-hold in asset deals. **Is SHA enough without changing AoA?** No – align AoA, else board/ROC conflict. ### Founder vesting and ESOP — term-sheet drafting support Co-founder exits early with full shares; employee equity promised orally. What it involvesStartups, Pvt Ltd. Relevant lawContract + Companies Act (allotment, SH-7/ PAS-3); tax on perquisite (referred to CA). ForumBoard + civil/arbitration on breach. Procedure & stageVesting schedule (e.g., 4-yr/1-yr cliff) → SHA + board resolutions + allotment filings → leaver (good/bad) clause. RemedyCliff/forfeiture enforcement; buy-back per terms. High Court connectionS.11/S.9 arbitration path if SHA has clause. Documents normally requiredCap table, employment terms, valuation note from CA, draft SHA. LimitationPut vesting before allotment; filings 30-day MCA windows. **Related:** Appointment letter; SHA. **Promise of “2% later” enforceable?** Only if written vesting + board process; oral promise weak. ## Partner, shareholder and director disputes ### Shareholder and director disputes — Section 241 oppression and mismanagement brief Minority sidelined, funds diverted, meetings faked. What it involvesShareholders with 10%/100-member or waiver threshold. Relevant lawSec 241-242 Companies Act; NCLT Rules. ForumNCLT Kochi Bench – appearance there is referred to counsel who practise before it. Procedure & stageFacts audit → Sec 241 eligibility check → paper-book compilation → referral to NCLT counsel; parallel civil/arbitration advice if contract breach also exists. RemedyNCLT directions – buy-out, removal, administrator, cost. High Court connectionAppeal to NCLAT then Supreme Court; HC writ generally barred where NCLT efficacious only in exceptional jurisdictional error, on referral advice. Documents normally requiredShareholding proof, board notices/minutes, bank statements, auditor notes, complaints. LimitationNo limitation but delay weakens interim; act on knowledge. **Related:** SHA deadlock; partnership dissolution contrast. **Can you appear in NCLT Kochi?** No – I give the opinion and prepare the drafts; appearance before the NCLT is referred to counsel who practise there. ### Partnership deed and partner disputes — capital, profit and exit clauses Oral partnership; profit, capital, exit, death clause disputed. What it involvesTraders, clinics, agencies, family firms. Relevant lawIndian Partnership Act 1932; Registration Act; stamp. ForumCivil Court; arbitration if clause; Registrar of Firms for registration. Procedure & stageCapital, profit ratio, salary/interest, duties, banking authority, admission/retirement/death, dissolution, accounts, non-compete (reasonable) → stamp + registration. RemedyRegistered firm can sue (Sec 69 advantage); clear exit. High Court connectionNil ordinarily. Documents normally requiredPartner KYC, capital proof, office NOC, business description. LimitationRegister promptly; unregistered bar under Sec 69 explained. **Related:** LLP contrast; vesting for employee-partners not applicable. **Unregistered firm can file recovery suit?** Generally barred under Sec 69. ## SaaS, software, licence and vendor agreements ### SaaS and software agreements — SLA drafting and review Downtime, data loss, exit/data return, uptime credits unclear. What it involvesSaaS buyers/vendors, agencies reselling software. Relevant lawContract + IT Act (data, intermediary); DPDP Act 2023 for personal data (advisory, referral for complex audits). ForumCivil/Commercial Court; arbitration. Procedure & stageModules/fees → uptime + credits → support TAT → data ownership/backup/return → security → suspension → exit assistance → DPA annex. RemedyService credits, termination, migration, damages. High Court connectionArbitration support path; no writ for private SaaS. Documents normally requiredProposal, pricing, prior MSA, DPA needs. LimitationRenewal/termination notice diary; data-return window on exit. **Related:** Licence agreement; software copyright Sec 17(c) in IPR file. **Vendor owns our data?** No – contract must say customer owns data, vendor is processor – note inserts. ### Software, brand and content licence agreements — drafting Shop uses brand/photo/software without scope, territory, royalty clarity. What it involvesRetailers, content users, software resellers. Relevant lawContract + TM/Copyright Acts for licensed rights. ForumCivil/Commercial Court; IP infringement route if unlicensed use. Procedure & stageRights, territory, term, exclusivity, royalty + audit, quality control, termination, infringement handling. RemedyRoyalty + injunction on breach; infringement suit if beyond scope. High Court connectionIP suits with higher value may lie before District/HC (as per pecuniary) explained. Documents normally requiredIP ownership proof, prior licence, royalty records. LimitationRenewal diary; Sec 47 non-use risk for TM flagged to licensor. **Related:** Franchise; TM licensing/registered user. **Oral permission enough?** Must be written with scope; else infringement dispute. ### Vendor agreement with LD — drafting Delay in supply stalls project; no LD/damages clause. What it involvesTraders, contractors, event firms. Relevant lawContract Act Sec 55, 73-74 (LD vs penalty). ForumCivil/Commercial Court Ernakulam; MSME facilitation if supplier is MSE. Procedure & stageScope/SLA → delivery milestones → LD rate + cap → cure notice → termination + damages → dispute clause (mediation 12A + arbitration). RemedyLD + termination + alternate procurement delta. High Court connectionS.9/S.11 arbitration support; writ not for private vendor. Documents normally requiredPO, quotations, delivery logs, prior chats. LimitationCure-notice periods in clause; Commercial Courts Act 12A pre-suit mediation where applicable. **Related:** SaaS SLA; demand notice; Order 37. **Can LD exceed actual loss?** Must be genuine pre-estimate with cap; penalty struck – note drafts reasonably. ### Franchise agreement — vetting for franchisee/franchisor Fee, royalty, territory, supply tie, exit lock unclear. What it involvesFood, retail, coaching franchisees in Kochi. Relevant lawContract; no standalone franchise statute – IP + consumer overlays. ForumCivil/Commercial Court; arbitration; consumer forum if consumer-angle (facts). Procedure & stageDisclosure check → fee/royalty/territory/supply/marketing/exit/non-compete (Sec 27 reasonable) → stamp + registration if premises lease linked. RemedyTermination, refund/damages per terms; injunction on brand misuse post-exit. High Court connectionArbitration support; writ not for private franchise. Documents normally requiredFDD/disclosure, draft agreement, payment proofs, outlet lease. LimitationCooling review before signing; exit-notice period diary. **Related:** Lease; TM registered-user note. **Can I exit loss-making franchise?** Only per lock-in + notice + post-termination brand stop – note vets before signing. ### NDA — drafting for business talks Idea, client list, pricing shared before order. What it involvesAgencies, manufacturers, startups, consultants. Relevant lawContract Act; Sec 27 limits on restraint; IT Act for data. ForumCivil Court / arbitration; criminal breach of trust only on facts. Procedure & stageDefine confidential info → purpose → exclusions → term + survival → return/destroy → remedy (injunction) + stamp. RemedyInjunction + damages; criminal complaint only if cheating ingredients separate. High Court connectionInterim injunction appeal to District/HC as per value. Documents normally requiredCounterparty KYC, description of info (without over-disclosing in draft), term. LimitationSign before disclosure; survival 2-3 years as negotiated. **Related:** Anton Piller note in IPR file; consultant agreement. **2-year NDA protects idea forever?** Only defined secrets for defined term; idea as such needs patent/design route. ### Commercial lease — drafting / vetting (office/shop) Advance, lock-in, repair, termination, registration unclear. What it involvesTenants/landlords in Kochi commercial belt. Relevant lawTransfer of Property Act; Registration Act S.17(1)(d); Kerala Building Rules for use. ForumCivil Court Ernakulam / Rent Control as applicable; arbitration if clause. Procedure & stageTitle/tax check → rent, deposit, lock-in, escalation, maintenance, termination, stamp + registration → police verification for staff stay if needed. RemedyEnforceable lease; eviction/damages per terms. High Court connectionWrit only if local-body licence blocked arbitrarily – otherwise civil remedy. Documents normally requiredTitle deed, tax receipts, ID, prior lease, plan if fit-out. LimitationRegistration compulsory for leases from year to year, for a term exceeding one year or reserving a yearly rent (Registration Act S.17(1)(d)); renewal diary. **Related:** Licence vs lease distinction; franchise premises note. **Notarised 5-year lease without registration valid?** Registration compulsory; unregistered lease risks evidentiary bar. ### Appointment letter — drafting for shops/SMEs Salary, probation, notice, PF/ESI, IP assignment missing. What it involvesSmall employers in Ernakulam. Relevant lawShops & Establishments (Kerala), Contract, PF/ESI/gratuity thresholds (Code on Social Security 2020, largely in force from 21.11.2025). ForumLabour forums / civil court per dispute. Procedure & stageRole, CTC break-up, probation, hours/leave, notice, confidentiality, IP assignment, termination → acceptance + registers. RemedyClear termination/discipline footing. High Court connectionService writ only for public employment – private staff via labour/civil route; not invoked. Documents normally requiredEmployer ID, salary structure, job description. LimitationIssue on joining; probation review diary. **Related:** Consultant-misclassification; POSH. **Can we call everyone “consultant” to avoid PF?** No – test is control + integration; misclassification backfires – see next note. ### Consultant vs employee — misclassification audit Long-term “consultants” on fixed hours, attendance, tools – PF/ESI/gratuity risk. What it involvesSMEs, agencies, clinics. Relevant lawContract Labour law, Code on Social Security 2020 (in force from 21.11.2025; ESI Act repealed) / EPF Act, Shops Act; control test in case law. ForumPF/ESI authorities; Labour Court. Procedure & stageAgreement + actual-practice audit (hours, supervision, exclusivity, tools, payment mode) → re-paper as employment or genuine consultancy with deliverables, milestones, non-exclusivity. RemedyReduced penalty/back-dues risk; clean contracts. High Court connectionWrit against coercive PF/ESI recovery + referral for 7A appearance. Documents normally requiredExisting consultant agreements, attendance/pay records, work orders. LimitationCorrect before inspection/dispute; ESI/PF appearance is referral. **Related:** PF/ESI 7A inquiry; appointment letter. **GST invoice makes them consultant?** Not conclusive; control test prevails. ### Security cheque in contracts — clause + risk note Blank/undated cheque taken as “security”; misuse alleged on default. What it involvesLenders, suppliers, landlords, employers. Relevant lawNI Act Sec 138; Contract; security-vs-guarantee distinction in case law. ForumMagistrate (138) + civil court (recovery). Procedure & stageAgreement must record cheque as security, trigger event, return on performance → on default, demand + present per terms → 138 + civil parallel. RemedyCivil recovery + 138 pressure; defence of misuse if blank/altered. High Court connectionQuash/revision to Sessions/HC on facts Documents normally requiredAgreement clause, cheque copy, handover receipt, presentation/memo, demand proof. Limitation138 chain: 30-day notice, 15-day pay, 1-month complaint (S.142(1)(b)). **Related:** DPN; multi-cheque strategy; 143A/148 deposit risks. **Undated security cheque enforceable?** Authorisation + legally enforceable debt still litigated; blank misuse is triable defence – note drafts clause to reduce dispute. ### Seller hold / holdback in business/asset sale — clause Buyer fears hidden dues, tax, warranty claims post-closing. What it involvesShop/business transfers, slump/asset sales. Relevant lawContract; Companies/tax overlays via CA. ForumCivil/arbitration. Procedure & stageHoldback % + escrow/expiry → claim window + set-off procedure → release with interest term. RemedySet-off from holdback; balance release. High Court connectionArbitration support if SPA has clause. Documents normally requiredSale/assignment draft, dues list, tax note from CA, escrow terms. LimitationClaim window (e.g., 6-12 months) + release date – diary. **Related:** SHA exit; demand notice. **Holdback without escrow safe?** Escrow preferred; mere retention invites set-off dispute. ## Commercial recovery: demand notice, Order 37 and Section 12A mediation ### Demand Promissory Note (DPN) — recovery backbone Friendly loan without paper; borrower denies. What it involvesHand loans to traders/friends, business advances. Relevant lawNI Act if cheque; Contract + Order 37 if DPN. ForumCivil/Commercial Court; criminal 138 only if cheque given. Procedure & stageDPN with consideration, interest, on-demand wording + revenue stamp → acknowledgement/bank transfer proof → demand notice on default. RemedySummary suit + interest; 138 parallel if cheque bounces. High Court connectionAppeal/revision to Sessions/HC on 138 side in. Documents normally requiredDPN original, transfer proof, chats, demand-notice postal proof. LimitationSuit within 3 years of demand/default per Limitation; 138 notice 30 days. **Related:** Demand notice; Order 37; security-cheque note. **Unstamped DPN valid?** Needs proper stamp; unstamped faces impounding – note insists on stamp at signing. ### Commercial demand notice — drafting before suit Unpaid invoices, vendor dues, loan recall need formal demand. What it involvesSMEs, traders, service providers. Relevant lawContract; Commercial Courts Act 12A; NI Act if cheque. ForumPre-court; then Commercial/Civil Court. Procedure & stageLedger reconciliation → notice with amount, interest, documents, 15/30-day pay window → RPAD + email → 12A mediation where applicable. RemedyPayment/settlement; foundation for suit/138. High Court connectionNil at notice stage. Documents normally requiredInvoices, PO, LR/delivery, ledger, bank entries, prior chats. LimitationPreserve limitation; 138 30-day notice separately if cheque. **Related:** Order 37; 12A mediation; MSEFC for MSE suppliers. **WhatsApp demand enough?** Send RPAD + email for proof; note drafts both. ### Order 37 summary suit — plaint drafting (Ernakulam) Written contract/bill/DPN/cheque debt; defendant will delay. What it involvesSuppliers, lenders, service providers with documents. Relevant lawOrder 37 CPC; Commercial Courts Act if commercial. ForumCivil/Commercial Court Ernakulam (pecuniary wise); HC only if value/transfer warrants. Procedure & stagePlaint with documents + summons in Form 4 → defendant appears within 10 days of service → summons for judgment (Form 4A) → leave application within 10 days of its service → decree if no leave/triable issue absent. RemedySpeedy decree; interest; execution. High Court connectionRevision/appeal to District/HC as per value for challenge/defence of decree explained. Documents normally requiredContract/DPN/invoices/cheque-return memo, ledger, demand proof. Limitation3-year limitation for recovery; Order 37 leave window 10 days (for defendant). **Related:** Leave-to-defend note; 12A mediation compliance. **Order 37 available for invoices?** Yes if written contract + bills raise liquidated demand. ### Order 37 leave-to-defend — defence drafting Served with summary summons; 10 days to seek leave. What it involvesBuyers, borrowers sued on documents. Relevant lawOrder 37 Rule 3(5); Mechelec triable-issue test. ForumSame court that issued summons. Procedure & stageEnter appearance in 10 days → leave application with affidavit disclosing triable issues + documents (payment, forgery, limitation, no consideration) → argue unconditional/conditional leave. RemedyUnconditional leave → full trial; conditional → deposit. High Court connectionChallenge to conditional-leave/decree via revision/appeal Documents normally requiredSummons, plaint, payment proofs, correspondence, bank entries. LimitationAppearance 10 days from service – hard clock; delay condonation narrow. **Related:** Security-cheque defence; 138 defence. **Ignore summary summons?** Decree follows automatically – note urges immediate appearance. ### Sec 12A Commercial Courts pre-institution mediation Commercial suit filed without 12A compliance risks rejection. What it involvesAll commercial disputes (trader, contractor, supplier). Relevant lawSec 12A Commercial Courts Act; DLSA/KELSA procedure. ForumDistrict Legal Services Authority mediation; then Commercial Court. Procedure & stageApplication with documents → mediator sittings → non-starter/settlement report → plaint with compliance annex. RemedySettlement with decree value; or compliant plaint. High Court connectionHC writ only if DLSA process stalled illegally – rare; otherwise Commercial Court + HC appeal. Documents normally requiredCause papers, invoices/contracts, ID, authority letter. Limitation3-month mediation + 2-month extension with consent; mediation period excluded from limitation (S.12A(3) provisos). **Related:** Demand notice; Order 37. **Urgent injunction – 12A still needed?** Exempt only with genuine urgent interim relief pleading. FAQ ## Company formation, governance and contracts: common questions **There is a dispute between shareholders or directors of our company. What is the route?** Where a minority is sidelined, funds are diverted or meetings are not held properly, the remedy is a petition for oppression and mismanagement under Sections 241 and 242 of the Companies Act before the NCLT, Kochi Bench. The petition brief is prepared here; appearance before the NCLT is by counsel who practise there. Disputes under a shareholders’ agreement are otherwise enforced in the civil court or by arbitration. **Our partnership has fallen out over capital, profit or exit. What governs it?** The Indian Partnership Act, 1932 and the partnership deed. Disputes go to the civil court, or to arbitration if the deed has an arbitration clause. An unregistered firm faces the bar in Section 69 on suing to enforce contract rights, so registration with the Registrar of Firms matters before a dispute starts. **What should a SaaS or software agreement cover?** Uptime and service credits, support, data security and data return on exit, downtime and data-loss responsibility, renewal and termination notice, and the parties’ roles for personal data under the DPDP Act, 2023. Disputes go to the civil or commercial court, or to arbitration if the agreement says so. **A business customer will not pay our invoices. What comes before a suit?** A commercial demand notice, and for a commercial dispute, pre-institution mediation under Section 12A of the Commercial Courts Act through the District Legal Services Authority. Mediation runs for three months, extendable by two with consent, and that time is excluded from limitation. A debt on a written contract, bill or promissory note can then be sued for under Order 37 CPC. Related matters - [Agreements — drafting and review (employment, vendor, SaaS, NDAs)](https://advaslam.com/practice/drafting/matters/agreements/) - [Partner and shareholder disputes — arbitration and interim relief](https://advaslam.com/practice/business-banking-ipr/matters/arbitration-insolvency/) - [Cheque bounce and MSME payment recovery](https://advaslam.com/practice/business-banking-ipr/matters/cheque-msme/) - [Commercial and contract disputes in the civil courts](https://advaslam.com/practice/civil-consumer/matters/civil-suits/) - [Business succession and wills](https://advaslam.com/practice/family-succession/matters/succession-wills/) More in this area ## Business, banking & IPR: other matters - Company formation, governance and contracts - [Cheque bounce and MSME payment recovery](https://advaslam.com/practice/business-banking-ipr/matters/cheque-msme/) - [Bank recovery, SARFAESI and DRT papers](https://advaslam.com/practice/business-banking-ipr/matters/sarfaesi-drt-banking/) - [Trademarks, copyright, designs and trade secrets](https://advaslam.com/practice/business-banking-ipr/matters/trademark-copyright-design-secrets/) - [Arbitration, mediation and insolvency](https://advaslam.com/practice/business-banking-ipr/matters/arbitration-insolvency/) - [GST and income tax](https://advaslam.com/practice/business-banking-ipr/matters/tax/) [Every matter in this area, on one page →](https://advaslam.com/practice/business-banking-ipr/matters/) [Business, banking & IPR: the practice area →](https://advaslam.com/practice/business-banking-ipr/) Procedure guides - [Online IPR Takedown Kerala (TM/Copyright)](https://advaslam.com/guides/ipr-online-takedown-kerala-information/) - [SARFAESI, DRT & Writ Route: Borrower Guide](https://advaslam.com/guides/sarfaesi-drt-writ-route-information/) - [Section 138 Cheque Bounce Kerala Guide](https://advaslam.com/guides/section-138-cheque-bounce-kerala-procedure/) Contact [WhatsApp](https://wa.me/919497240215?text=Hello%2C%20I%20found%20advaslam.com%20and%20would%20like%20to%20discuss%20a%20matter.) 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What is the route?","acceptedAnswer":{"@type":"Answer","text":"Where a minority is sidelined, funds are diverted or meetings are not held properly, the remedy is a petition for oppression and mismanagement under Sections 241 and 242 of the Companies Act before the NCLT, Kochi Bench. The petition brief is prepared here; appearance before the NCLT is by counsel who practise there. Disputes under a shareholders’ agreement are otherwise enforced in the civil court or by arbitration."}},{"@type":"Question","name":"Our partnership has fallen out over capital, profit or exit. What governs it?","acceptedAnswer":{"@type":"Answer","text":"The Indian Partnership Act, 1932 and the partnership deed. Disputes go to the civil court, or to arbitration if the deed has an arbitration clause. An unregistered firm faces the bar in Section 69 on suing to enforce contract rights, so registration with the Registrar of Firms matters before a dispute starts."}},{"@type":"Question","name":"What should a SaaS or software agreement cover?","acceptedAnswer":{"@type":"Answer","text":"Uptime and service credits, support, data security and data return on exit, downtime and data-loss responsibility, renewal and termination notice, and the parties’ roles for personal data under the DPDP Act, 2023. Disputes go to the civil or commercial court, or to arbitration if the agreement says so."}},{"@type":"Question","name":"A business customer will not pay our invoices. What comes before a suit?","acceptedAnswer":{"@type":"Answer","text":"A commercial demand notice, and for a commercial dispute, pre-institution mediation under Section 12A of the Commercial Courts Act through the District Legal Services Authority. Mediation runs for three months, extendable by two with consent, and that time is excluded from limitation. A debt on a written contract, bill or promissory note can then be sued for under Order 37 CPC."}},{"@type":"Question","name":"Can an advocate handle my company’s incorporation?","acceptedAnswer":{"@type":"Answer","text":"Yes – the paperwork, drafting of the objects and MOA/AOA, and the filing are handled directly; audit and CA/CS certification, where applicable, remain with a CA or CS."}},{"@type":"Question","name":"LLP or partnership firm?","acceptedAnswer":{"@type":"Answer","text":"LLP limits personal liability and suits startups with contracts; firm is cheaper but partners fully liable – note gives comparison, choice left to client + CA."}},{"@type":"Question","name":"Can nominee take money?","acceptedAnswer":{"@type":"Answer","text":"No – nominee only steps in on death/incapacity; operating control stays with member."}},{"@type":"Question","name":"Is SHA enough without changing AoA?","acceptedAnswer":{"@type":"Answer","text":"No – align AoA, else board/ROC conflict."}},{"@type":"Question","name":"Resigned director still getting notices?","acceptedAnswer":{"@type":"Answer","text":"File DIR-11 promptly and keep dispatch proof."}},{"@type":"Question","name":"Can you appear in NCLT Kochi?","acceptedAnswer":{"@type":"Answer","text":"No – I give the opinion and prepare the drafts; appearance before the NCLT is referred to counsel who practise there."}},{"@type":"Question","name":"Deactivated DIN – new appointment possible?","acceptedAnswer":{"@type":"Answer","text":"No till reactivated; note gives steps."}},{"@type":"Question","name":"Back-dated minutes okay?","acceptedAnswer":{"@type":"Answer","text":"No – minutes should be drafted at the time, with the correct dates."}},{"@type":"Question","name":"Notarised 5-year lease without registration valid?","acceptedAnswer":{"@type":"Answer","text":"Registration compulsory; unregistered lease risks evidentiary bar."}},{"@type":"Question","name":"Unregistered firm can file recovery suit?","acceptedAnswer":{"@type":"Answer","text":"Generally barred under Sec 69."}},{"@type":"Question","name":"Promise of “2% later” enforceable?","acceptedAnswer":{"@type":"Answer","text":"Only if written vesting + board process; oral promise weak."}},{"@type":"Question","name":"Liabilities pending – can we strike off?","acceptedAnswer":{"@type":"Answer","text":"No – clear creditors first."}},{"@type":"Question","name":"2-year NDA protects idea forever?","acceptedAnswer":{"@type":"Answer","text":"Only defined secrets for defined term; idea as such needs patent/design route."}},{"@type":"Question","name":"Can we call everyone “consultant” to avoid PF?","acceptedAnswer":{"@type":"Answer","text":"No – test is control + integration; misclassification backfires – see next note."}},{"@type":"Question","name":"GST invoice makes them consultant?","acceptedAnswer":{"@type":"Answer","text":"Not conclusive; control test prevails."}},{"@type":"Question","name":"Can LD exceed actual loss?","acceptedAnswer":{"@type":"Answer","text":"Must be genuine pre-estimate with cap; penalty struck – note drafts reasonably."}},{"@type":"Question","name":"Vendor owns our data?","acceptedAnswer":{"@type":"Answer","text":"No – contract must say customer owns data, vendor is processor – note inserts."}},{"@type":"Question","name":"Oral permission enough?","acceptedAnswer":{"@type":"Answer","text":"Must be written with scope; else infringement dispute."}},{"@type":"Question","name":"Can I exit loss-making franchise?","acceptedAnswer":{"@type":"Answer","text":"Only per lock-in + notice + post-termination brand stop – note vets before signing."}},{"@type":"Question","name":"Unstamped DPN valid?","acceptedAnswer":{"@type":"Answer","text":"Needs proper stamp; unstamped faces impounding – note insists on stamp at signing."}},{"@type":"Question","name":"WhatsApp demand enough?","acceptedAnswer":{"@type":"Answer","text":"Send RPAD + email for proof; note drafts both."}},{"@type":"Question","name":"Order 37 available for invoices?","acceptedAnswer":{"@type":"Answer","text":"Yes if written contract + bills raise liquidated demand."}},{"@type":"Question","name":"Ignore summary summons?","acceptedAnswer":{"@type":"Answer","text":"Decree follows automatically – note urges immediate appearance."}},{"@type":"Question","name":"Undated security cheque enforceable?","acceptedAnswer":{"@type":"Answer","text":"Authorisation + legally enforceable debt still litigated; blank misuse is triable defence – note drafts clause to reduce dispute."}},{"@type":"Question","name":"Holdback without escrow safe?","acceptedAnswer":{"@type":"Answer","text":"Escrow preferred; mere retention invites set-off dispute."}},{"@type":"Question","name":"Urgent injunction – 12A still needed?","acceptedAnswer":{"@type":"Answer","text":"Exempt only with genuine urgent interim relief pleading."}}]}]} ```