On 26 March 2021, the Supreme Court of India pronounced its much-awaited ruling in Tata Consultancy Services Limited v. Cyrus Investments Pvt. Ltd. The Court found that the allegations of oppression and prejudice raised by the Mistry group could not be sustained, and hence declined to grant any relief. It answered all the legal questions raised in favour of the Tata group. In a sense, this forces...
The Continued Influence of Foss v. Harbottle in India
[On 6 March 2021, the Jindal Global Law School (JGLS) organised a JGLS Virtual Discourse titled “Action by Minority Shareholders and the Rules in Foss v. Harbottle (1843) 2 Hare 461”. It was structured as a comparative discussion, with James d’Apice discussing the Australian position and me the Indian position. In this post, I summarise the key points I made during the session. My thanks go to...
Third Party Pledgees Not “Financial Creditors”: Supreme Court
An arrangement involving a third party security is not uncommon in commercial financing transactions. Here, a person (“A”) creates a security in favour a creditor (“B”) who provides financing to a third party (“C”). While a number of contract law and commercial law issues likely arise in such third party security, of immediate relevance is a scenario where A were to become insolvent in terms of...
Franklin Templeton: Supreme Court Rules on Unitholder Democracy
The winding up of six mutual fund schemes of Franklin Templeton has been mired in legal dispute. Last year, the Karnataka High Court ruled (discussed here) that the winding up of the schemes require the approval of the unitholders thereof. Upon appeal, the Supreme Court permitted the trustee of Franklin Templeton to call for a meeting of the unitholders under certain conditions prescribed by the...
The Ineligibility of Collusive Transactions as “Financial Debt”: Part II
[Continued from here] Analysis and Observations Through its decision in Phoenix Arc, the Supreme Court has added to the wealth of jurisprudence under the IBC. At the same time, several questions remain. Collusive Transactions Perhaps the broadest and most impactful interpretation of the Court lies in the question of whether collusive transactions give rise at all to “financial debt” within the...
The Ineligibility of Collusive Transactions as “Financial Debt”: Part I
[Another post on this topic is available here]A three-judge bench of the Supreme Court of India on 1 February 2021 rendered important and interesting pronouncements on some aspects of the Insolvency and Bankruptcy Code, 2016 (IBC) in Phoenix Arc Private Limited v Spade Financial Services Limited. Speaking through Dr. Dhananjaya Y Chandrachud, J, the Court ruled that a collusive transaction cannot...
Andhra High Court Rejects Insider Trading Claims on Land
Rooted in preserving market integrity, the concept of insider trading emerged and has been ingrained in the context of the securities markets. Despite the well-understood nature of the subject-matter of insider trading, a question recently arose on whether the offence can be extended to the purchase and sale of land. In Chekka Guru Murali Mohan v. The State of Andhra Pradesh (decided 19 January...
Pump and Dump? SEBI Order against TV Anchor and Family
In a somewhat unconventional interim order, the Securities and Exchange Board of India (SEBI) issued a series of directions against CNBC Awaaz anchor Hemant Ghai, his wife Jaya Hemant Ghai and his mother Shyam Mohini Ghai. SEBI’s preliminary examination of prices of certain stocks indicated a pattern of trading that potentially violated the SEBI Act, 1992 and the SEBI (Prohibition of Fraudulent...
Supreme Court Affirms Expansive Locus Standi under Competition Law
The Supreme Court in Samir Agrawal v. Competition Commission of India (decided 15 December 2020) was concerned with some basic but important questions of law. Can a member of the public file information with the Competition Commission of India (CCI) alleging a violation of the provisions of the Competition Act, 2002 and thereby triggering an investigation by the regulatory authority? If aggrieved...
SEBI Consults on Risk Management Committee
Risk management has acquired a crucial status in corporate governance. Its importance tends to get accentuated in the wake of crises. The concept came to the forefront after the global financial crisis more than a decade ago, and it became entrenched in specific sectors such as banking and financial services that were severely affected by the crisis. Even industrial accidents such as the BP oil...
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