[Rakshit Agarwal is a 2nd Year Student at the National Law School of India University, Bangalore] The judgment of the Delhi High Court in ICP Investments v Uppal Housing Pvt Ltd has spurred the debate as to whether section 241 of the Companies Act 2013 (“Act”) is the appropriate provision under which derivative actions can be instituted. The decision in ICP Investments to include derivative...
Supreme Court on Mandatory Pre-Litigation Mediation in Commercial Court Cases
Mediation has gained significant momentum as a means of alternative dispute resolution, both within India and globally. This is particularly so in disputes involving corporate and commercial issues. In this background, an important question arose before the Supreme Court of India on whether pre-litigation mediation is mandatory under section 12A of the Commercial Courts Act, 2015. In Patil...
A Comment on a Delhi High Court Ruling on Shareholder Derivative Actions
One of the age-old tenets of corporate law is the “proper plaintiff” rule laid down in the seminal case of Foss v Harbottle, (1843) 2 Hare 461. According to this rule, where a wrong has been done to a company, it is only the company and not an individual shareholder who may bring an action to seek redress. This represents a wholesome recognition of the separate legal personality of the company...
Third Party Funding of Disputes: Easing the Burden on Stressed Litigants
[Soham Banerjee is an Associate in the Dispute Resolution team of a law firm in Mumbai] With the outbreak of the of the Covid–19 virus, litigants are under immense stress owing to the non-functioning of the courts, except only for urgent matters. The judiciary, which is, in any event, overburdened with backlog and pendency of cases has been functioning in an extremely restricted manner...
Obliterating Unnecessarys Delays: SEBI Proposes 10% Mandatory Deposits for Appeal
[Shubham Gupta is a 4th Year Student at the Institute of Law, Nirma University] The Indian judicial system is grossly afflicted with litigation, some of which tends to be frivolous. The Supreme Court, in its Sahara decision, stated that ‘ways and means need to be evolved to deter the litigants from their compulsive obsession toward senseless and ill-considered claims’. Therefore, with the aim of...
NCLAT Ruling on Maintainability in the Tata Sons Case
Earlier this week, the National Company Law Tribunal (“NCLAT”) issued its ruling in Cyrus Investments Pvt Ltd v. Tata Sons Ltd on whether the Mistry group’s action for oppression and mismanagement in respect of Tata Sons is maintainable. Although the NCLAT ruled that the Mistry group’s petition did not meet the requirements of maintainability under section 244 of the Companies Act, 2013 (the...
Conversion of Tata Sons into a Private Limited Company: In Whose Interest?
The proposed conversion of Tata Sons Limited from a public limited company to a private limited company has reignited the corporate governance issues that the Tata Group has faced over the last year or so. Menaka Doshi has an interesting piece (and an accompanying interview with two corporate lawyers) in BloombergQuint that sets out some of the background to why Tata Sons proposes (and that too...
Bombay High Court on the Permissibility of Shareholder Representative Suits
Bar & Bench yesterday reported that the Bombay High Court denied leave to certain shareholders of various Tata group companies to bring a representative suit that made certain legal claims in the aftermath of the ouster of Mr. Cyrus Mistry from the board of Tata Sons as well as other Tata group companies. The order of the court in Pramod Premchand Shah v. Rata Tata is now available. Facts and...
Incorrect Prefixes to Company Names
A longstanding misconception is finally sought to be rectified by the Bombay High Court in a Circular issued on 3 April 2017 (via LiveLaw), the extracts of which are as follows: IT IS OBSERVED by the Hon’ble Shri Justice G. S. Patel while hearing Chamber Summons No. 89 of 2017 in Execution Application (L) No. 198 of 2017 in Arbitration Case No. 1 of 2014, on 8th March, 2017, that for...
Shareholding Thresholds for Oppression and Class Actions
The Tata-Mistry episode has brought into focus the minimum shareholding threshold required for a minority shareholder to bring an action for oppression and mismanagement under sections 241 to 244 of the Companies Act, 2013. In a piece in Bloomberg Quint titled Minority Shareholder Protection as a Numbers Game, I examine the implications of such shareholding thresholds that operate as a filter...
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