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...
Caught between PMLA and IBC: The Bhushan Power-JSW Saga
[Aniket Aggarwal is a commercial litigator and technology lawyer practicing in New Delhi] A prima facie look at the Prevention of Money Laundering Act, 2002 [“PMLA” or “the Act”] and the Insolvency and Bankruptcy Code, 2016 [“IBC” or “the Code”] belies exclusivity and distinctness between the legislations. Indeed, the Delhi High Court observed these laws to be consistent with each other in light...
GST Implication on Director’s Remuneration: CBIC’s Circular
[Ashutosh Choudhary (BA.LLB) and Anuj Jain (BBA.LLB) are 3rd year students at National Law University Odisha] The issue of applicability of Goods and Services Tax (“GST”) on the remuneration of directors has prevailed since the very inception of the legislation. The bone of contention that needs to be settled is whether the remuneration paid to directors by companies falls within the ambit of...
The Prospect of AI in the ‘Virtual’ Corporate Boardroom
[Rongeet Poddar is a 5th Year student at West Bengal National University of Juridical Sciences] The Covid-19 pandemic has had a detrimental impact on businesses around the world. The crisis has forced regulators to come up with prompt responses to maintain social distancing norms in companies. The Ministry of Corporate Affairs has allowed companies to conduct virtual meetings. The Securities and...
The (Active) Involvement of Directors during Insolvency Proceedings
[Kushagra Srivastava is a 3rd year B.A.L.L.B. (Hons.) student at National Law Institute University, Bhopal] Section 17(1)(a) of the Insolvency and Bankruptcy Code, 2016 (the “Code”) vests the management of the affairs of a corporate debtor in the interim resolution professional (“IRP”) on the insolvency commencement date in accordance with section 16 of the Code. This implies the imposition of...
Vacating Directorship in Companies: Examining a Fallacy
[Paras Ahuja is a third year law under-graduate at National law University, Jodhpur] Section 167(1) of the Companies Act, 2013 provides for several grounds that mandate directors of companies to vacate their office. Section 167(1)(a) provides for one such ground, wherein the office of the director shall become vacant if he is disqualified to be a director under section 164 of the Act. Under...
Disqualification of Directors: Construing Retrospectivity
[Aditya Singh Chauhan is a B.A. LL.B (Hons.) student at the National Law University, Jodhpur] The Companies Act, 2013 (“Act”), under section 164(2)(a), provides for the disqualification of directors of a company in case they fail to file financial statements and annual returns for a period of at least three (3) consecutive financial years. The provision reads as follows: “No person who is or has...
MCA Clarifies on Legal Actions against Outside Directors
Recognizing the specific roles that different directors of a company play, section 149(12) of the Companies Act, 2013 contains a safe harbour provision that protects certain types of directors against liability. It relates to three types of directors, who are, for the sake of convenience, referred to as “outside” directors: (i) an independent director; (ii) a non-executive director who is not a...
Shareholder Ratification for Directors’ Breach of Duty
[Rajat Maloo is a III year B.A., LL.B. (Hons.) student at the National Law School of India University, Bangalore] Common law provides that those to whom duties are owed may release those who owe the duties from their legal obligations. In the corporate law context, this principle has been applied by courts in cases where shareholders ratified directors’ breaches of duties. However, various...
Reinforcing the Corporate Governance Framework on Director Competence
[Tushar Oberoy and Rishabh Sharma are 4th year BA.LL.B. (Hons.) students at NALSAR University of Law, Hyderabad] A director of a company has manifold duties and responsibilities that include ensuring that the interests of all shareholders are protected and that healthy management practices are put in place. For effective fulfillment of these responsibilities, a competent director becomes an...
Recent Comments