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Corp Referencer
Class Corp Law
Application of SEBI Regulations: S 11 of SEBI Act, Subrata Roy
Nusli Wadia: Impact on securities market would mean that there is scope for SEBI
jurisdiction.
Prakash Gupta: Deference to SEBI views even though not mentioned under Section for
compuonding (S. 24A)
Corporate Veil
Saloman v Saloman: Owner shielding
Prest v Petrodel: Entity shielding, concealment and evasion principle
In Re Kondoli: Did not cite entity shielding but principle applied
Gotam Lime: Public interest to lift corporate veil
Balwant Rai Saluja v Air India: Relevance of MoA and AoA for lifting corporate veil (S.
4 deals with MoA and S. 5 deals with AoA)
Nusli Wadia: If the structure is intertwined, cannot claim defence of separate legal entity.
Kraakman
AoA, MoA
Balwant Rai Saluja v Air India: Relevance of MoA and AoA for lifting corporate veil
Hamlin Trust: Using CA to interpret AoA (S 6-act to override, S. 203 dealing with KMP)
Union of India v Gymkhana Club: Interpretation of public interest done in light of
constitutional principle (S. 8-charitable objective, S. 14 dealing with amendment of AoA,
S.241 (2) which allows central government to take over a company)
63 Moons Technologies v Union of India: Interpretation of public interest
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VB Rangaraj v VB Goapalakrishnan: Implication of incorporation under AoA (S. 10-
effect of MoA and AoA, S. 2 (68) dealing with private company)
Rolta India Ltd v Venire Industries: Cannot read in restrictions on director’s powers if not
under AoA
SBO, Associate, Subsidiary
Linkedin Order: Control tests-reporting manner, financial control (S. 89 and S. 90,
“significant beneficial owner” under Companies (Significant Beneficial Owners) Rules,
2018)
Nusli Wadia: Broad interpretation of significant influence to hold as an associate
company.
Fraud and Hostile Takeover
S. 36: Punishment for fraudulently inducing persons to invest money
Saloman v Saloman: S raised an amount on his own debentures shows his good faith.
This meant no fraud.
Usha Ananthasubramanian v Union: No personal liability (S. 241 deals relief in cases of
oppression, S. 339 deals with liability for fraudulent conduct of business, S. 447 dealing
with fraud, S. 2 (54) defines managing director)
Nanalal Zaver v Bombay Life Assurance Co Ltd: Dolus malus claim, that the benefits to
the directors is NOT indicative of dolus malus (S. 62 conditions on rights issue, S. 241
(2) dealing with takeover by State)
Serious Fraud Investigation Office v Rahul Modi: Time limit for investigation of fraud is
directory (S. 211, S. 212 and S. 213)
DLF v SEBI (2014 SEBI Order): Deals with test of materiality, that non-disclosure of
material facts can amount to fraud
Nusli Wadia: Importance of financial statement (S. 129), arrangements should have
commercial value (S.97 of Income Tax Act), broad interpretation/inclusive definition of
fraud under PFUTP Regulations, 2003.
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Oppression and Mismanagement
Shanti Prasad Jain v Kalinga Tubes: Basis of O&M (give remedy other than winding up),
what is oppression (fact-specific; continuous acts; burdensome, harsh and wrongful and
not mere lack of confidence), also on prejudice
Needle Industries: Essentials of oppression, interplay with winding up, substantive
justice when O/M case fails, every illegality is not oppression
Cyrus v TCS (NCLT): Oppression finding; in favor of Cyrus
TCS v Cyrus (SC): Illegal removal by itself does not amount to oppression. Nature of
reliefs under S. 242.
Cyrus (NCLAT, Waiver): S. 241 is a beneficial provision included in the interest equity,
justice and good conscience in order to protect the minority (liberal construction).
Radharamanan v Chandrasekara Raja (father son deadlock): Mismanagement, S. 242 test
is that facts disclose such egregious oppression or mismanagement that point to winding
up BUT winding up would harm the interests so, other remedies that are ‘just and
equitable’ would be granted; when to not invoke ‘just and equitable;’ imp. of O&M as a
remedy
Jackie Shroff V/s Atlas Equifin Pvt. Ltd.: Incorrect interpretation of Chandrasekara (as an
argument, but not pointed out by tribunal)
Vikram Bakshi v Cannaught Plaza Restaurants: Finding of oppression cannot thus, be
concluded on the basis of one or two events. Cannot be a mere inter-se dispute.
Usha Ananthasubramanian v Union: No personal liability (S. 241 deals relief in cases of
oppression).
Dale and Carrington: Applied the principle that an oppressor cannot be allowed to take
further advantage of his wrong and that the oppressor cannot be permitted to buy out the
oppressed
Needle Industries: Minority was asked to buy foreign majority
Shotgun merger (S. 237)—63 Moons Technologies v Union of India: Requirements under S.
237. Interpretation of public interest.
Shares
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KLA Padmanabhasa v SEBI: Deals with dematerialization of shares (Rule 9 and 9A
Companies (Prospectus and Allotment of Securities) Rules, 2014)
Piyush Bokaria v RBI: AT1 bonds not being either shares or debentures (S. 71 deals with
debentures)
Subrata Roy Sahara v Union of India: Hybrid securities come within the definition of
securities even though not explicitly defined (inclusive definition). Hybrid means
elements of both debt and equity. Focus on intention from conduct.
Interpretation of marketability. [Expl to S. 42 and Companies (Prospectus and
Allotment of Securities) Rules, 2014 deal with private placement]
Cadbury India: Can categorize between promoter and non-promoter (Macintosh says the
contrary).
Shakti Yezdani v Jayanand Jayant Salgaonkar & Ors: Nomination under S. 72 is not
absolute.
Aruna Oswal v Pankaj Oswal: Nomination under S. 72 is absolute.
Macintosh Burn v Sarkar and Chowdury: Sufficient cause is not limited to illegality (S.
58 dealing with refusal of registration).
Synthite Industries: Sufficient cause as fact specific inquiry (S. 58 (4) since allegation of
hostile takeover).
PNB Housing Finance Limited v SEBI: Preferential Allotment, valuation of shares (any
clause in the AoA which is repugnant to the CA would be void and CA shall prevail)
Needle Industries: Right to renounce
Balram Garg v SEBI: Insider trading (examination of connected persons)
SEBI v Abhijit Ranjan: Insider trading (reliance on rational theory)
Prannoy Roy v SEBI: Insider trading/PSI (interpretation of change in policy)
Chitra Ramakrishna: Insider trading liability is NOT affected by resignation or delay
Material Disclosure (S. 26, Matters to be stated in prospectus; SEBI (Section I Chapter
VI of Disclosure and Investor Protection) Guidelines, 2000; SEBI (Disclosure and
Investor Protection) Guidelines, 2000)
DLF v SEBI (2011 SEBI Order): Examination of control, role of SEBI
DLF v SEBI (2014 SEBI Order): Deals with test of materiality
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Jurisdiction
S.430-Civil court not to have jurisdiction (affirmed in Selvarathnam v Standard Fire)
Madras Bar Association v Union of India (2014): Importance of technical members (S. 2
(4), 2 (90) and 407-414)
Cyrus Investments v Tata Sons NCLT Bombay (Derivative Action Suit-not specifically
under CA but indirectly under S. 245 which deals with Class Action): S 241-242
jurisdiction is extraordinary. BSA is applicable to CA. NCLT Rules, 2016 (S. 39).
Cyrus was allowed to bring petition because S. 241 requires ‘members,’ not
specifically shareholders. No distinction between minority or majority shareholding
either.
DLF v SEBI (SAT 2014): Deals with locus standi-shareholder or investor must have
cause of action to become proper and necessary party.
Director Duties (S. 166)
Needle Industries: Fiduciary duties (context: issue of shares and price), interested
director
Sangramsingh Gaekwad v Shantadevi Gaekwad: Fiduciary duties to company (Note that
now the Act specifically mentions shareholders)
Rajeev Saumitra: Fiduciary duties
Puri v. Sippy : Concept of corporate opportunity
Chandra-Goenka (Zee): Fiduciary duties justify urgency of action, ‘market abuse’ under
PFUTP and fraud
Requisition
Zee v Invesco: Interpretation of “valid” (form over substance approach), NRC
(Nomination and Remuneration Committee)
Invesco v Zee: Tribunal’s power under S. 98 is discretionary, requirements of “valid”
requisition, NCLT over civil court since S. 439, powers of Bod when they receive
requisition of appointment
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Madhu Ashok Kapur v Rana Kapoor: Right to nominate does not mean the seat becomes
heritable, Court cannot sit in judgement over Board and Yes Banks’ Nomination and
Governance Council (NGC); powers were limited by AoA itself thus, no violation of
fiduciary duties
S. 164
G Vasudevan: Disqualification under S. 167 (1) proviso [read with S. 164 (2)]
M.K. Rajagopalan vs Dr. Periasamy Palani Gounder: Proper process needed to be
followed to effectuate disqualification under S. 164 (2) (b), interpretation of “conflict of
interest”
Misc.
Chitra Ramakrishna: SEBI’s directions scope
Chandra-Goenka (Zee): SEBI’s power to disqualify
Cyrus v Tata (NCLT): Shadow director contention not applicable here since shadow
director requires some harm caused. SC further said that you cannot allege this against
the same person who appointed you as successor.
Auditors/Scheme
UoI v Deloitte Haskins: Resignation and/or removal of an auditor cannot be said to be an
end of the proceedings, and has to go to its logical end, interpretation of S. 140 (read with
Kraakman’s Gatekeeper Control)
Harish Kumar v NFRA: NFRA v ICAI, retrospective application since NFRA was
formed later, important of SAs
Brightcom Group: Failure to disclose a material development, what an audit report
should NOT look like, “fraud” by auditors
Miheer Mafatlal: Separate meeting when separate scheme, guidelines for tribunal
interference in a scheme (mostly procedural)
Wiki Kids: Substantive standard for interference
IP Holding Asia Singapore v SEBI: Acquisition (necessity based on commercial wisdom-
though they fudge up the standard here), Deference to commercial wisdom, 25%
threshold for non-compete fee is not rigid
RNRL v RIL: MoU and Scheme read with S.231 (6), extent of modification of scheme
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Zee (NCLT Mumbai): Locus standi [S. 241 (4)], tribunal’s scope of interference (very
limited; commercial wisdom wins; BUT if unfair to SHs/creditors for whom it is meant)
Religare: Scheme determines rights and liabilities, situations where criminal liability cna
be transferred
Derivative Suits
ICP Investments: Locates DS in India (S. 241)
Valluvar Kuzhumam vs APC Drilling & Construction: Locates DS in India in a different
manner
Rajeev Saumitra: Personal v Corporate rights
Secondary literature
Winding Up
Needle Industries: Winding Up and Oppression
Devas Multimedia: On ground of fraud, req. of advertisement, locus standi, estoppel
Rajesh Ravi Valiparambil & Schnell v. ROC: Idea of striking off is interpreted liberally
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