Corporate Governance - The Legal Chamber

Arbitration Award Final: Supreme Court Dismisses MMTC’s Post-Decree Objections

17Jan

By The Legal ChamberNo Comments

Supreme Court

Arbitration Award Final: Supreme Court Dismisses MMTC’s Post-Decree Objections

This Supreme Court judgment reaffirms that objections to the execution of an arbitral award under Section 47 of the CPC are maintainable only within a very narrow compass, limited to grounds of jurisdictional infirmity or voidness. The Court emphasized that allegations of fraud or breach of fiduciary duty by a party’s own officers, raised after the award has attained finality, do not constitute such grounds unless they render the award a nullity. The business judgment rule protects decisions that fall within a range of reasonableness. Facts Of The Case: The dispute arose from a Long Term Agreement (LTA) dated 07.03.2007 between MMTC Limited and Anglo American Metallurgical Coal Pvt. Limited for the supply of coking coal. The agreement included an option for MMTC to extend the con...

Investment vs. Debt: Supreme Court Explains Why Preference Shares Don’t Trigger IBC

13Jan

By The Legal ChamberNo Comments

Supreme Court

Investment vs. Debt: Supreme Court Explains Why Preference Shares Don’t Trigger IBC

The Supreme Court held that Cumulative Redeemable Preference Shares (CRPS) represent an equity investment, not a financial debt under the IBC. Preference shareholders are not creditors, and redemption is contingent upon company profits under the Companies Act. Therefore, they cannot initiate insolvency proceedings under Section 7 of the IBC for non-redemption. Facts Of The Case: EPC Constructions India Limited (EPCC) held outstanding receivables from Matix Fertilizers and Chemicals Limited for construction work. In 2015, to help Matix meet lender-mandated debt-equity ratios, the parties agreed to convert ₹400 crores of dues into 8% Cumulative Redeemable Preference Shares (CRPS). Matix subsequently allotted CRPS worth ₹250 crores to EPCC. When the shares matured after three years, M...

Supreme Court Ruling: Fraudulent Share Transfer Struck Down: Key Takeaways from the Satori Global Judgement

9Oct

By The Legal ChamberNo Comments

Supreme Court

Supreme Court Ruling: Fraudulent Share Transfer Struck Down: Key Takeaways from the Satori Global Judgement

The Supreme Court ruled that the NCLT has wide jurisdiction under Sections 397 and 398 of the Companies Act, 1956, to adjudicate on allegations of fraud, oppression, and mismanagement when integral to the complaint. It upheld that acts violating the Articles of Association and statutory provisions, including invalid share transfers and board meetings, constitute oppression, empowering the Tribunal to grant comprehensive relief. Facts Of The Case: The case involves Mrs. Shailja Krishna, a majority shareholder holding over 98% of a private company, and her husband, Mr. Ved Krishna. In December 2010, during a strained marital relationship, Mrs. Krishna allegedly resigned from her directorship and executed a gift deed transferring her entire shareholding to her mother-in-law. She contended s...

Supreme Court Upholds SEBI’s Power to Levy Interest on Unpaid Penalties

11Aug

By The Legal ChamberNo Comments

Supreme Court

Supreme Court Upholds SEBI’s Power to Levy Interest on Unpaid Penalties

The Supreme Court held that under Section 28A of the SEBI Act, interest on unpaid penalties is recoverable as per Section 220 of the Income Tax Act, 1961, and accrues from the date the penalty becomes payable, not from the date of subsequent demand notices. The Court clarified that the adjudication order itself constitutes a valid demand, and interest is compensatory, not penal, in nature. The insertion of Explanation 4 to Section 28A merely clarified the existing legal position and did not introduce a substantive change. The Tribunal's dismissal of the appeals was upheld, affirming SEBI's authority to levy interest from the date of default. Facts Of The Case: The appellants, Jaykishor Chaturvedi and others, were promoter-directors of Brijlaxmi Leasing and Finance Limited, a company list...

Death of a Partner Doesn’t End Business: Supreme Court Rules in Favor of Reconstituted Firm

22Jul

By The Legal ChamberNo Comments

Supreme Court

Death of a Partner Doesn’t End Business: Supreme Court Rules in Favor of Reconstituted Firm

The Supreme Court upheld the Calcutta High Court’s decision, ruling that a partnership firm does not automatically dissolve upon a partner’s death if the partnership deed permits continuation with surviving partners. The Court held that Indian Oil Corporation (IOCL) could not arbitrarily stop kerosene supply without terminating the dealership agreement. It clarified that reconstitution of the firm does not require all legal heirs to join, emphasizing IOCL’s obligation to act fairly as a state instrumentality. The judgment reinforced that contractual terms and partnership deeds override rigid policy guidelines in commercial disputes. Facts Of The Case: The case involved a dispute between Indian Oil Corporation Limited (IOCL) and M/s Shree Niwas Ramgopal, a partnership firm operating as a ...

Cheque Bounce Case: Supreme Court Reinstates Case Against Director in ₹6 Crore Cheque Dishonour Case

7Jun

By The Legal ChamberNo Comments

Supreme Court

Cheque Bounce Case: Supreme Court Reinstates Case Against Director in ₹6 Crore Cheque Dishonour Case

The Supreme Court clarified that for vicarious liability under Section 141 of the Negotiable Instruments Act, complaints need not reproduce statutory language verbatim. Substantive allegations demonstrating a director's responsibility for company affairs suffice. The Court emphasized substance over form, ruling that technical pleading deficiencies don't invalidate proceedings if the complaint, read holistically, establishes the director's operational role. The judgment reinstated criminal proceedings against the director, overturning the High Court's quashing order. Facts Of The Case: The case involved a complaint filed by HDFC Bank against M/s R Square Shri Sai Baba Abhikaran Pvt. Ltd. and its directors, including Mrs. Ranjana Sharma (Respondent No. 2), for dishonor of a cheque worth ₹6...