20 Leading Supreme Court Judgments on Corporate Litigation in India
Corporate
Litigations Part 2: 20 Leading Supreme Court Judgments on Corporate Litigation,
Shareholder & Partnership Disputes in India
Blog by:
Jayprakash B. Somani,
Advocate, Supreme Court of India & IP,
Cell: PA 9322188701
www.jayprakashsomani.com
www.supremecourtlawfirm.com
These landmark judgments of the Supreme Court of India
have shaped the jurisprudence relating to:
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Oppression and mismanagement
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Minority shareholder rights
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Share transfer disputes
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Partnership disputes
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Fiduciary duties
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Arbitration in corporate disputes
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Corporate governance
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Director powers
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Shareholder remedies
1.
Shanti Prasad Jain v. Kalinga Tubes Ltd.
Citation
AIR 1965 SC 1535
Summary Facts
Minority shareholders alleged oppression and
mismanagement by majority shareholders in conduct of company affairs.
Decision
The Supreme Court refused relief and clarified the
meaning of “oppression”.
Ratio Decidendi
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Oppression must be:
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burdensome,
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harsh,
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wrongful,
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and continuous.
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Mere lack of confidence between shareholders is
insufficient.
2.
Needle Industries (India) Ltd. v. Needle Industries Newey (India) Holding Ltd.
Citation
(1981) 3 SCC 333
Summary Facts
Foreign majority shareholders alleged oppressive
conduct by Indian minority shareholders concerning share allotments and
management.
Decision
The Court granted equitable relief.
Ratio Decidendi
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Oppression depends on fairness and probity.
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Courts may mould equitable remedies even where
strict illegality is absent.
3.
Sangramsinh P. Gaekwad v. Shantadevi P. Gaekwad
Citation
(2005) 11 SCC 314
Summary Facts
Dispute arose in a family-controlled company involving
allegations of oppression and diversion of company affairs.
Decision
Court examined scope of Sections 397 and 398 of
Companies Act, 1956.
Ratio Decidendi
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Oppression must involve lack of probity.
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Relief is discretionary and equitable.
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Company interest is paramount.
4.
V.B. Rangaraj v. V.B. Gopalakrishnan
Citation
(1992) 1 SCC 160
Summary Facts
Shareholders imposed restrictions on transfer of shares
through private agreement.
Decision
Court invalidated restriction.
Ratio Decidendi
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Restrictions on share transfer must be
incorporated in Articles of Association.
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Private agreements alone are insufficient.
5.
M.S.D.C. Radharamanan v. M.S.D. Chandrasekara Raja
Citation
(2008) 6 SCC 750
Summary Facts
Deadlock between directors/shareholders paralysed
management.
Decision
Court upheld order directing share purchase.
Ratio Decidendi
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Company Law Board/NCLT possesses broad equitable
powers.
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Buyout orders may be passed even without strict
proof of oppression.
6.
Tata Consultancy Services Ltd. v. Cyrus Investments Pvt. Ltd.
Citation
(2021) 9 SCC 449
Summary Facts
Cyrus Mistry challenged removal as Executive Chairman
of Tata Sons alleging oppression and mismanagement.
Decision
Supreme Court upheld Tata Sons’ actions.
Ratio Decidendi
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Mere removal from directorship is not
oppression.
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Commercial wisdom of Board deserves judicial
restraint.
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Loss of confidence can justify removal.
7.
Dale and Carrington Investment Pvt. Ltd. v. P.K. Prathapan
Citation
(2005) 1 SCC 212
Summary Facts
Managing director allotted shares to himself to gain
majority control.
Decision
Court set aside allotment.
Ratio Decidendi
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Directors owe fiduciary duties.
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Shares cannot be issued for collateral purposes.
8.
Sri Ramdas Motor Transport Ltd. v. Tadi Adhinarayana Reddy
Citation
(1997) 2 SCC 334
Summary Facts
Minority shareholders alleged exclusion from
management.
Decision
Court recognized quasi-partnership principles.
Ratio Decidendi
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In family companies, equitable considerations
apply.
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Mutual trust is essential in closely held
companies.
9.
J.P. Srivastava & Sons Pvt. Ltd. v. Gwalior Sugar Co. Ltd.
Citation
(2005) 1 SCC 172
Summary Facts
Dispute regarding oppression and eligibility
requirements for petition.
Decision
Court interpreted maintainability provisions.
Ratio Decidendi
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Technical objections should not defeat
substantial justice.
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Courts must focus on real prejudice.
10.
Kilpest Pvt. Ltd. v. Shekhar Mehra
Citation
(1996) 10 SCC 696
Summary Facts
Director sought winding up on “just and equitable”
grounds.
Decision
Court declined winding up.
Ratio Decidendi
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Corporate personality cannot be lightly
disregarded.
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Quasi-partnership doctrine applies only in
exceptional cases.
11.
Hind Overseas Pvt. Ltd. v. Raghunath Prasad Jhunjhunwalla
Citation
(1976) 3 SCC 259
Summary Facts
Petition for winding up due to management disputes.
Decision
Court refused winding up.
Ratio Decidendi
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Winding up is last resort.
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Courts should prefer alternative remedies.
12.
World Wide Agencies Pvt. Ltd. v. Margaret T. Desor
Citation
(1990) 1 SCC 536
Summary Facts
Legal heirs sought continuation of oppression
proceedings.
Decision
Court allowed continuation.
Ratio Decidendi
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Rights under oppression provisions survive to
legal representatives.
13.
Mohanlal Ganpatram v. Shri Sayaji Jubilee Cotton and Jute Mills Co. Ltd.
Citation
AIR 1965 SC 772
Summary Facts
Dispute involved director misconduct and fiduciary
obligations.
Decision
Court emphasized director accountability.
Ratio Decidendi
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Directors occupy fiduciary position.
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Directors must act bona fide for company
benefit.
14.
Life Insurance Corporation of India v. Escorts Ltd.
Citation
(1986) 1 SCC 264
Summary Facts
Dispute concerning shareholder rights and government
interference.
Decision
Court protected corporate autonomy.
Ratio Decidendi
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Shareholders exercise rights through
resolutions.
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Judicial review in commercial matters is
limited.
15.
Bacha F. Guzdar v. Commissioner of Income Tax
Citation
AIR 1955 SC 74
Summary Facts
Issue concerning shareholder ownership rights.
Decision
Court clarified legal nature of shares.
Ratio Decidendi
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Shareholder does not own company assets.
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Company has separate legal personality.
16.
Vodafone International Holdings BV v. Union of India
Citation
(2012) 6 SCC 613
Summary Facts
Major international corporate acquisition involving
indirect transfer of Indian assets.
Decision
Court ruled in favour of Vodafone.
Ratio Decidendi
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Corporate structures must be respected unless
sham.
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Commercial substance important in corporate
transactions.
17.
Chloro Controls India Pvt. Ltd. v. Severn Trent Water Purification Inc.
Citation
(2013) 1 SCC 641
Summary Facts
Issue involved arbitration in complex shareholder and
joint venture agreements.
Decision
Court expanded scope of arbitration.
Ratio Decidendi
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Non-signatories may be bound by arbitration
agreements in composite transactions.
18.
Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd.
Citation
(2011) 5 SCC 532
Summary Facts
Court examined arbitrability of disputes.
Decision
Certain disputes held non-arbitrable.
Ratio Decidendi
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Rights in rem are generally non-arbitrable.
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Oppression and mismanagement claims largely
remain within tribunal jurisdiction.
19.
V.S. Krishnan v. Westfort Hi-Tech Hospital Ltd.
Citation
(2008) 3 SCC 363
Summary Facts
Allegations of illegal board meetings and oppression.
Decision
Court discussed maintainability and remedies.
Ratio Decidendi
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NCLT/Company Law Board has wide powers to grant
equitable relief.
20.
Ebrahimi v. Westbourne Galleries Ltd.
Citation
1973 AC 360
Summary Facts
Partnership-style company dispute involving exclusion
from management.
Decision
Company ordered to be wound up.
Ratio Decidendi
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Quasi-partnership principles apply in closely
held companies.
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Equitable considerations override strict legal
rights.
