Many in this country including the corporates are closely watching the IPL controversy and it had led Mr. Shari Tharoor to submit his resignation. There are many interesting issues in the entire episode and I want to highlight few issues as a classic example of complications in dealing with corporate issues.
Any irregularity in a company may be deal with by the Central Government, Company Law Board, Company Court and SEBI if the Company is a listed Company. We rarely see the Central Government suo muto initiating proceedings against a Company and normally the misdeeds in a Company are questioned before the Company Law Board, Company Court and SEBI when the Company is a listed Company.
The issue has come to lime light as everybody knows with the tweeting done by Mr. Lalit Modi saying that Mr. S hashi Tharoor had called him asking not to insist as to who are all the shareholders of the Kochi Franchise. Initially, the people behind Kochi Franchise had made a public statement that they have acted in accordance with the provisions of the Companies Act, 1956 and the corporate regulations. Then, slowly, the media has even probed into the issue of violation of the provisions of the Companies Act, 1956 in granting sweat equity to Shunanda Pushkar.
The facts are like:
1. Rendezvous Sports World Pvt Ltd is a private limited company and it has granted 70 crore worth equity to Shunanda Pushkar claiming that she has a professional expertise and an expertise in event management and brand management.
2. Rendezvous Sports World Pvt. Ltd has infact changed its name and the company has brought the other investors together to form a consortium for bidding for IPL Kochi Franchise.
3. It was pointed by the media that Rendezvous Sports has violated all the provisions of the Companies Act, 1956 in granting Sweat Equity to Shunanda Pushkar and now Shunanda Pushkar had voluntarily surrendered her share claiming that she is deeply hurt.
4. BCCI claims that there is a clause in the bidding document that no information is to be revealed public and they claim it as a “confidentiality clause”.
5. No shareholder in the Company nor the other investors has any grievance against the management in the Company.
6. The Central Government has decided to look into the issue in public interest and in view of the wide spread allegations and it was told that while the Finance Ministry will look into the issue of sources of funds, Corporate Ministry will look into other issues like non-compliance of corporate regulations etc.
There are many complications in the issue and those are like:
How to deal with the issue of “professional expertise”?
How to look into the affairs of other investors while the Rendezvous Sports is deal with by the authority?
The presence of political and other pressures and heavy weights involved in the issue? And, plethora of technical issues?
The validity of confidentiality clause?
The authority of BCCI?
The authority of the adjudicating forum to question the BCCI and look into the BCCI affairs?
The legal status of IPL and its constitution? etc.
This is a classic example of complications in a corporate dispute or a matter. Assuming that a matter like this comes before the Company Law Board or the Company Court, it is really a complicated issue to dealwith. Many documents are to be carefully scrutinized, the facts are to be looked into in the light of corporate regulations, the principles of natural justice are to be followed and it will definitely take some time and it is inevitable. That is why; dealing with a corporate dispute is totally different from dealing with other matters. Urgent orders may need to be passed, principles of natural justice are to be followed, the presiding officer needs a good assistance through counsel representing the corporates and finally, the presiding officer should spend substantial amount of time on reading the papers, listening to the issue, remembering the important things, taking notes and finally passing the necessary orders.
Note: the intention is focus on the complications in dealing with a corporate dispute and nothing more.
V.DURGA RAO, Advocate, Madras High Court.
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