Corporate succession: Boardroom power, shareholder rights and rule of law

The recent dispute between Noel Tata and N. Chandrasekaran has reignited longstanding debates concerning the balance of power between shareholders and corporate boards under Indian company law. The controversy bears striking similarities to the earlier Tata–Mistry litigation, particularly regarding the extent to which controlling shareholders may influence corporate decision making.

Traditionally, Indian company law has recognised the principle of majority rule established in Foss v. Harbottle (1843). However, this principle is subject to statutory safeguards against oppression and mismanagement. In Shanti Prasad Jain v. Kalinga Tubes Ltd. (1965), the Supreme Court held that oppression must involve conduct that is burdensome, harsh and wrongful, constituting a departure from the principles of fair play and fair dealing.

Sections 241–242 of the independence Companies Act, 2013 provide remedies against oppression and mismanagement. However, judicial interpretation has maintained a demanding threshold for establishing oppression, requiring more than mere disagreements over corporate management. This approach was reinforced in the Tata–Mistry litigation.

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