Corporate litigations on the rise

Apart from company law cases, land disputes are forming part of the litigation

Hyderabad: As the legal awareness is increasing among the common man coupled with the aggressive nature of new generation corporates, the legal fraternity sees more corporate litigation in the offing.

“As it is, we have piled up cases in courts and we clearly seeing the raise in the corporate litigation in the state,” says K Srikanth, Advocate, Hyderabad High Court. He further added that increasingly people are pressing for legal settlements against corporate, unlike earlier times to settle disputes outside the legal system.

Mostly the corporate litigation is associated with the breaches of contracts, employment relations and other regulatory compliance. But of late, disputes over land dealings are forming part of the corporate litigation in a big way, he points out.

“It may be that the land values are increasing and the land owners are disputing with the prices, as they have entered contract earlier at a lower price,” the lawyers are pointing out. In some cases, the dispute arising because the original owner is not willing to register the property at lower price, and claims higher rate, they added.

Airing similar views, even the practicing company secretary, V Ahalada Rao, says the land related litigation is in raise especially in the case of family held companies. “As the valuations are increasing, the sleeping partners in the business suddenly waking up claiming their rights, putting the property into dispute,” he reveals.

Rao further explains that after the new company law 2013 coming into effect, the number of compliances increased and also technological changes brought in by the regulators become cumbersome and violations are cropping up. And this has led to litigation with regulators.

Further the companies are engaging fresh law graduates direct from colleges, who lack practical knowledge in courts and procedures. Their compliance level is faulty, which is major causing for litigation, reveals C Mohan Prakash, another High Court Advocate.

Interestingly, Prakash says that the corporates are not showing much interest in speedy settlement of cases, as long as there is no hindrance to their business. Hence, the litigation will continue till the company wants to redress it.

Meanwhile, the Parliament was informed on Tuesday that about 1,400 corporate cases are undecided over a decade, and over 3,500 cases are pending at various stages in CLB, BIFR besides the Official Liquidator. Interestingly, Andhra Pradesh account for highest pending corporate litigation at 685.

According to Srikanth, the companies always go by commercial option and even they earmark a percentage of turnover for the legal expenditure. Under the new company Act, the government plans to setup National Company Law Tribunal and special courts for speedy trial of offences besides mediation and conciliation panel.

By KVVV Charya