It's India Inc vs the Union of India in court: Reliance ADAG, Vedanta & others have cases pending against the govt
March, 02nd 2012
When Vodafone approached DMD Advocates to handle its case against the Income Tax Department in the Supreme Court, partner Fereshte Sethna knew she would need to put her life on hold for at least two years. Vodafone had just let go ALMT Legal, the firm that lost its case in the Mumbai High Court, and was looking to start with a clean slate. Starting from scratch, moving between Mumbai, Delhi and London, Sethna, her partner Anuradha Dutt and independent counsel Harish Salve finally procured a judgement that saves Vodafone Rs 11,000 crore and sets an abiding precedent.
There's still a review petition and a PIL to contend with, but Sethna is taking some time out to savour the moment. "I would say to you, there is a clear trend of global players accessing the legal system of the country. The Indian judiciary is seen as independent. It may not always be so in every day life, but our system is efficient where it really matters," she says.
India is not an overly litigious society where citizens are prone to suing each other. Most disputes tend to be settled bilaterally and only the most contentious go to court. The one exception here seems to be the government.
Under pressure to increase tax revenues in a slowdown, in a quandary over the interpretation of new laws it has enacted and often pulled into litigation by political compulsions, the government is currently corporate India's biggest adversary. Ask Ajit Gulabchand, chairman and managing director of Hindustan Construction Company, which operates in a naturally litigious industry.
"90% of our litigation is with arms of the government," he says. "They create badly framed regulations and when questions of interpretation arise, they want the courts to decide. Worse, if a decision goes against them, they won't stop. They will keep challenging it in higher courts."
From Reliance ADAG and Vedanta to the Tatas and Essar, every major corporate house today has cases pending against the government in court. And as more and more corporates prepare to do battle, top law firms are being put on retainership, if only to ensure that the best lawyers don't work for the other side if it comes to a crunch.
This is good news for Indian law firms, though it means many of them will have to change direction. Through the past decade, the younger firms have grown through 'non-contentious' work, which is mostly about drafting watertight contracts than strive to ensure that corporates never have to go court. That era seems to over as the realisation dawns that there's just no getting away from contentious work.