Winning Legal Wars Ranjeev C Dubey 2

Winning Legal Wars
How to successfully fight court cases in India
Ranjeev C Dubey
First published by Macmillan, 2003
This revised and rewritten work has been published by the author Ranjeev C Dubey
on April 30th, 2021
All rights are reserved to the author exclusively, who also asserts the moral authority
to be recognized as the proprietor of this work.
© 2021 Ranjeev C Dubey
About the Author
Admitted to the Bar in 1981, Ranjeev C Dubey has more than

four decades of substantial litigation experience. Commencing
his career on the original side of the civil courts in Delhi, he
joined a law firm in 1992 and then established his own law
firm in 1999. He is well versed with mainstream civil, criminal
and revenue litigation, specialized corporate litigation,
together with domestic and international arbitration.
Over these four decades, he has also acquired extensive

experience in main stream corporate commercial legal practice
including strategic and general corporate advise and corporate regulation. He has vast
experience of structuring, drafting and negotiating both domestic and cross border
incorporated and unincorporated business partnerships including their associated
technology contracts and tax efficient investment routings. He has long years of
experience in corporate finance, project finance, private equity, insolvency and
business restructuring.
As the Founder of the firm, he is the team leader on many of the firm’s leading
assignments, rendering advice and steering the strategic input at the pulse of the
commercial bargain.
Ranjeev C Dubey frequently speaks at various business and legal conferences

domestically and internationally. He has been an acknowledged speaker at various
Indian, European, American and Nordic conferences. He has also been the principal
trainer at various business communication initiatives. He has since 2004 been a regular
columnist for a number of business and legal publications including Business World
and Business Today.
Ranjeev C Dubey first authored the pioneering litigation strategy book for
business and legal executives Winning Legal Wars in 2003 (Macmillan). His later
expose of the real world of law “Legal Confidential” (Penguin 2016) has achieved
substantial success.
More information on his skill sets including his vast archive of writings may be
found at his website www.ranjeevdubey.com
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Disclaimer
This both is, and is not, a work of fiction. The cases described in this book form
part of the author’s work profile. To protect the identities of clients and their
representatives, I have been obliged to selectively change the facts, or the narrative,
while retaining the core of the learning. It is always a great challenge to retain the
essence of something while doing your best to obliterate its identity. I concede that
in protecting people from unauthorized disclosure of identity, I may have created a
new fiction.
I would not contest this conclusion. Bear in mind that unless you are writing
science fiction, all fiction is based on a solid foundation of fact. Where do you draw
your line between the two?
Nevertheless, I assert only that this book is fiction based on a bed of fact, and
to the extent I was capable, I tried to keep my message. I have named a variety of
government authorities and regulators because they are key to the issues being
discussed: I am not suggesting that these authorities and regulators ever actually
encountered any such case submission or reacted as stated in these pages. If in the
process of protecting identities, I have made someone look like someone else, or
suggested they did something that they didn’t, allow me to say this:
“This is not a work of history. All characters, events and issues

are illustrative and not assertions of fact. Any resemblance of
any person, event or issue stated or related herein to any actual
persons, event or issue is purely coincidental.”
Within the constraints of time and cyberspace, I am always happy to discuss

these rules with anyone interested in further debate. I can be contacted via Email at
rcd@nsouthlaw.com. If you want to know more about me, my writings or the things
I have done or (more likely!) failed to do, the data is all there at
http://ranjeevdubey.com/.
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Winning Legal Wars
How to successfully fight court cases in India
Ranjeev C Dubey
Index of Contents
1. Author’s Preface 1
Part A. Understanding the Justice Machine
A1. Do you want to fight a court case? 4

A2. The true nature of the justice machine 19
A3. Sex and the Justice Machine 31
A4. The four noble truths of the Justice Machine 37
A5. The Four-Fold path 59
Part B. Do you want to Start a fight?
B0. Introduction: Do you want to deploy the Justice Machine? 71

B1. The Balance of Personal Power 74
B2. The Governing Environment 86
B3. The Occupation of the Field 99
B4. The Leadership 111
B5. The Organization and its Management 125
(i) Organization
(ii) Command and Control
(iii) Logistics
B6. Conclusion – Litigating to win 136
Part C. Preparing for the Fight
C0. Preparing for Litigation: Five Action points. 141

C1. Planning Amorally 143
C2. Planning Defense 149
C3. Planning Defensive Litigation 163
C4. Timing the Attack 170
C5. Planning for stalemates 175
C6. Conclusion – Plan Honestly 181
Part D. Fighting Strategies
D0. Configuring Litigation: Seven Strategy Tools 184

D1. Match Magnitude of engagement to resources 186
D2. Redeploy Captured Resources 188
D3. Seek Quick Results 202
D4. Avoid costly annihilation 211
D5. Priority of targets 218
D6. Factor Force levels 234
D7. Avoiding Entanglement: 244
(i) Unnecessary Action
(ii) Comprehending Turf
(iii) Ignorance
D8. Conclusion: The myriad colors of strategic choices 251
Part E. Fighting Tactics
E0. Fighting Tactics: The Seven Tactics 256

E1. The orthodox and the unorthodox 258
E2. Seize and control initiative 267
E3. Control the enemy’s response 282
E4. Exploit the momentum 294
E5. Employ the blitz 309
E6. Be unpredictable 312
E7. The rule of deception 329
Part F. Conclusion
F. The Paramount Rule of War 340
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Author’s Preface
Winning Legal Wars first appeared in 2003. It was a coming-of-age story, but
it wasn’t about a young lawyer coming of age! Instead, it contained a bunch of ideas,
a lawyer’s first understanding of how the Justice Machine worked. At the time I wrote
it, I had only recently understood the ‘system’ I worked in. I felt delighted, liberated,
indeed triumphant. I wanted to share my joy. The problem was I also wanted to
impress everyone around me. Winning Legal Wars was pompous, self-aggrandizing,
sermonizing, patronising, grandiose, and the vocabulary was truly intimidating. I hated
the book within days of it hitting the shelf.
My publisher had no trouble selling the book. Pretentious books easily find
intimidated readers to buy them. In the years that followed, I transformed the book
into a workshop series and took it across the country. I did weekend workshops for
senior executives, playing war games with intelligent people who engaged with the
Justice Machine as part of their job. It was fun, and it was enriching. But as the years
rolled by, I found myself simplifying my stories, focussing better on the basic thread
of my case studies, divorcing myself from the self-absorbed tedium of the written
work. The book didn’t talk to its audience like the workshops did.
Eventually, I took the book out of print about 2010. The publisher waited
patiently for a rewrite, but life got in the way. My law practice kept me engaged. Yet,
at every turn, I found myself using the same principles to advice my clients. Tragic as
it has been, the pandemic of 2020 provided me with the space to rewrite the book. It
is difficult to be creative when both nature and humans are inflicting violence on one
another: when a great and ancient civilization is being reduced to a wasteland. Still,
one grits one’s teeth and here we are.
In the end, I didn’t have to change much from the 2003 edition. The structure
remains the same. I have a new opening section, and I trust you will find that
insightful. This section contains a perspective I did not have in 2003 and I thought it
dovetailed beautifully into the ‘attitude’ of the book.
I struggled between using old case studies and new case studies. People
resonate better with newer case studies but then you have to obliterate identities and
events all the more in order only to protect people. I found there wasn’t that much
difference between the old and new cases, I was comfortable in the knowledge that
the more things change, the more they remain the same. I have also deleted about a
third of my case studies. You can emphasise a point too much!
1
That takes me to the decision to not charge for this book. After three books
published, finding a competent publisher was not going to be a challenge. But is it
moral to sell one’s life experience and knowledge? There is no simple answer here but
I do hope I asked the right questions in this 2016 piece
https://www.nsouthlaw.com/2016/08/08/is-ipr-moral/. Curiously, it raised this issue
in the context of a pandemic so this Opinion piece remains as relevant today as always.
In the end, the decision was simple. It came down to objectives. Why was I
writing a book? Did I want to share my knowledge or did I want to take a buck off
someone’s back pocket? I am told people do not respect things they don’t pay for.
Perhaps that is true of those who have a great deal of money. For much of my life, I
was not that person. I didn’t want a financial criterion to determine who would have
access to my knowledge. In giving the book away free, everyone can have it to use
or to throw away, to profit or to reject. I share it because I know that life itself is
elusive. It is only experience and knowledge that can outlive us, and I want to share
mine before death do us part. We humans don’t have an option to find immortality.
Is there too much hubris in wishing that our ideas do?
Thank you then for taking a peek at this book and I do wish you a happy read.
Ranjeev C Dubey
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Part A
Understanding the Justice Machine
3
Winning Legal Wars – Ranjeev C Dubey
Chapter A1
Do you really want to fight a court case?
The great thing about being a lawyer is you always get a ringside seat for
the best shows in town! For those who came in late, the early 1990s were years
of incredible change. India ‘globalized’, leading the world to believe there was gold
in this exotic land of snake charmers and painted temple elephants. Investors
came in droves, only to run into our Foreign Direct Investment Policy. It was a
grease ball script to beat them all! It allowed tens of thousands of desis to make
money for nothing out of imaginary palaces of illusions. It also allowed people like
me to make a great living out of this illusion. How our FDI policy was monetized
is a story you don’t want to miss.
Up until 1992, India was a textbook case of a socialist License, Permit,

Quota Raj. When Narasimha Rao decided to ‘liberalize’, Indian industrialists were
incensed. “You controlled us for decades”, they said, “telling us what we could
manufacture and how much and where and using what methods. Now that we are
properly obsolete and don’t know how to be free, you want us to go compete with
multinationals”! They were right, but India was bankrupt and the Government had
no choice. They found the perfect socialist solution: why not create a new class of
quota holders? The new FDI policy required foreigners to have local partners in
vast ‘sectors’ of business. That created a class of legally recognized squatters on
government approved manufacturing quotas! As a ‘corporate lawyer’ of the day, I
got to write about one joint venture agreement a month. Five years later, I got to
issue about a lawyer’s notice a month claiming breach of joint venture contract.
Fifteen years later, I was still fighting cases over those contracts I wrote!
In a way, this was inevitable. Indians had vast experience in how the
license, permit, quota Raj really worked. When the Government rationed out
contracts, everyone with a contact ‘on the inside’ - politician father, brother, or
illegitimate uncle thrice removed - grabbed a piece of the action and launched his
entitlement plan. He then invites those less networked to supply the money and
expertise to get the contract performed. ‘Local partners’ signed joint venture
contracts and then waited for the foreigners to supply the seed capital, technology,
business expertise, bank guarantees, indeed, even the local partner’s share of the
funding! Why would we expect homegrown businessman Narayan Kini to be
different?
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As entrepreneurial spirit went, Kini was pretty good. He has a highway

construction equipment manufacturing joint venture with the Americans, a
machine manufacturing joint venture with the Koreans and a mining equipment
joint venture with Subtek, a South African company. None of his joint ventures
made much money but he made sure he kept total control over ‘his’ companies.
He dealt exclusively with suppliers so he decided the price at which his joint
ventures were able to buy goods. He also made sure he controlled the aftermarket.
Bazaar gossips whispered that he had parallel supplies of fake spare parts flooding
the market through the same vendors who supplied original components to the
venture. Like the best piano players, Kini did a lot of five finger exercises, and all
of them were in the jam jar. Net, net, Subtek’s Indian joint venture consistently
lost money till its capital base was burnt toast. It was a matter of time before
Subtek figured out his scam. By the time it did, Y2K was well behind us and India
had a whole new ‘India story’ to sell. That’s when Subtek decided to take control
of the venture.
Subtek hit the ground running. India’s time had come, they told Kini. The
Indian market had now matured. They wanted to invest a lot more money to build
an exponentially bigger business. Was that okay with Kini? On the surface, Kini
took it well. He didn’t want to put in a lot of money but he also didn’t mind being
a smaller part of a much bigger business. The partners began a new commercial
negotiation. The good times didn’t last. As the dance progressed, it became clear
that Kini didn’t want to terminate his five-finger scam. Quite the contrary, Kini had
figured out a way to grow extra fingers.
He was pretty brazen about it. If Subtek wanted to buy land for a bigger
factory, they must buy the land through him. He didn’t say what his upside was
going to be! Subtek was most welcome to put more money into the Indian JV but
he would like to maintain his proportion of the shareholding. Okay, said Subtek,
you want to put in money? Nope, Kini retorted, you have to put in money for me
as my money! It didn’t end there. If Subtek wanted his cooperation in expanding
the business, they would have to give him complete management control. If they
didn’t want him to manage the business, they could buy him out. Of course, buying
Kini out came at a fancy cost! Subtek wasn’t stupid enough not to know when it
was on the receiving end of an extortion scheme. It was time to cut loose from
Kini and move on.
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Subtek’s lawyers weren’t encouraging. India had something in its FDI policy
called Press Note 1. This made Joint Ventures in India a lot like marriage. If you
have an existing venture in India, you couldn’t start a new wholly owned subsidiary
without the consent of your Indian partner. Kini had the ability to keep blocking
Subtek till they paid him off. What could Subtek do but go find an Indian lawyer
who was better at offering solutions than he was at blocking business ideas?
Subtek’s new lawyers didn’t see a problem the way Subtek did. There were
two limbs to their solution. “What was an ‘existing JV’ in India” they asked? If a
foreign investor terminates a JV contract for good cause, can it still be ‘existing’?
Kini had breached many of his contractual promises to Subtek. Subtek was justified
in terminating its JV Agreement with him. If Subtek did that, it would still have an
existing JV in India? In a sense, the lawyers were right. Legally, treating a
terminated contract as subsisting is in reality a license to the Indian party to break
every rule in the book, violate every clause in the JV contract, and treat the
foreigner any which way it pleases. Who can justify such a construction of the law?
The second limb of their solution was even better. What’s so unique to
mining equipment? It’s stuff that digs out the earth, its stuff that transports the
stuff dug out to the surface and stuff that processes the stuff that is dug out of
the earth. The same equipment can be used to dig a road or railway tunnel. The
same machines can be used to transport materials on the earth’s surface as
opposed to underground. The same equipment can be used to process other
materials. The only thing unique about mining equipment is that it is designed to
work in restrictive spaces. It’s not rocket science: its design. If an Indian JV sets
out to make and sell such equipment, it’s a specific design - indeed a specific model
- it chooses to sell. It’s not as if a whole class of goods automatically enter some
sort of holy cow list.
The Indian JV wasn’t licensed to make and sell all of Subtek’s models,
products, offerings and services offered world-wide to its international customer
base. Subtek has licensed the Indian JV to manufacture a limited range of specific
models. Press Note 1 could only be applied to what the Indian JV was authorized
to manufacture, not everything Subtek every did or could do. These authorized
models were dated and would soon be obsolete. Subtek need not manufacture
these same models in its new Indian subsidiary at all. It could bring in entirely new
6
and different products. Yes, this new technology did do the same job as the
licensed products but so what? A horse did the same job as a car but does that
make a horse a car?
For sure, Kini had an argument or two on his side too. There are always
two sides to every story, sometimes even more! That’s how lawyers make a living.
From a purely commercial viewpoint, Subtek had no choice. Subtek could pay Kini
a lot of money to avoid a legal war or it could set up a new factory and face the
ensuing legal war. If you have to choose between giving money to your partner
or your lawyer, who would you choose to pay? It comes down to numbers, doesn’t
it? Would you rather pay 100 crores to your partner tomorrow morning or (let’s
say) five crores to your lawyer for the next 20 years? Clearly, the lawyer costs a
lot less because money tomorrow morning is worth more than the same amount
of money paid over twenty years. Besides, you may end up settling the case in
three years for a lot less money. Subtek identified a group subsidiary they had
previously registered in India for an entirely unrelated business, re-assigned it to
their mining equipment business, put money in it and got down to the task of
building the factory to churn out new products.
If you are new to the legal world, it would be natural to ask if Subtek did
anything illegal in picking up this group subsidiary and setting up a new factory.
This is the mother of all irrelevant questions. It doesn’t matter who was right and
who was wrong. This is something we learn as we mature in the world of business.
If the law was black and white, we wouldn’t need lawyers to come down on
different sides of the argument. Besides, people don’t necessarily only do what is
legally beyond debate. They do what they absolutely must do to survive the
environment and then find a way to interpret the law suitably. The best commercial
lawyers are those who offer solutions: no one pays a lawyer to be told that his
problems have no solutions. How would you feel if your doctor was like that?
We should stop just a moment here because this is basic to the subject of
this book. I will repeat myself. Commercial compulsions drive business behavior,
not the other way round. It’s a lawyer’s job to ‘find’ the right construction of legal
provisions and make commercial decisions stick. Consider the recent Covid induced
lockdown. The government told businessmen to pay all wages even as it went
about killing the revenue streams of these businesses. That was fine for people
with deep pockets. What about businesses who had no money to pay anyone? If
7
they paid all wages, they would be bankrupt. What would you do in the
circumstances: would you sell your wife’s jewelry to pay employees or sack your
employees and pay a lawyer to defend you in court?
* * * * *
It wasn’t long before Kini swung into action. He attacked on several fronts.
First, he invoked arbitration claiming breach of the JV Agreement. Next, he rushed
to the local trial court, and asked the court to stop Subtek from constructing a new
factory. Third, he went to the High Court asking the court to stop this violation of
the Government’s FDI Policy. Subtek was ready with its own attack. Subtek asked
a court to stop Kini from using its technology, logos and business know-how. It
then filed two more cases asking the Courts to stop Kini from stamping the stuff
he rolled out of ‘his’ factory as Subtek’s products. In a nutshell, six cases rolled
out in four different courts in as many weeks in each corner of India and the
airlines started to rock and roll.
This gorefest lasted two years. Like any contest between highly energetic
players clashing before overloaded courts burdened with complicated procedures,
the courts were unable to take any decision at all. The trial court sympathized with
Kini but then found it didn’t have jurisdiction. In this time, the FDI policy changed
again so the High Court didn’t have the time to waste on listening to Kini. Subtek
didn’t do much better. Two years on, Kini cut Subtek out of the loop and continued
to operate the India JV like he owned it. He also continued to use Subtek’s name
and logo on his bootleg products. Naturally, the market had no way of knowing if
these were Kini goods or Subtek goods.
As this expensive litigation slowly ground to halt in fruitless frustration, the

arbitration became the way to go. In legal term, this meant that each party focused
on persuading the Arbitration Tribunal to compensate them for the legal sins of
the other. Wildly ambitious claims and counter claims were made. In a company
with a paid-up capital of Rs. 1 Crores, both sides asked for compensation of Rs.
1000 crores or more. It was ridiculous. From the perspective of the contending
parties, it was also perfectly rational and logical. Let me explain this.
Look at the psychology driving legal positions. If you file a case and the
other side chooses only to defend the claim, it’s a classic win-lose situation. You
8
may get a lot of money or you may get nothing. In either event, you will not lose
anything. In turn, the other side may lose nothing, but then again, it may lose
something. In either event, it will definitely gain nothing. So, you only have
something to gain and the other side only has something to lose. When the
Arbitration Tribunal decides the case, it basically has to decide if it will give you
something or nothing. It doesn’t have to balance the claims on the other side. Very
likely, it could “take a conservative approach” and give you half a win. The bigger
your claim, the bigger your ultimate half a win!
As opposed to that, if both parties ask for a lot of money, how is the
Arbitration Tribunal to decide the case? It could take the same ‘conservative
approach’ and give to each party half of what that party claims. Practically, this
means that each party is incentivized to make a claim bigger than the other party
has. If you ask for a Mercedes, you may get a Maruti, but if you ask for a Maruti,
what will you get but a rickshaw?
Now, if the Arbitration Tribunal does not want to take the ‘conservative
approach’, its next best option is to decide the case on its merit. To do that, it
needs to get deep into the case and burn a lot of legal acumen! That takes time,
energy and motivation. It increases the level of skill each party needs to bring to
the table, hiring better lawyers, preparing harder. In the bargain, arbitrators’ fees
also rise proportionately. Damned if you do and damned if you don’t.
There is a third choice. The Arbitration Tribunal can choose to do nothing.

You have heard the old Panchatantra story of the two cats who fought over a cake
and ended up allowing the monkey to eat it all! The Arbitration Tribunal can keep
the case in play, hearing after hearing, charging hefty fees in the process.
Eventually, like the Cheshire cat, the parties get fed up and settle the matter
amongst themselves, leaving the Arbitrator’s fees behind. Actually, this is a pretty
good solution. Parties will always find a settlement that best meets their
commercial objectives. Who understands better than the parties where their best
interest lies?
Back in the day, before we amended our law to prescribe timelines to finish
every arbitration in 2015, leisurely arbitrations were common enough, and not
merely because the Arbitration Tribunals encouraged settlement. More often than
not, the commercial compulsions of one or the other party favored stalling
9
arbitration proceedings. Arbitration Tribunals were unable to, often unwilling to,
steamroll over the parties. Let me illustrate this. In the beginning, Kini tried to
stop Subtek from setting up a factory so that he could extort money from them.
He didn’t care half a rat’s butt about a long expensive arbitration. He invoked
arbitration for ‘legal reasons’ and then pretended it wasn’t there. The Arbitration
Tribunal had no reason to push the pace. It was Kini’s arbitration and if he didn’t
want it decided, who was to argue with that? At the time, Subtek didn’t want
arbitration either. They wanted to establish their India factory so they could show
Kini his place and send him off with a modest settlement. If neither party pushed
for a fast arbitration process, what were the arbitrators to do? The arbitration
drifted along for several years.
Kini’s objectives changed when he couldn’t get the courts to stop Subtek’s
India plans. He now wanted to collect a lot of compensation through the
arbitration. He then started pushing the pace of the arbitration. How hard should
he have pushed? Litigation is like sailing in rough seas in a small boat. Subtek had
a large counter claim. Kini could win big bucks, but he could lose as well. If the
Arbitration Tribunal decided that Subtek was justified in terminating the JV
Agreement, Kini would have to stop bootlegging his products as genuine Subtek
goods. He may or may not make money at the end of arbitration, but as long as
the arbitration ran on, he surely was making a lot of money selling those ‘duplicate’
products! It was a case of heads he was winning, tails Subtek would lose.
In turn, Subtek had no motivation to complete the arbitration quickly. If it

won, it would receive some royalties and damages. If it lost, there could equally
be a lot of compensation to pay. Royalties and damages would be nice to have but
it would be a big blow for it to take a beating from this blackmailer of a local
partner. Subtek prioritized a strong defense over a strong attack and that meant
it had to set up a very sophisticated and expansive defense. It takes a lot of
documents and witnesses to prove a huge and complicated defense. The process
played out over many years. The clock kept ticking and the bills kept running. In
this period, Subtek tried hard to find a settlement with him. It was in Subtek’s
interest to settle the matter. Subtek would gain from a settlement but a decision
by the Arbitrators could go either way. Kini had no incentive to settle the matter.
He had everything to gain and nothing to lose. Kini dug in his heels: he wanted
either an awful lot of money or the law could ‘take its own course’.
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What view were the arbitrators to take? Arbitrators may or may not want
to push for a faster process but could they deny Subtek a fair opportunity to prove
its very substantial case? In the end, it took Subtek six years to present its case.
Kini had already taken two years to present his case. Eight years after Kini asked
for arbitration, the evidence part of the process ended. Parties now prepared to
make their final arguments. It looked like the case would be decided in nine years.
Nine years is a long time in anyone’s life. You can get used to the good life.
If the party ended and Kini didn’t win big time, his revenue from selling ‘duplicate’
goods would take a hit. It was not in his interest to complete the case. As the
curtain rang down on this nine-year tango, you would have expected severe
withdrawal symptoms. Would you be surprised if at this point, Kini pulled a rabbit
out of his hat?
Kini found the rabbit he needed. When anyone files a case in court claiming
legal damages, there is a high element of speculation in it. If you have your leg
broken in a road accident, its impact will remain for a life time as you struggle to
perform job after job to a standard that your employer requires. In many ways,
your income level will bear the brunt of your disability. The law has a mechanism
to compute the future financial value such injury and damage. It’s the same with
breaches of contract. Both Kini and Subtek had computed their damages based on
this kind of legally sanctioned speculation.
But speculation was now unnecessary. In eight years, the parties, their
companies and the world of mining equipment had experienced financial successes
and failures in the real world. It was now possible to accurately predict what would
have been the result of either party honoring its contractual obligations instead of
ending up in a dispute. Why should the Arbitration Tribunal compute speculative
damages when it had a real chance to make a calculation based on real world
figures and facts? Why not let Kini supply these facts? After all, these were
‘subsequent facts’ and the law allows parties to rely on new facts and subsequent
data even after the case is filed. Kini went back to the Arbitration Tribunal. May
he be allowed to amend his case to show to the arbitrators the actual loss he had
suffered?
What do you think happened next?
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* * * * *
I can offer you some alternate scenarios.
Scenario One: the Arbitration Tribunal heard this application and rejected
it. First, it was too late to make this case. The parties had been in arbitration for
a long time and everyone had every opportunity to present their case to their
hearts’ content. It was unfair to ask for more time now. Second, when the law has
a standard way of computing the future cost of a current legal injury, what
happens the real world later becomes irrelevant. Face it, if you allow this kind of
subsequent evidence, you need to allow it every few years in perpetuity till
everyone is dead. For these reasons, the Arbitration Tribunal dismissed the
application and proceeded to decide the main arbitration claim. Since Kini could
not prove damages, it threw out his case, giving him nothing. This allowed Subtek
to settle their dispute with Kini for a modest handout and the matter ended there.
Scenario Two: the Arbitration Tribunal decided that since Kini now had fresh
facts to go on, he should be given the opportunity to prove the loss suffered by
him. It allowed the application for amendment and Kini then had the opportunity
to show his actual losses based on real world data and facts. On this basis, the
case continued.
Which one are you betting on?
Here is one of life’s great lessons. To be ahead of the curve in the legal
world, you have to be able to predict the other side’s behavior. What would your
enemy do next? If you want to understand behavior, you have to understand
incentives. Your enemy will always do what is in his or her self-interest to do. If
you can analyze incentives, you can always predict behavior. When Kini filed his
application to amend his claim, you know what his incentive was: he needed the
case to go on as long as possible so that he could keep churning out his bootleg
goods. Subtek obviously had the opposite incentive. They had never found a way
to settle they case: they were ready to have it decided and be done with it. But
then, the fate of a case is not merely between two parties. The case is fought by
rules established by the law. It’s the law that decides how the case is to proceed.
12
More often than not, the law is on the side of proliferating processes. Parties
had already spent a lifetime fighting this case. It was in the interest of parties that
the case should be decided effectively and completely. If a party says it can add
new material and complete the picture, why shouldn’t the law allow it to do so?
Allowing a party to produce new material is not the same as accepting the value
of that material. Arbitrations can measure the worth of new material only after
they have allowed its production: how can they just shut out stuff that would be
very useful to examine?
Here I must take a scenic side journey and digress into a related reality we
should not lose sight of. In any industry and in any trade, litigation isn’t simply a
contest between parties. There are other players in the game and they are front-
line fighters. What role these front-line fighters play in the fate of any litigation
can never be easily discounted. It may be in the interest of a party to end a case,
but is it in the interest of its service providers?
Looking back at my career, I can think of many examples. I can think of

several early-stage private power projects, and a few mining projects too, which
ran into trouble and sparked off litigation. For years after that, foreign companies
who had run these projects employed a law officer in India only to run this one
case. If this case was lost, the law officer would likely lose his job but equally, if
he won the case, he would become redundant and lose his job! Why would he not
want the case to continue? In any litigation, several players make a living out of
the discord. Why would anyone want the war to end?
Mercifully, this was not true in either Kini or Subtek’s case. This made no
difference. The law supported the complete settlement of the real questions of
controversy in the case. Crudely put, the law likes parties to keep beating each
other up. In culmination, the Arbitration Tribunal allowed Kini’s application. The
party was going to last another year or two!
This order allowing Kini to prove damages afresh set off another dynamic.
If every claim must bring a bigger counter claim, every amended claim must also
bring a bigger amended counter claim. If one party wants to bring fresh
subsequent facts, the other party will also find a way to do the same. That is
exactly what happened. Subtek now applied to bring new fresh facts before the
Arbitration Tribunal. This would further enlarge its own claim. The Arbitration
13
Tribunal now found itself without a choice. If it allows one party to bring fresh
facts on the record, how can it deny the other party the same opportunity? Just
as you would expect, any Arbitration Tribunal will simply throw up its hands and
‘let justice take its own course’! That’s exactly what the Arbitration Tribunal did in
this case as well. Both parties were allowed to bring new evidence.
The whole can of worms was open once more and a fresh process started.
Kini brought two experts and Subtek brought four! This process took another six
years. By now, the arbitration had run for fifteen years. A decade and a half is a
long time for business realities to reinvent themselves several times over. While
the Arbitration Tribunal dealt with an increasingly proliferating litigation record
stretching to hundreds of kilos of paperwork, Subtek established a profitable
subsidiary in India and Kini made a fortune selling fake mining equipment under
the Subtek brand. Everybody was happy.
At this point, I must take leave of this case, not least because the point has
been made. What is the point?
* * * * *
If you think about it, there are several different things we can learn about
legal wars from this case. Let’s try and serialize them.
1. The legal ‘system’ is a purpose-built ‘solution’ to provide a dispute resolution

service to its customers. It is based on certain assumptions and has a certain
philosophical position. It also has a structure, an internal logic and rules by
which it is operated. These rules do not necessarily suit the convenience of the
fee-paying customer. You have to examine how comfortably you fit into the
shoes of the person who is good at fighting legal wars.
The conclusion is inescapable: if you want to pick yourself a legal war, you
need to understand these rules and see how ‘fit for purpose’ you are to
successfully function in that environment.
2. You can start a legal war any time you like but once it starts, you will very likely
lose control over it. The Justice Machine has several service providers, who are
also stakeholders in the outcome of the legal war. All these people have
14
something to gain if the case goes one way or the other. They also have
something to gain or lose if it goes on forever. These people also have
significant power to direct the course of the case. If you want to get into a
legal war without thinking about how your case will be impacted by the
agendas of these service providers, you may find that you may soon have no
ability to determine what happens next but you will still pay the bills of these
third-party agendas.
The conclusion is inescapable: you cannot start a legal war without a plan.
3. It takes at least two parties to litigate. Both usually have different objectives.
What happens to your legal war depends as much on your objectives as it does
on the objectives of the other. Your plans will not be implementable unless you
have anticipated the objectives of your enemy and found a way to neutralize
them.
The conclusion is inescapable: you have to have a war strategy.
4. Objectives are neither immutable nor fixed: they change as conditions on the
ground evolve. Events on the actual field of battle determine what you do next.
If your priorities change, you have to change your plans.
The conclusion is inescapable. To fight a legal war, you must have a clear
sense of litigation tactics, how they are used, in what circumstances and to
what end.
All this means that you really have no business to get into a legal war unless
you have a clear sense of how the Justice Machine works and how you are going
to manage it. You must also know how far you are prepared to go to get what you
want and what price you are willing to pay to get it. After that, you also need to
know how you are going to go about getting what you want. Who is going to get
it for you? Who is doing what? What methods are you going to use to get it? What
is your overall strategy? Finally, when you do start your war, how will you deal
with the unforeseen knowns that will hit you in the face? What are the tactics you
can use in such circumstances and which ones are actually implementable?
15
Everything comes down to anticipation, and planning. But who will do this
planning for you? It could be left to the service providers but if you do that, you
have a problem. If you outsource decision making, will you get decisions that are
good for you, or will you get decisions that are good for the outsourced decision
maker?
I have written this book assuming that the fee-paying customer has some
interest in participating in the planning and execution of the service he is paying
for!
Already, I think I hear some protests. How can a layman participate in a

discussion about litigation planning and plan execution? How can he understand
the games that get played in the innards of the Justice Machine? How can he
navigate through seas he does not understand?
For inexplicable reasons, everyone and their super sexy pugs and poodles
think that normal people are not expected to understand law or lawyers. Maybe
lawyers really do come from another planet. Who else would wear a black coat in
June in Rajasthan just to go to work? Compare this with another profession:
doctors. A medical student studies for ten years before he can call himself a doctor.
Still, everyone seems to know what to do if they have a high decibel sneezing solo
or turn green at the gills. What they don’t know, their sisters-in-law will tell them.
On any given day, a million Indians call up their local chemist without a prescription
and rattle off names of all sorts of complex pharmaceutical brews and portions
they want free home delivered. This stuff could kill them, but it doesn’t kill their
confidence. Legal stuff in comparison is not a high stakes game. You could lose a
lot of money, but unless you are accused of a crime, no matter what happens, you
would likely get out of it alive.
I can feel your resistance! When lawyers need years of experience to

understand legal strategy and tactics, how am I ever going to write a simple book
that laymen will understand? Am I trying to explain Higgs Boson to Bar Bouncers?
You may say this because you think you need legal training to understand
strategies and tactics. Perhaps you think you need a technical understanding of
the law and its procedures. Perhaps you think you won’t understand what I say
because you are overwhelmed by the complex ‘language’ of the law. This I must
16
admit: we lawyers do have a great vocabulary. I mean, 500 years after it became
extinct in Europe, only lawyers, and the Church, still use Latin.
Perhaps you are confused by the way lawyers use ten words when two
would be just great. But then this is true of every specialized field. Marketing
managers don’t think, they ideate; auditors don’t correct account books, they audit
and professors don’t read PhD thesis, they review and critique them. So what’s
your problem if I give, transfer and yield unto you, irrevocably and voluntarily,
absolutely and forever to have and to hold at your sole discretion, this knowledge,
including but not being limited to its principles, text, context and application, with
complete powers of alienation without let or hindrance from any person
whatsoever …… instead of just telling you how to win a bloody case?
Once you get past our arcane language, riding the Justice Machine is not
difficult. To drive a car, you don’t need to know how a car works. You just need
to know which button, wheel and paddle does what and how they must be used
individually or together to do what you want the car to do. It’s the same with
computers. You press a button and the Word program explodes onto your screen,
voila! It’s the same with the legal world. All you need is a simple set of rules; rules
that tell you in simple terms when, where, why and how to go about winning. The
central conceit of this book is that legal decision, like practically all other decision,
can be taken by following simple rules, rules that follow from generic first
principles. The secret is not to know the laws of the land; it is to know the rules
of the game.
The only way for me to demonstrate this is to give you a handbook of simple
rules. These rules should have widest application to practically any area of life
where you need to use the law to get what you want. I see this book as a bridge,
a kind of hitchhiker’s guide to the world of legal strategy and tactics. By employing
these simple rules, I hope that you will be capable of taking decisions about all the
guys you need to beat up in your personal and professional life. These rules will
help you make decisions about corporate strategy in any environment of actual or
potential legal conflict. In business, you could use them to more efficiently manage
your counter parties: people you make contracts with, with your customers and
suppliers, with Government and anyone else ‘out there’. Within your internal
business environment, you could use these rules to deal with employees,
employers, colleagues and friends in the system. Out there in the larger
17
environment, you could use these rules to formulate action plans for ‘fourth party’
relationships such as consumer groups and green activists. The main thing for me
is to make sure that I explain how a rule works by giving you an example. So when
I suggest a rule, I will demonstrate it with a case study. I will give you the facts,
the strategic options, the course adopted and the result achieved.
I will caution you about one key point though. This book is not primarily
about fighting court cases. It is true that I am relying on court case histories to
make my point. There is good reason for this. Any legal strategy, or tactic, is only
as good as what comes out of it in court. But at the same time, we need to bear
in mind that courts are the last resort in any personal or business conflict. Most of
the fighting gets done before anyone reaches a court. This whole book is making
the argument that you can win a legal war without going to court. This book is
also arguing that you can resolve business conflict through pro-active action at the
level of the Board of Directors, at Shareholders Meetings, in the market, in the
corridors of government, through strategic position play and through the tactical
conduct of legal strategy. It is true that the final test of any legal strategy is in a
court but the best strategy is really one where the war is won without having to
go to court. In fact, I have argued in this book that what happens to a case in
court is decided long before the case reaches a court.
With this objective firmly in view, let’s move on and first look at the secret
life of the Justice Machine and how it actually operates. You may want to brace up
because before too long, you are going to have to painfully exorcise some ghosts
that have long infested your mind!
* * * * *
18
Chapter A2
The True Nature of the Justice Machine
Do human beings have some kind of built-in justice gene? Even the worst
gangster movies ride on the assumption that thieves have principles, a sense of right
and wrong. In our everyday world, this translates into an app we carry in our heads
constantly monitoring the behaviour of those around us on some justice algorithm. No
one seems to acknowledge that the untested assumption underlying this app is the
idea that if someone does someone wrong, society can and should provide us with a
mechanism to right the wrong and ‘get justice’.
There are of course as many justice dispensing institutions as there are

societies. Those with a love of Bollywood period films are familiar with the bell hanging
below the balcony of Mughal kings. If you tugged at this rope, the emperor would
emerge like a puppet in an animated swiss cuckoo clock and decide the matter. In the
years since the Mughal Empire, India has evolved a modern ‘judicial system’ on the
lines of its English parents. I can this the Justice Machine. I do so because there is
more to the Justice Machine than the courts. First, justice is now dispensed by courts,
tribunals, regulators and arbitrators. Together, they try and cover the range of legal
injuries which citizens face. Second, the relationship between these justice dispensing
institutions and their supporting service providers is symbiotic and interdependent.
These service providers include judges, lawyers, the police, court clerks, court officials,
valuation experts, liquidators, insolvency professionals et al. They work together, and
this generates incentives and motivations far greater and wider than would be the
case if courts were indeed just plain old ivory towers. This complex throbbing living
organism is what I call the Justice Machine.
Why have I chosen to call it the Justice Machine? This is, to my mind,
appropriate usage because the Justice Machine a mechanical construct, designed to
perform a specific job using many moving parts, more or less oblivious to the ‘value’
of the result it actually achieves. In using the word ‘justice’, I must admit I am being
ironic. I believe that whatever else the courts do or do not achieve, the courts do not
set out to be just. Most of the time, it does not even make such a claim. At best, what
the Justice Machine sets out to do is enforce the rule of law. This is challenging
enough. It’s unfair to compel it to engage in metaphysical pursuits.
This needs to be understood in its proper context. It is critical we understand

that law and justice are not the same thing. This is almost never true for people who
end up in a court case. Given the hard work it takes to go there, you won’t dream of
going to a court without this huge perception of wrong, injury, and injustice. If you
19
should find yourself in court one day, fighting a court case, the environment around
you would most likely be clouded with a sense of outrage and moral righteousness.
You would never admit that you just may be wrong. Even worse, you would probably
think the courts are here to right every wrong. Not just that, you would also probably
think you are a better judge of what is right and wrong than the court. You would be
upset if the court did not totally agree with you. In fact, every party in court on both
sides of every case thinks exactly as you do. The result is a very confusing mix of
angry clients, bewildered witnesses, cynical lawyer and exasperated judges. Justice is
not what always gets done at the end of the day.
Now, I am not suggesting that justice never gets done. I am definitely not
suggesting that judges and lawyers are not trying to provide justice. Sometimes they
succeed and that is good. But just as often, they can’t succeed. I am not saying they
don’t, or don’t want to. I am saying they can’t. There are many reasons why they
can’t. First, they can’t because laws are not just as I have said already. Let me try
and illustrate my meaning.
On the eve of India’s independence, New Delhi was still a sleepy town with a
distinctly laid-back feel of a backwater. Yes, there was action in the walled city but
the law-and-order environment had been largely stable for a hundred years. Residents
went about their business oblivious to tectonic shifts taking place in the world around
them, oblivious that is till the refugees started pouring in from the north and west.
Where were these refugees to be housed? The walled city was crowded already and
New Delhi was built to the colonial fantasies of our imperial masters. Overcrowding
was inevitable and rentals hit the roof. Landlords split their houses, renting them out
a room at a time.
Thus far, the law on the subject of tenancy was simple. You pay the rent you
have agreed to pay and you live there for as long as you have agreed to live and then
you ship out. That’s the way it was and that’s the way it remained till 1958. Then the
politicians decided that tenants had more votes than landlords. Why not cherry pick
who India should be just to? We enacted the Delhi Rent Control Act. By this law,
landlords could let them in but couldn’t get them out. The landlords could let them in
at any price, but the tenants then had the ‘right’ to go to a court and the court would
decide what the tenant should pay for the room. Sometimes, it turned out to be only
a fraction of what they had agreed to pay. The landlord still had to keep the property
in fine fettle and if he did not, the tenant could do it himself and adjust it against the
rent. Sometimes, the cost of maintaining the property was higher than the rent the
tenant paid. Try as one might, there is no construct by which it is possible to argue
that there is justice in robbing one citizen and paying another. Still the landlords who
20
got to court and challenged the law were read some lecture about social engineering
and protection of the weak. Where was the justice in this? But it was legal.
Meanwhile, a different dynamic played out in ‘rural areas’ but with exactly the
same result. Historically, rural land in north India was held by large zamindars who
had it tilled by poor tenants and left them a share of the grain in payment. In turn,
the landlords collected the lion’s share and paid a part of what they earned as revenue
to the government. This system did not do anything for the tenant but it was an
efficient way to collect tax! When India became independent, rural tenants got a vote
each. There were a lot more tenants than there were zamindars. This new-fangled
bleeding-heart government didn’t want to tax agriculture either. It made sense for the
democratic government of the day to curry favour with the tenant and abandon the
landlords. New laws were now created placing a low ceiling on land holding and
redistributing the ‘surplus’ land to landless peasants. The zamindars who worked up
the courage to go to court were lectured on the dawn of a new India and the need
for them to restrain their acquisitive instincts. Once again, the law had cherry picked
who it would be fair to. More significantly, and most fortuitously, the law cherry picked
the self-interest of those who had the power to put the law makers back in the saddle
the next time the general elections came around. Where was the justice for the
zamindars in any of this? But it was legal.
As time went by, the cities started to grow and soon edged up to the villages.
Demand for housing kept rising all the time, and in the meanwhile, the cost of
democracy kept rising alongside. If you wanted to win an election, you had to spend
a lot of money getting elected. This is when voters realised that their ‘adult franchise’
was ‘fungible’ meaning you could convert votes to cash. Where were the politicians to
find all this cash? The builders were happy to oblige. Give us the land, they told the
politicians, and we will plough the profits back into your election campaigns. This is
how it went. The local government issued a notice under the land acquisition law
acquiring an entire village for a small price and sent in the police to take possession
of it. Taking possession of course means kicking everyone out of their farms. The
government then handed over these lands to builders and collected their side deal
election funding corpus. In turn, the builders constructed houses on the land and sold
the land to urban dwellers for a hundred times the price. Everyone but the peasants
were happy. When and if the peasants managed to get to a court, it told them that
“due process” had been followed and the land was required for the ‘public purpose’ of
generating housing. So the new rich urban guys got their fancy flats in Dwarka, the
politicians got paid off and the peasants ended up in slums. Where was the justice in
this? But it was totally legal.
21
There is more to the story yet! In the mid-eighties, the tides had begun to turn
again. Rent control laws were threatening the real estate industry. Landlords didn’t
want to rent their houses because they didn’t think they would get them back at the
end of the rental period. Indeed, a lot of landlords lived as tenants in other people’s
houses while keeping their own houses vacant! People who didn’t need a house to live
in wouldn’t buy one because they couldn’t rent it and make money out of it. Those
who couldn’t afford to buy a house had nowhere to live because no one wanted to
rent out a house. Builders were unhappy because the industry faced low demand.
Everyone but tenants who had already occupied a rented house was miserable. It was
time to redefine what justice meant!
Starting in 1988 or thereabouts, politicians progressively amended rent control

laws. They killed these laws using two strategies. First they decided that tenants who
paid rent above a certain amount would not be protected by these Rent Control Laws.
Second, they allowed rents to rise slowly so that eventually, everyone was out of the
rent control net. What did this mean? Richer landlords who had bigger properties and
collected higher rents could chuck out their tenants quicker while poorer landlords
who had rented small properties with smaller rents could not. Think about this. In
Delhi, if the tenant paid rent above Rs. 3500 per month, the courts protected the
landlord. If the tenant paid Rs. 3499 per month, it threw the landlord under the bus.
How can there be two standards of justice with a line so arbitrary? Tenants who went
to court to challenge these amendments were delivered a lecture about coveting the
property of another and the changing needs of society. Where was the justice in this?
But it was legal.
Maybe we should stop now and ask instead what we think law-making is all
about. It is clear already that laws inevitably rob one guy for no good reason and
reward another. The question is: how does the law decide who it’s going to rob and
who it’s going to reward? The answer is embedded in the examples we have looked
at. These decisions are taken by a couple of hundred elected law makers. More often
than not, they are paid by interested parties to make these laws. Is this corruption?
That’s a big topic embedded with all kinds of ideological biases. For now, I will only
say this: unless you are personally willing to pay taxes used to fund every candidate
to every election that is ever held in India, someone with an interest in one or another
candidate winning will have to pay. This guy is going to pay because there is
something in it for him. Now if that is corruption, then we need to redefine our
vocabulary. Should we apply a term like corruption to all economic activity?
Which brings us to the next question: if a few hundred guys are going to decide
what laws we are going to have, how does India pick who these 500 guys will be? To
22
understand this, we need to recognise that man is ultimately a political animal, and in
the use of the expression ‘political’, we speak of the acquisition, control and exercise
of power over our fellow men. Societies are structured around those who exercise the
most power. We call these dominant guys political elites but it’s really groups of
networked individuals who come together and make a joint bid for power using
democratic votes as their weapon of choice. If they win, they form a government and
that gives them the power they seek.
How is this power exercised? In India, it is first exercised by seizing publicly

owned common assets and converting them into private wealth. Second, this power
is also exercised by selling new laws and ‘public policy’ to profit seeking business
interests for a price. Finally, it is exercised by creating new laws and then using these
laws to screw some people out of their money. Once they get their hands on the
money, they either transfer it to people they favour or just blow it up as public
expenditure. A good example of this would be a foreign trip for a minister, his family
and a couple dozen hangers-on. The conclusion is inescapable: laws created by
societies are intended primarily to service the paramount interest of those who
dominate those societies. It’s the job of the Justice Machine to dispense these laws.
What choice does the Justice Machine have? To be fair, it’s possible that these elites
may have more than a streak of do goody humanism in them. When this happens,
they support all sorts of initiatives to work towards a better society. When these elites
do not have more than a streak of do goody humanism in them, everyone else is
profoundly pulverised to powder.
Everyone is profoundly pulverised because in any democratic society, the fall

guys basically have two choices: take to the streets in protest or go to the Justice
Machine for help. If the fall guy protests on the street, he faces a lathi charge, arrest,
FIRs, a jail term and perhaps bullets. Shorn of the bullshit, his protest is received with
violence which encourages him to give up and go home. If he goes to court, he is told
the ‘law’ is against him. A judge may see the injustice, but he has his own challenges.
What can a judge do? He can hold that the law is illegal, but he can only do that if
there is another ‘higher’ law in favour of the fall guy. Frequently, this ‘higher’ law is
the Constitution of India. Think of something like Fundamental Rights. If the
Constitution of India says we will take this man’s property, what’s to stop the
politicians setting up a law taking his money and pants too? The Constitution would
say you can have all the rest but you can’t have his pants because human dignity is a
fundamental right. It is on the basis of that fundamental right that the man gets to
keep his modesty. There aren’t that many fundamental rights any more. Where even
that is not an option, then it’s game over for the fall guy and there is nothing the
23
Justice Machine can do. This is the harsh reality that every cog in the Justice Machine
faces, whatever its personal feelings on any subject.
That is not how it is positioned though. Going back to the examples we have
examined above, in most every judgment in all these 70 years since Independence on
land ceiling, land acquisition, rent control or abolition of rent control, the overwhelming
tone is righteous and rhetorical. Everyone always knew that at each step, the law
makers were following their self-interest. Yet, no court ever said “look this law may
be a crime against one section of humanity and we understand why the politicians are
playing the voting numbers game but we must enforce it because that is what courts
are here to mainly do”. In every case, lofty language and elevated moral posturing
informed the decision of the Justice Machine. This is denial wrapped in moral oratory.
However, neither moral posturing nor moral outrage at moral posturing leaves
us any wiser. It’s the bottom line we must recognise so let us summarise it one more
time. Most every law favours one guy and penalises another. How we define justice
depends on whose trumpet we blow. The Justice Machine enforces unjust laws all the
time. Even if we forget about who is favoured by what law and get back to the basics,
we still have to admit that the Justice Machine has been established to enforce the
law that has been enacted. So you can get a judge to deliver a legally correct decision
but unless the law is just, you can’t get him to deliver a just decision. The Judge runs
a court of law; he doesn’t preside over a court of justice.
It’s important to understand this. The Justice Machine has been created to
enforce the law. Laws flow from agendas of dominant groups of people: society’s
elites. These elites create laws in their self-interest. Such laws can’t be fair to
everyone, nor are they intended to be. If you are a judge, you work for an institution.
You may not agree with the laws that the institution is expected to enforce but you
can either do what the institution is set up to do or you can walk away. Either way,
you can’t subvert that institution and do whatever you think is just. It does not matter
if what you do is just or not. If what you do is not legal, you can’t do it. When the law
is unjust, and many laws are, where is the question of anyone approaching the Justice
Machine to get justice?
* * * *
There are several other reasons why laws really struggle to be on the right side
of justice, however you define it. The single biggest problem is process. No matter
how you tailor legal procedures for Indian conditions, practical realities make the law
onerous and expensive. There are many reasons for this, but the biggest is probably
24
cultural. I will illustrate. Take for instance the Indian love for consultation. We are not
an individualistic society. Instead, we are a consultative minded community of people.
It’s rare to simply pick a beau, set a date, and get married. There are parents to be
consulted, not just on the person to marry, but also on the procedures by which one
is to be married. The date must suit a host of ‘key functionaries’ including the family
soothsayer. This culture of consultation continues into every sphere of public life,
including justice.
Every case has many stake holders – contending parties, judges, lawyers,
employees, enforcing authorities and regulators too – and all need to be consulted as
is appropriate. What we get is long hearings in court and then some. Woe begets the
judge who decides a case without providing opportunity to everyone and his favourite
pet rhesus monkey to say whatever rubbish he wants for as long as he wants till he
runs out of things to say. It all goes on endlessly. In our attempt to be fair, we are so
fair to the guy who is wrong that the guy who is right gets his butt wiped with
sandpaper. The procedure makes sure that so much is said that by the time it is all
said, no one knows what anyone started out to say. And many of those who did the
saying, listening or suffering are dead, long gone senile or bankrupt. Justice delayed
by decades is anything but, and India excels at that. We need to accept this if we are
to use the Justice Machine to get what we want.
That said, it doesn’t matter if it’s ridiculous. If you go to court thinking that this
is where you are going to get your justice, you had just better accept that this is your
tool of choice and you are going to have to live with the limitations of that tool. You
can’t be buying a bike and then be worrying about it raining all the time. A hammer
does not run your arithmetical calculations for you. A computer does not fix a nail into
a wall for you. The Justice Machine is what it is, so you have to deal with what is on
your plate.
* * * * *
So why do we mouth platitudes about justice? No doubt, larger forces are at

play. Perhaps we need to believe that we live in a sane society where there is hope.
Life would be unbearable if we did not have this hope. I could argue that we fool
ourselves about justice like we do on about every other ugly reality crawling up our
spine because we cannot deal with the reality of it. This is true for everyone.
It may also have to do with sugar coating bitter pills in order to swallow. A
soldier will not accept that he is fundamentally in the business of inflicting violent
death, whatever else he achieves in the bargain. A businessman will not accept that
25
he is basically in the business of selling the cheapest good at the highest price to the
most gullible customer in order to make the most money, whatever value gets
delivered in the bargain. A lawyer will not fundamentally accept that he is a hired killer
(so to speak) of the opponent’s case, whatever justice he may possibly achieve in the
bargain. We need to fool ourselves, because we need to believe that what we do is
very elevated and principled and high thinking. The problem is that we then go on
and buy the bullshit we make up to make ourselves look better to ourselves and
everyone else around us. But if you decide to knock on the doors of the Justice
Machine on a real or imaginary grievance, there are a whole bunch of bitter realities
you have to deal with. The upshot of all this is that if you decide to use the Justice
Machine to fix your problem, you are going to have to see both the Justice Machine
and your legal problem in the same way that the law and lawyers see it. Only then
will you be able to evaluate your options and decide how to go forward.
This is the heart of the matter. The Justice Machine is what it is: it is not what
you wish it were, or want it to be. Looking back on my years as a lawyer, I can see
now why I struggled to understand the nature of every legal situation and every legal
problem. I can see now that I couldn’t understand the problems because I did not
understand the true nature of the Justice Machine, or how it looked at legal issues. As
I eventually learnt, finding a solution to a problem is never a problem: the real problem
is to understand the true nature of the problem and the environment around the tools
I wanted to use to get it fixed.
I can now see that I had an inappropriate mental ‘attitude’. Maybe I shouldn’t
blame myself. Maybe this is how the mind works. When we see something strange,
we imagine it’s only a small variation of something else we know well. Let’s face it:
when you get past a certain age, you don’t really have an open mind anymore. You
get heavily into pattern recognition. If it stands four feet tall, has four legs and a tail,
it must be a pony even though it’s actually an oversized great Dane. You don’t stop
and say, okay, let me get the facts and assess them independent of my
preconceptions. Life is too short for that. You glance at the thing, you register non-
threatening animal, and you move on. There’s evolutionary benefit in this. If we were
to stop and scratch our chins about everything we encounter on the average day, we
wouldn’t get much done, would we? We use rules of thumb. Most times we come up
trumps. Occasionally, we really royally blow it. That’s when we get clubbed on the
head by a Neanderthal. That is when we chuck the bullshit out of our head and see
the thing for what it is. With the legal world, everyone not already trained in it gets
hit by that Neanderthal club!
26
The legal world is just not one where you use rules of thumb. It most certainly
is not one where you use rules of TV soaps, or ‘Aap Ki Adalats’ or any of that infantile
“order, order” hammer swinging halfwit-in-a-wig who shows up from time to time in
Bollywood movies. This is a world with its own rules. These rules are sharp and they
are clear but they are unique. This is why it takes many years to train a lawyer to
successfully navigate through this world. The trick is to get a head start on this
learning curve by dispensing with preconceived thinking. I recall once an interview I
read of the cricketer Lala Amarnath. Asked about the secret of his success, he said
that he lived his life without baggage. “In life”, he said “I have lived each day on its
merit and in cricket”, he added, “I have played each ball on its merit”.
If you want to seek the help of the Justice Machine, you have to figure out how
to play the legal ball on its merit! If you figure it out right, the Justice Machine is a
great place to achieve your objectives. If you don’t figure it out, three nights in a tub
with full strength sulphuric acid would be a gentle painless death in comparison. So I
am going to repeat myself yet again. The Justice Machine is here to enforce the law.
The system is very imperfect. It is slow and a lot of the players in the Justice Machine
‘work’ the system to their own personal benefit. The best you can hope for is the
enforcement of the law. The guy you are trying to screw over is trying to screw you
right back. The system encourages both parties to have a hell of a screw ball party.
This is perfectly legal. You may end up having the screw of your life but equally, you
may end up having an experience akin to being a football amidst a bunch of seriously
deranged hostile aggressive blood thirsty death row inmates. You shouldn’t be playing
the game unless you have a very good sense of where the game is at.
So where is the game at? The game is about enforcing the law. How do you
judge whether you will be able to enforce the law? To begin with, you have to know
what is the law is. You can’t go to court because you are pissed off. You go to court
because you looked at the law, and you feel like you have a good case and every
expert you talked to thinks you can win. You can’t do any of this if you aren’t willing
to spend some time figuring out the law and what it can do to your poor victim to be.
* * * * *
Now, the law has three dimensions to it. First and foremost, there is substantive
law. Substantive comes from substance meaning the meat of the law. This is the law
which says that you have a right to the land you purchased. If you don’t have a legal
right to the land you purchased because the guy who sold it to you wasn’t the owner,
your best bet may be to get yourself a good bottle of whisky, go home and drown in
it. I am saying that having the law on your side is necessary before you think of
27
cranking up the Justice Machine. We call these things ‘conditions precedent’. While on
the topic, let me add that the reverse is not true. If the law is not on your side, the
Justice Machine is still a viable option for you just so long as you are not the one who
cranks it up. That’s another way of saying that the Justice Machine is very sympathetic
to the defending side even as it discriminates against the victim of the claimed legal
injury. This is a very long topic and I will come back to it throughout this book.
Second, there is the procedural law. ‘Procedural’ comes from procedure

meaning the steps you take to enforce the law. This is the law which says that if
someone grabbed your land, you have to file this sort of petition which reads like this,
in that court or tribunal and the case will be decided in this way. If the procedure is
very elaborate or complicated or no one knows what it is, you wouldn’t want to crank
up the Justice Machine because you run the real risk of being lost in the labyrinth of
procedural confusion. This is especially important because as I said above, procedure
is by definition unfair to the guy who activates the Justice Machine. We will return to
this topic throughout this book.
Finally, there is the strategic and tactical side of the law. This is the knowledge
which tells you which button to press where and which bullet to fire on whom! You
won’t find it in a book and no one teaches it. It comes from experience and it’s the
hardest part to grasp. When you go to a very smart lawyer for advice, this is what you
go for. You don’t want this smart lawyer to pick up a legal book and read some part
of it and tell you what it means. You want him to tell you what to do, and how to do
it. You want him to tell you how to go about using the law and the procedure to win.
As I sit down to write this book, it is perfectly clear to me that I am not going
to write about substantive law. I have an LLB degree and 42 years so far in legal
practice, half of that as the Managing Partner of a law firm. Still, I understand only a
small number of laws! Besides, can anyone write one slim volume on the law when
most lawyers store thousands of hefty law books on their chamber walls? I am also
not talking about procedural law. There is a lot less procedural law than there is
substantive law but it still fills many books. Besides, procedural law has a lot of
‘localisation’ meaning it changes a lot from court to court and from jurisdiction to
jurisdiction. This book is about the third dimension of the law: the strategy and tactics
used in courts to win cases! This book tells you what to do when you have a legal
problem and how to go about fixing it. It reduces the business of successfully beating
up your enemy into a series of rules. Follow these rules and more likely than not, you
will come up trumps. It’s a handbook for winning and I assure you, it is the only book
of its type in India. And then, maybe out of India too.
28
* * * * *
This book is therefore split into four parts thus:
 First, when you realize you may find yourself in a legal war, you must ask
yourself if you should be fighting. Part B deals with rules that help you decide
if you should jump into the fight. It’s about Deciding to Fight.
 Second, if you decide that you do want to go ahead and fight, you need to
prepare for the fight. In Part C, I cover the stuff you need to do to make sure
you have the capacity to fight a legal war. It’s about Preparing for Conflict.
 Third, once the fight has begun, you must prepare and implement your long-
term legal strategy. How are you going to beat your enemy? Part D deals with
Conflict Strategy: the larger game plan on the basis of which you fight your
good fight by doing bad things to your enemy.
 Finally, we deal with the final aspect of legal strategy: the tactics you can use
‘on the street’, in the moment, when you are right in the thick of it. This is what
turns the tide at the immediate local level. Part E is about Conflict Tactics.
* * * * *
This book is an expansion of experience gained over 40 years of fighting legal

wars. It relies primarily on my experience of fighting legal wars in India on behalf of
large global corporations but the lessons learnt may well have wider validity. I would
think that many of the lessons here apply to life generally, and not merely to the legal
world.
Although the rules themselves apply more or less universally, there are a variety
of ways I could have mapped them. Ultimately, maps tell you more about the mind of
the map maker than the place he is depicting. You know what I mean when you see
a medieval map saying “Here be Dragons”. I see legal conflict as war without guns
and so I draw battle analogies as I share my thoughts. I have used these rules more
than a few times.
Naturally, I continue to remain bound to my confidentiality obligations. I would

therefore take the liberty of referring my readers to the Disclaimer contained on the
second page, of the book
29
-x-
30
Chapter A3
Sex and the Justice Machine
No matter how young or old or rich or poor you are, there is a universal
category of ‘Indian’ experience you may never stop having till the day you die.
Test this. You are a young executive and have just entered the job market.
From your first salary cheque, you reward yourself with the latest snazziest mobile
phone. It’s pretty! Two weeks later, it goes on the blink. You go back to the shop and
ask for a replacement. The shopkeeper declines. He directs you to the company’s
service centre. You protest. But there is a warranty! Of course, there is a warranty,
the shopkeeper confirms, but it’s for repair or replacement! The company would like
to know if this was a defective phone or you just misused it. Misused it, you ask? Sure,
he shrugs, like flush it down the toilet. It strikes you then. You never did read the
warranty fine print at the point of purchase!
But that is not what makes you angry. You are angry because you think you
purchased a communication solution while the shopkeeper thinks he sold you a
commodity, like a sack of onions. He doesn’t care what happens to the onions after
he gets his fingers on your cash. It may anger you more if you realised that the fine
print has a loophole. What stops the seller from claiming you misused the phone when
you know you didn’t? The more you think about the fine print, the more you come to
see that the seller can simply throw you under the bus, even though he might not
want to necessarily throw you under the bus only for the sake of his reputation. It
gets worse if the seller is a faceless company. If Covid-19 should hit or the National
Company Law Tribunal should issue notice to the seller on a bankruptcy action, the
seller can throw all its customers under the bus. This is then that you come to realise
that your seller is one person before the cash changes hands and another after it does.
I could multiply these examples endlessly. When my daughter entered college,

I bought her a shiny red second hand car from a well-known company specialising in
‘reconditioned cars’. The promoter of this company is a very charismatic visionary
corporate automobile Czar. The image of the man transformed (in my mind) into brand
equity of the company. One month after the purchase, the clutch began to give way.
I took it back to them. But this is a ‘wearing part’, the company protested. I was
bewildered: which part of the expression “reconditioned cars” is hard to understand?
They dug in their heels. How long clutches last depend on how you use them and
besides everyone knows they will wear out. It seems I hadn’t read the fine print. I
was pretty flummoxed: which part of a car does not eventually wear out? What is this
distinction about wearing part and non-wearing part anyway and why should I care?
31
But no, the money was in their pocket, the damaged baby was mine and that was
that. Despite thirty years of cynical law practice at the time, I had been had.
The real question is this: if you have been had in India, what do you do about
it? Nine people out of ten believe this is what law courts are for. Nine out of those ten
wouldn’t have the time or energy to take this to court. But of the very few who do,
the end results are not what they expect. What they really experience is a very slow
kind of choking to death in the belly of the Justice Machine as they are painfully
smothered, then digested. This is when they come to realise that our Justice Machine
works to a unique desi system of law which I call the ‘Buffalo School of Jurisprudence’!
* * * * *
Before I go there, allow me to formally state a disclaimer. I first explained this

principle in my book ‘Bullshit Quotient’ (Hachette 2012). If you have read that book,
you could skip the rest of this chapter. If you haven’t read the book, I will be rewriting
it next year and you may want to give it a go when it is re-released. Bullshit Quotient
debunks a great many beliefs we all hold dear. These are beliefs my naani called ‘nek
khayals’ . These are noble ideas commonly flaunted even if they are rubbish! Ideas
like it is hypocritical for politicians to claim they will rid India of corruption because
even they know corruption is necessary for the good health of Indian democracy.
Ideas like the absurdity of talking about corporate social responsibility when the law
is concerned only with the well-being of company shareholders to the exclusion of
everyone else. Ideas like the value of a brand is the difference between the intrinsic
‘value’ of the product and the price at which it is sold!
* * * * *
This brings us to the Buffalo School of Jurisprudence. Consider this scenario.
Thanks to your semi-rural grand-parenting, your love for dairy products is

matched only by your passion for organic, uncontaminated free-range avian food
products. It seems inevitable that you would one day buy a buffalo for your farm and
enjoy home supplied milk. In your excitement you don’t really stop to notice that your
son-of-the-soil neighbour owns a bull already. Tethered close by across the barrier of
a low wall, these horny young neighbours fall in love, pretty much as I am sure some
of my readers did in their time! And where there is love, sooner or later, there is
inevitably some steamy sex. And as a thousand Hindi movies will tell you, where there
is steamy sex without marriage, a ripple becomes a tsunami!
32
Your troubles begin when your buffalo delivers a calf in due course. In the
beginning, your neighbour only glares at you across the boundary wall, his eyes hostile
with menace. He tells you soon enough that the pretty baby calf belongs to him, or at
least one half of it does. He wants money. You are not amused. Your buffalo has been
seduced without your consent, and now he wants his bull to receive gigolo fees! The
cheek of the man!
It goes downhill from there. Loud arguments become open threats of violence
till finally, one Monday afternoon, while you are in the city, he trespasses your farm
and abducts the calf. Your caretaker calls you. You abandon your board meeting, rush
to the farm and gate crash his buffalo shed; only to find his two brothers pointing a
shotgun at you. They tell you they know their Chambal ravines. You know you are in
way over your head. What do you do now?
The local sarpanch is your first natural port of call. You expect him to be
sympathetic, not least because he has received more than his fair share of Diwali
largess from you. But he is above all a politician. His primary interest is to preserve
his own position by keeping both sides engaged without committing himself to either.
Then again, he may have blood and kinship ties with the other side and your Diwali
largess may not be quite equal to that. No matter how you see this relationship, all he
wants is to understand what he gets out of fixing this.
Once it is clear that recourse to ‘local self-government’ is not a solution, you

really have no choice but to approach the Justice Machine. This brings you to a fork
in the road. One branch of this road takes you to the civil court system. The other l is
much closer to your farm: the local police station. This route is by no means as
outlandish as you may think. A calf borne of the womb of your buffalo has been
abducted by your neighbour. It is your calf. Indeed, even if the calf was human, the
mother is the natural guardian of a Hindu child! What we have here is theft of property.
It’s the cops’ job to restore stolen goods.
That’s not how it turns out. You realise that all cops are severely overworked.
There are too few of them policing too many unruly subjects. Their default instinct is
to do nothing about this unlawfully acquired carnal knowledge. While you are regaling
them with your tale of woe in the buffalo shed, they are trying to figure out if you
have enough ‘jack’ (a.k.a leverage!) to pressure them to lose the few hours of sleep
they do get in a day. You may choose not to relent. All Indians are networked. If you
spend long hours meeting politicians and top cops, you will succeed in making the cop
lose sleep over your case. This does not mean that your problem will be resolved.
33
Once you get past the inertia, you will deal with the natural tendency of every
human being to fish in troubled waters for a little profit. You come to realise that when
you introduce a ‘neutral’ outsider to a two-sided dispute, it suddenly becomes a three-
legged grease ball stool. The cop may proposition you for some ‘chai paani kharcha’.
This may not bother you but then, what can you pay him? A calf isn’t worth that much.
It may not even matter whether you pay him or not. He will sooner or later visit your
neighbour, there will be a lot of to-and-fro, and then the cop will tell you the hard
facts of life. What you have brought to him is a title dispute. You wish for him to
decide who owns the calf, the mother or the father. That is the purview of the civil
courts. Yes, if you and your neighbour start brawling, then it’s a different matter. He
is here to keep the peace and he would have to arrest you both, book you for petty
crimes and force you to sign bonds to keep the peace, at least till he’s there.
You may consider yourself fortunate if you encounter a saintly cop in the local
‘thana’. This would be false hope. The bottom line is the cop still has to get rid of a
potentially explosive situation in his territory. You are unlikely to appreciate his
methods.
I have real life experience of this. Many years ago, I had a dispute with a former
business partner in my law firm. Neither of us were big believers in the substance of
the dispute, or particularly outraged by each other’s conduct but we both had big egos
and hated losing, as lawyers should. He started sniffing around looking to entrap me
in a case and I got wind of it. I called up my network and soon had a meeting with
the local top cop in Gurgaon. It was a sweltering July afternoon. The bemused cop
could barely suppress his chuckle.
“How much money can he accuse you of misappropriating?” he wanted to know.
“Perhaps fifteen-twenty lakhs”
“What’s your car worth”, he hooted derisively. You don’t need an advanced sense of
irony to get the point!
“What do you do in such cases”, I insisted. His sides started shaking with silent
laughter. He drew up his chest and announced in his chaste Haryanvi accent.
“You are a suit-boot vakeel”, he reminded me, “How many minutes a day do you
spend without air-conditioning?” I didn’t understand his meaning.
34
“Look vakeel sahib, it’s very ‘straight for me’. I will call you both at noon, put you in a
room without a fan and invite you to resolve your dispute. In my experience, you will
last till three-four pm!”
By now, I was smiling right back, as amused as I was relieved.
“This is the thing vakeel sahib. You all pretend to be tigers, but when it comes to
genuine physical discomfort, your nose is much longer than your tolerance. Resolving
your disputes is child’s play!”
If you contextualise this story to your own visit to the local cops, you know you
will end up in similar circumstances. This is when many of your friends will advise you
to pursue your ownership dispute in the local civil courts.
* * * * *
When and if you do go as far as the local civil courts, you find yourself in the
chamber of the local hotshot lawyer. He claims to have the inside track. He is most
encouraging. Being a little worldly wise now, you can’t shake off the feeling that he is
broadcasting his business development sales pitch. Still, you need a lawyer and you
keep talking to him. You move forward even when he tells you that he wants his fees
in advance. He then tells you that the court would also like you to pay the court fees
in advance. Even the computer guy who punches out your petition wants his fees in
advance. The photocopy guy wants his money in advance. The oath commissioner
who attests your affidavits also wants his money in advance. To file the case in court,
you have to pay the court registry some speed money to accept your case, in advance.
By the time you file anything, you are substantially cashed out.
This is only the beginning. Your case is listed before a court but the Reader of
the court wouldn’t “put it up” to the judge without a tip, in advance. The Court issues
notice to the other side returnable in 4 months time but then the guy who has to type
out the order wants a tip, in advance. The order is typed out but the guy who has to
deliver the Court Summons to your neighbour wants to be tipped, in advance. You
manage to get the Court Summons sent out, but it comes right back with the notation
that your neighbour was ‘out of station’, ‘not available’ or ‘addressee not found’. Four
months later, when the case is listed for hearing, the judge re-issues the court
summons returnable another three months later. You then start tipping everyone
again, in advance. It is already clear that you will now be funding every service
provider in the Justice Machine just to create activity, with no expectation of any
result.
35
It only goes downhill from there. Your case gets listed three or four times a
year. More often than not, at these hearings, the judge is on leave or on deputation
elsewhere for an urgent job under order of the High Court or has been transferred
and the new judge has not yet taken over. When the Judge is in court and presiding,
your lawyer is sick or busy elsewhere. When your lawyer is present, key court staff
who are in possession of court files are on strike over their salaries, sick at home or
busy elsewhere doing election duties or whatever. Your neighbour is able to avoid
appearing in court over many scheduled hearings. When he eventually runs out of
available evasion tactics and is forced to appear, he too acquires a lawyer who is
sickly. When everyone does finally show up and court records are available, there is a
bomb threat or a pandemic shuts down everything for months together. Months
become years as your case drags on. You keep funding your litigation, throwing good
money after bad and see no solution on the horizon. Meanwhile, the calf has grown
into a nice fat Buffalo and the milk tastes good, only you are not doing the drinking!
You may have law on your side, but your rural neighbour has a stick to beat you with.
This is when the old Indian homily comes back to strike you full across your
gobsmacked face. When it comes down to the love of mother earth, it's the stick that
decides who owns the buffalo.
Jiski lathi uski bhains!
And that my friends is the heart of the Indian school of Jurisprudence.
* * * * *
36
Chapter A4
The Four Noble Truths of Indian Courts
Many kids in my day dealt with ‘system architecture’ for the first time when
they asked their dad why he had purchased a small Fiat car and not a Willy’s Jeep.
Why couldn’t a Jeep drive on a road like talcum powder could glide off a baby’s
bottom? The answer was obvious enough. If you wanted to drive on rough ground,
you had to have a high suspension. When you took that kind of vehicle on to tarmac,
a lot of air passed under the vehicle making it buoyant and unstable. In addition, if
you wanted to ride the potholes, you had to stiffen the suspension. When the same
car drove on a tarred surface, this stiff suspension made a crater of every pothole with
the result that mother found it very uncomfortable to sit in. In the result, mother had
her Fiat and you lamented the loss of your macho ambition.
It’s the same with any legal system. The Justice Machine is designed to achieve
certain results and to do that, it has a certain internal logic. It’s outside the scope of
this book to explain why the Justice Machine has one system architecture but not
another but we do need to accept that it does indeed have a system architecture. By
definition, this means that it is good at doing things that are compatible with its system
architecture and vice versa. Let me illustrate my meaning.
The Justice Machine is grounded in liberalism which you may not find elsewhere
in Indian culture. By liberalism, I mean that it puts the individual, and the rights of the
individual, at the heart of the system. This critically impacts its functioning. Consider
criminal law. On the principle of it, it’s so very simple to pick up someone you suspect
of murder and beat a confession out of him. If the law allowed you to hang a man
based on his confession, you wouldn’t take more than a day to catch, try, convict and
hang a murderer. Such a system can easily deliver quick justice. The problem is you
will never achieve ‘real’ justice this way because with a little skill, you can inflict so
much pain on a suspect that he will confess to anything. Modern medicine does its bit.
Intolerable pain can lead to cardiac arrest, but you can have a doctor on standby to
inject a shot of Papaverine directly into the heart the moment the suspect goes into
cardiac distress. Then you can continue your torture procedure. The upshot is that by
law, a confession made by a criminal to a cop is of no relevance in a criminal trial. The
police have to prove their case using other evidence.
Then again, if you are to hang a man, can you begin by assuming that he is
guilty and ask him to prove he is not? How do you prove a negative? Can you
personally prove that you have never murdered anyone? How will you do that, using
what evidence? The upshot is that every accused is innocent unless otherwise proven.
37
This means that the cops have to prove every element of the crime: the fact that a
crime was committed, that the accused did it or most likely did it, that he had a motive,
and that no one else could equally have done it making him squarely guilty. This
means that the accused only has to sit back and criticise everything the cops show
the judge. In practice, if the cops need to show six connected facts but show only
five, the accused goes free.
Then again, to hang a man, what kind of evidence will you accept? Can you
hang a man because A said that B had told him that C had seen the accused at the
murder spot on the evening of the killing? Or would you demand that C come and
swear he had seen the accused there? The rule of best evidence means that you need
a lot of witnesses to prove a lot of connected facts and if they should contradict each
other, or there is a gap in the chain, the accused walks free. In all this, I make no
comment on the ability of any accused to cajole, intimidate, bribe or blackmail one or
more witness to go back on their story or tell lies in court for any one or more of a
hundred reasons.
That apart, the accused is also entitled to present an alternate sequence of

events in his defence. Since the burden is so heavy on the police, those accused of
crimes don’t usually use this right. But push comes to shove, if an accused finds
himself facing an airtight case, he can get someone to say he was 200 km away on
the evening of the crime and there is not a lot the police can do about it.
What we end up with is a criminal administration that is cumbersome, slow,

inefficient and unable to hang a high percentage of those who are accused of murder.
The system architecture determines how a criminal case is compiled, fought, proved
and concluded. Whatever be the motives and agendas of the players in the Justice
Machine, its system architecture is such that overnight justice is impossible. The
Justice Machine has no self-doubt about this. Let a hundred guilty men go scot free,
it freely admits, before one innocent man is hanged!
It follows then that if you wish to bend the Justice Machine to your purpose
and make it do what you want, you have to understand how it works and what its
capabilities are. The easy way to do this is to capture the essence of its ‘behaviour’. If
you think about it, it’s not terribly important how a car works: what matters is how it
behaves when you drive it. This behaviour can be reduced to a set of rules and these
rules can guide us in our search for a strategy for a case we want to file and win.
Indeed, I would argue that if you want to win in an Indian court, you have to adapt
your strategy and tactics to these rules of engagement. These rules of engagement
38
are in terms absolute and remain immutable: I therefore call them The Four Noble
Truths of the Justice Machine. To these we now turn.
* * * * *
Noble Truth 1:
The system architecture punishes the victim of a legal injury.
Most people in the business world have at one time or another faced a bounced
cheque. When this happens, you have two basic options. Your classic option is to
approach a civil disputes court and complain that money owned to you has not been
paid. If you choose this route, you have to pay your court fees up front and then prove
that money was owed to you, was not paid and therefore you are entitled to get a
court order. When we contextualize this to complex commercial transactions, the first
element of it - proving that money is owed to you - becomes an elaborate process. To
prove this, you need many witnesses. These witnesses swear to different elements of
the facts. The more complex the case, the more elaborate the trail of the case, the
more expensive and the more prolonged. When the amount owed is not large enough
to justify the effort, the litigation is unaffordable.
To get around this complexity, we amended our Negotiable Instruments law in

1988. This new law now allows you to sue NOT on the ground that money is owed to
you but on the ground that your debtor paid you by cheque but it was dishonoured.
Let me explain this. It does not matter what money was owed to you for what reason
etc. It’s enough that somebody needed to pay you and gave you a cheque. The cheque
is your holy cow. In this frame, the dishonour of the cheque is itself a legal injury and
all you have to do is prove that the cheque was dishonoured. That narrows the issues
considerably, making the trial short, simple and quick. Theoretically, such cases can
be decided in months, if not weeks.
But that is not how the Justice Machine deals with it. In practice, a court doesn’t
want mischievous professional blackmailing litigants to victimize innocent
businessmen by enmeshing them in criminal courts and litigation. Practically, if a
cheque you received is dishonoured, you have to go to court to ‘prima facie’ show that
you have a case at all. This means you have to make your statement giving all the
facts. You have to call a bank official to prove that a cheque was dishonoured. Given
the speed at which the Justice Machine works, this could take half a dozen hearings
spaced over a year. Once concluded, the court now sits down to hear your arguments
on why the accused should be summoned to court. It evaluates the facts, the law and
in culmination decides that yes, you are right. At this point, the court issues notice to
39
the other side. In this process, you may have invested another six months.
Successfully navigated, you are now past the ‘preliminary stage’.
Now begins the ‘issue notice’ circus. Doubtless, you will have to ‘grease’ your
way as the court summons travel from the Judges table to the stenographer to the
court reader to the court clerk who then sends it to the local police station for service
to the accused. It is more than likely that the notice will not be served at the first
opportunity. Cops are grossly overworked and can’t find the time. Even if they do
show up, the accused dodges the warrants and is ‘out of station’, ‘not available’, served
on an ‘incorrect address’ or some other slick Sudhir excuse. Summons will come back
only to be sent out again to the accompaniment of the usual lubrication and months
will pass between hearings. Eventually, you will get fed up and apply to the court for
the issue of bailable warrants.
For those who don’t know, bailable warrants are coercive, meaning that once
they are issued, the accused has to go to the local police station and sign a bond
promising that he will appear in court on the next date of hearing. If he fails to do
that, he gets arrested. Chances are pretty good your debtor will sign the bond. He has
the ability to skip out and disappear right after that event but then living the life of
the fugitive for what remains of his life may not be his thing. Hopefully, he shows up
in court on the appointed day. Thus, two or more years after you first petitioned the
criminal court, the debtor will appear and the hearing of the cheque bouncing case
will now begin in earnest.
How the plot now unfolds depends on the accused. If he has a lot of money
and very little time, he will immediately settle the case and pay you. You in turn will
be so relieved at your good fortune that you will immediately drop the case and go
home. In the result, despite this fast procedure, the accused would have kept your
money for two years for free and used it to finance his business. Who needs a banker
when he has the legal system to help him use you to bankroll him for up to two years,
or more?
On the other hand, if the accused has no money but a lot of time, he will deny
that you have a case and leave you to prove it. You are now in the business of proving
the same case a second time to the magistrate, the only difference being that the
accused will now also cross examine your witnesses. Depending on the complexity of
the case, this could take several more years of delays. Whether the accused prolongs
the case this way depends on his private cost-benefit analysis. What is this litigation
costing him in terms of lawyer’s fees etc.? Is he able to use your money to finance his
business and make more money at a rate higher than his legal costs? What is the risk
40
that he will lose the case and suffer disproportionately? At each stage, he will make
his business calculations. When he finds that there is no business case left, he will
approach you for a settlement which you promptly accept because you are truly fed
up.
You can immediately see the problem that informs court processes. The Justice
Machine wants to be fair. Fair makes sense when parties are equally placed but where
they are not, fair will always favour the side that has put the counter party in jeopardy.
When a man goes to court over a bounced cheque, he has already been done in. He
is already a victim. It takes effort to go to court. In these circumstances, treating the
debtor ‘equally’ is the same as putting the perpetrator of a legal wrong at an
advantage. This obsession with equality before the law brings on some very strange
results. Let me share one example with you.
Back in June 2018 2018, we amended our cheque bouncing law to empower
courts to order debtors to pay 20% of the amount written on a bounced cheque to
the creditor within 60 days (as interim compensation) regardless of whatever story
the debtor had to explain his behaviour. As is common with Indian laws, this
amendment built enough ifs and buts into the law to make the 60-day period very
flexible. If the debtor lost the cheque bouncing case and felt compelled to appeal, the
court had the power to ask him to make a further deposit of 20%. Presumably, the
law makers felt that this up-front payment would at least finance the creditors litigation
in the same way that the other 80% helped finance the debtor’s litigation!
In practice, this could never work. Over the medium term, State Bank of India
charges about 16% on a clean overdraft while most courts award 7 to 12% interest
on judgements they hand out to creditors. With that kind of spread, there is no
business case to ever pay a creditor. With some adroit handling, any sharp
businessman can finance his entire business on bounced cheques and unpaid debts.
Forcing the debtor to pay 20% does not change the essential arithmetic. Besides,
fighting a battle over 20% has two main fall outs. First, the whole case is delayed as
the creditor tries to persuade the court to let him have his 20%. Getting this kind of
order passed takes several dates of hearing and wastes time. What if the magistrate
doesn’t give you your 20%? You now have to appeal the order and that could take
some years more to decide.
That’s not the only problem. Magisterial courts are clogged. You don’t get a
case hearing more than a couple of times a year. Time periods specified by law are
meaningless when judges have no time. If you are frustrated by these delays, you
may vent your rage by filing an appeal against the delay. For sure, the appeal court
41
would be sympathetic. But what will the appeal court do then? Very likely, the appeal
court will order the magistrate to decide your case quickly. It will then send you back
to the magistrate’s court. Now you have a bigger problem. You lost time in the appeal
court and now you have a magistrate who is seriously upset. The magistrate is only
human. He vents his frustration too. What’s to stop him from deciding your case in
ways you may not like wherever there is room for judicial discretion? I can quote you
dozens of cases where the Supreme Court has directed a High Court to decide a case
within a timeline only for the litigant to find that the High Court didn’t really pay much
attention to the direction!
This brings us to problem no 2. The law always gives wide discretionary power
to the Judges. This is as it should be. The law is a human institution designed to be
administered to people and there are so many varied circumstances in life that one
size can never fit all. That said, judicial discretion also means that a judge’s emotions,
relationships, obligations and ideological preferences become central to the result you
get. Very often, it becomes a case of getting a favoured lawyer to appear before him
and get this discretionary order. Favoured lawyer means premium fees. This means
that young and cheaper lawyers who handle the bulk of cheque bouncing cases in the
country are not going to cut it anymore. How much of the 20 percent will survive to
arrive in your hands after you have paid the celebrity counsel?
It seems to me that we have the tools to fix our cheque bouncing laws but not
the correct mental attitude to do it. We need to change our priorities. The law should
stop trying to balance the scales between debtor and creditor, giving both an equal
chance to win the judicial match! The law should burden the debtor and put him on
the back foot till he has discharged his debt to the creditor. If a cheque bounces, it’s
not the creditor who should be trying to get the debtor into jail: it should be the debtor
begging a court to keep him out of jail without paying the money. The law needs
simply say that if a cheque bounces, the debtor goes to jail unless a magistrate
intervenes for specified legal reasons. This intervention has to be temporary and
renewed for good legal reasons for another temporary period. Given the risks, it would
make perfect sense for the debtor will find a way to honour his cheques rather than
run around from court-to-court week after week trying to keep himself from being
sent to jail.
To me, this is a perfectly rational law to make. It’s true that people in deep
financial trouble will end up in jail, as they do in Dubai, but then parties make decisions
in their business wisdom, right or wrong. If they are wrong, there is no reason to allow
that party to shift the business risk to a third party. There is no rational reason why
courts should be allowed to insert themselves into the distribution of business risk and
42
protect one party or another from its bad commercial call. If I miscalculate my cash
flow, I must find a way to pay for my own errors. Here is the main thing to remember:
a man can give money without security to his debtor and that’s his choice. If he
chooses to give money believing that the cheque he receives in return is a form of
security, it is for the debtor to keep his word or go to jail for it. It’s not the law’s job
to help the debtor and victimize the creditor. In any case, it is the debtor’s job to
ensure that he has the money before he writes cheques for his creditors. Why should
the law be the one to start prescribing the morning-after pill?
I do not discount the possibility that the cheque bounced because the computer
program malfunctioned or worse, a sophisticated fraudster fabricated a cheque and is
now blackmailing me when I actually owe him nothing. Worse things happen in the
world. They don’t happen every day. If a debtor shows that he is the victim of fraud,
protect him by all means. But then, how much protection do debtors need based on
hypothetical situations? In the end, it’s a fake cheque and the blackmailer will very
likely find that he ends up in trouble. Why should the law assume that every creditor
is a blackmailer till he proves he is not? It’s ridiculous. And yet, the law offers a remedy
which in effect makes a criminal of the victim of a crime.
Perhaps a day will come when the law redraws its priorities. Till it does, we
need to internalize this noble truth and mould our strategies to take in its impact. We
need to be aware that the system architecture of the Justice Machine is such that if
you are a victim of a legal wrong, the Justice Machine will make you suffer for it.
The solution is of course obvious. This will be explored in the next chapter.
* * * * *
Noble Truth 2:
The Justice Machine is designed for the producer, not the consumer.
In discussing this noble truth, we must recognize the essential difference

between fact and narrative. It is different between ‘what it is’ and ‘what it means’.
This has been the subject of intense study in recent decades. Research has combined
philosophy, cognitive science and neurobiology to show how narratives actually
change how the brain processes facts. This research shows that our brain can take
the same facts and understand them differently depending on the narrative in which
these facts are packaged. At the cutting edge of this research, brain scans show us
precisely what features of these narratives interrupt or facilitate narrative
comprehension. More significantly, research has uncovered ‘structural features’, not
43
just content, which impacts narrative influence. This has great relevance to (for
instance) recruitment of committed cadres to terrorist movements.
To be clear, ‘facts’ themselves are not narratives. It is the way in which ‘facts’
are narrated that mobilizes action. Consider the assertion ‘Hinduism is under attack’.
This is just an idea. It becomes a narrative when motives and meanings are assigned
to all the elements of this idea. Thus, Hinduism is under attack acquires meaning when
it comes packaged within Aurengzeb’s repressive laws, the Mughal history of patricide
and fratricide, high Muslim reproduction rates in modern India, and whatever else
besides. It is narratives that makes it possible to believe in Islamic ‘Love Jihad’. In a
vacuum, facts are merely facts. Narratives give meaning to facts based on an idea.
Here’s the thing. Ideas or facts are either true or they are not. Narratives are
not like that. Narratives are either successful or they are not. This is why it is entirely
irrelevant whether Hinduism is indeed under attack. If it works during election time,
mobilizing voters and influencing their behaviour, that more than serves the purpose
of the narrative. It follows that an idea can be entirely illogical, even daft, but it can
still influence behaviour if it is located within a powerful narrative.
This does not mean that a narrative can be entirely outlandish. A narrative does
not need to be truthful, but it does need to be believable. This can be achieved in two
ways: it is either packaged in half-truths in a way that it is difficult to deny, or it is
narrated by a credible source (such as for instance a great scholar). It helps if the
narrative is not too far removed from the believer’s everyday experience. You can
remind people that Shah Rukh Khan’s wife and Salman Khan’s mother are both Hindu.
This makes ‘Love Jihad’ seem entirely plausible. Similarly, by promoting the visibility
of the lunatic fringe within the Islamic community on TV, you can convince Hindus
that their way of life is under attack. This is why ridiculous fatwas by the most
inconsequential mullas have been projected on national news networks in recent
times.
As often as not, narratives are received in childhood, or early youth and then
never tested by the believer. These narratives then control perceptions. I have many
friends who view the conduct of Muslims within the parameters of their own inherited
narratives. We know they pray to something located in Saudi Arabia, so they are anti
India! That Lord Shiva finds his abode in Tibet (China actually!) is not part of the same
narrative. We can safely assume that as human beings, we are able to intelligently
and rationally evaluate the narratives of others, but not our own!
44
Narratives run as a powerful threat throughout our public discourse. When a

poor man builds a hut by trackside, an ‘encroacher’ has ‘illegally occupied’ government
land ‘in defiance’ of the law under the protection of ‘slumlords’. When I build a house
in an illegal colony like Delhi’s Sainik Farm, I am ‘harassed’ by ‘corrupt’ inspectors in
search for ‘bribes’ who ‘interfere’ with my property. Take another example. In an
endless public campaign to demonize Auto-rickshaw drivers who, for urban elites,
seem to personify rapacious opportunism like no other, ‘rude and aggressive’ drivers
are intermittently accused of ‘harassing’ citizens and ‘demanding’ double fares ‘taking
advantage’ of rush hour. We don’t stop to ask why it costs four times more to register
a private auto rickshaw than it does to register a small car at the local road transport
authority. We do not ask why commercial auto rickshaw licenses are concentrated in
the hands of so few or why these licensees charge extortionist daily rentals from the
drivers. Airlines on the other hand double their fares on rush days but are still
projected as ‘struggling’ carriers, ‘reeling’ under the impact of ‘unsustainable prices’
and ‘uneconomic low fares’ who need to ‘recoup’ some of their losses. We do however
ask why ‘tax payer’s money’ is used to ‘subsidize’ Indian Airlines which then ‘undercuts’
the other airlines causing ‘tremendous losses’ to the whole industry. Such is the power
of narratives that we think of the same fact in entirely different ways because of the
language used to describe the facts. This is how form becomes substance.
Something of the same phenomenon informs law making and it then goes on
to ‘control’ judicial behaviour. We have framed an unfair land acquisition law where
owners are simply dispossessed because somebody very far away decides to take that
land and give it to someone else. In the course of this transaction, the original owner
receives a low price for the land the law takes away from him. Worse, he is usually
not paid even this fractional sum for years together, sometimes decades. The
Government then marks up the price of the same land, makes a tidy profit and sells it
to private interests. It is possible to do this in a democracy only because this kind of
coercive sovereign robbery is wrapped in a laudable narrative. Thus, for instance, the
conversion of peasant farms to golf clubs is projected as ‘development’ and the original
‘owners’ are reclassified as ‘claimants’. Our reactions would be very different if we
were to hear a narrative which speaks of ‘the reduction of lush and bountiful grain
producing land which for generations has fed the mouths of the poor and the needy’
to ‘evil enclaves of slothful self-indulgence by hedonistic predatory elites’. If we saw
acquisition as ‘land grab’, landowners as ‘victims’ and compensation as ‘peanuts for
helpless peasants’, our attitudes to the laws we make, indeed the things we do, would
change radically. Historically, this is how it has always been. When the British
Government ejected indigenous people from their community owned forests, their
‘relationship with the forest’ was ‘settled’. When plains dwellers lost title to their lands
45
to a newly created class of zamindars, agricultural land was thus subject to a

‘permanent settlement’.
The point here is not to change the ‘language’ of legal issues to favour peasants
and victimize industry. To do that would be to replace one prejudice with another, one
propagandist line with another, one demagogue with another, and, most of all, one
moral judgment with another. To make fair and just laws, we need legal discourse
free of semantic spin and narrative distortion.
Within the innards of the Justice Machine, powerful narratives control the
manner in which stake holders perceive of themselves. This gravely influences their
behaviour. Thus, there are no service providers in the Justice Machine: only Judges
who ‘preside’ over a court, lawyers who facilitate justice by ‘appearing’ and……court
staff who absorb the grease you provide to lubricate the wheels of justice!! When
mere mortals arrogate to themselves the power, and the wisdom, to deliver something
as undefinable as justice, there is little reason for them to see themselves as sellers
of a service for a price. Their narrative prevents them from thinking about the cost of
the service, the delivery time, the quality standards and similar mundane matters of
value for money. What is but a function in the running of a smooth society of coexisting
human is now a great elevated almost holy dispensation: the ordinary rules of
economic common sense don’t apply. This is one reason why you can never convince
service provider in the Justice Machine to prioritize the needs of the fee-paying
customer. Till such time as the stake holders in the Justice Machine change the
narrative within which they locate their activities, we are not going to see anything
change in the way justice is delivered in India.
To close the loop, I can also supplement my argument by drawing attention to

less elevated forces at work here. The Justice Machine is a monopoly and has no
competitors. For reasons I come to shortly, it is not truly capable of privatization.
There is a natural tendency of any monopoly to service itself, rather than the purpose
for which it was built. Look around you. Like a good monsoon song in a Hindi movie
featuring a sultry siren, India’s institutional structure is soaking wet in an all-pervasive
environment of institutional callousness, of self-serving irrelevance, which no one
really wants to accept. Do government undertakings provide goods or services to their
consumers, or jobs to political constituencies and perks to politicians and their cronies?
Do the civil services exist to govern, or to service the personal ambitions of the
governors? Everywhere, the sovereign functions of state increasingly service
producers, not consumers. Would you be shocked and dismayed if the Justice Machine
did more for its producers, rather than its consumers?
46
The conclusion is inescapable. When you walk into the legal world, you do it
knowing that the Justice Machine doesn’t think that it exists only to make sure that
you get the justice that you think you deserve as you define it. It has its own agendas.
You must mould your strategy to its agendas, or you will be doomed.
* * * * *
Noble Truth 3:
The Justice machine has a caste system
Let’s ask ourselves why anyone would want to complain about their domestic
help, their employees or for that matter a civil servant. Take the first. Why would
anyone want to become a cook in your house? Does he do it to have this opportunity
to serve you faithfully 16 hours a day without break seven days a week and pander
to your every whim in order to have the satisfaction of knowing that he was a true
karma yogi? Or is he slaving away for you so that he can get the best quality food he
can as a perk, pick up some money along the way, secure his future and the future of
his children, save enough to own a hut back in the village and maybe have a little nest
egg for his old age? If he is indeed driven by his self-interest, would you not expect
him to work as little as he can get away with, eat as much as he can, dip into the
candy jar as often as he can, while continuously badgering you for raises, perks,
freebies, home hut finance and a retirement fund?
Come to think of it, isn’t that what all your friends in the corporate world also
do to their employees? Why would the domestic servant be different?
I need not labour the point. Once you get past the prejudice and the class bias,
you will find that your maid, driver, office assistant, accounts guy, manager, CEO and
anyone else who depends on you for his or her security behaves in exactly the same
way as your corporate hot shot friends. It would be truly extraordinary to expect that
service providers in the Justice Machine should be driven by motives that are more
laudable than yours or live to a spiritual standard that is higher than yours.
Naturally, these motives are not confined to cash and the most basic of material
needs. Maslow explored a whole hierarchy of human needs for us in his seminal paper
on the subject back in 1943. His original conception has evolved ever since and is now
quite sophisticated. It is now widely accepted that we are all driven by at least five
essential layers of needs stacked as a pyramid. At the lowest level are ‘Physiological
Needs’, meaning the need for food, water, air, sex and so forth. Above this level,
humans have ‘Safety and Stability needs’: the need to feel physically, emotionally and
47
financially secure in a stable environment. Naturally, this includes health and security.
Together, these two needs are seen as basic human physiological needs.
The next two levels of human needs are viewed as ‘Psychological Needs’. Of
these, level three of this pyramid is occupied by ‘Love and Attachment Needs’, i.e. the
needs for unconditional love, support, and belonging. This cluster of needs also
encompasses the need to belong to and feel attachment for a family, a group and a
society. At the fourth level are found the ‘Self-Esteem and Power Needs’. Every human
being needs to feel good about him or herself, to feel powerful and the need to be
‘respected’ by the world. This is the level at which we need to experience a sense of
accomplishment.
Finally, at the fifth and highest level, we seek to attain the ‘Self Actualization
Needs’. This is the most obtuse, yet an equally fundamental need. It is the need to
feel that one has achieved one’s full potential, as also the need to express one’s
creative energies.
The key takeaway here is that these needs are universal - there are no
exceptions – and we would do well to remember that exactly the same needs are
experienced by all participants in the Justice Machine. That includes judges and
lawyers. It would be fanciful to expect that these normal rational people would be
driven by motivations different from those driving the behaviour of the rest of the
normal world.
What does this mean in practical terms? Let me use the judiciary by way only
of illustration. At the most basic, a judge for instance wants his physiological needs to
be met. While, some of these needs are best addressed within the confines of his
home, a stable job in a dependable institution is a wonderful foundation on which to
being the satisfaction of these needs. Next, he wishes to satisfy his safety and stability
needs. Once again, the judiciary provides a strong foundation on the basis of which,
he can begin to experience the safety and stability he needs to have a degree of
physiological comfort. You will note that in the satisfaction of these needs, the
performance of his professional duties plays no role: he only needs to ensure that he
continues to have his job so that these needs continue to be met.
What role does the manner of performance of his professional duties play in
the satisfaction of a judge’s Psychological Needs? For sure, Love and Attachment
needs are concerned with events occurring within his personal social environment. For
sure, belonging to the judiciary is a very soul satisfying way to address elements of
this need. That said, being service oriented in the performance of his duties could, but
48
need not necessarily, be central to the satisfaction of these needs. On the fourth layer
of the pyramid sit the Self Esteem and Power Needs. A judge needs to feel powerful,
the sense that he has the world, or some part of it, at his feet. A judge also needs to
have a high sense of self-worth and the need to be ‘respected’ by the world. It is fear
(or at least weariness) that he now seeks, and he wants to throw his weight at the
world and test its reaction. We need to understand that these are by no means
negative attributes. Most humans experience these states of being, and there is
nothing invalid about it.
This brings us to the apex of Maslow’s pyramid of Needs. Here finally, at the
fifth and highest level, every human seeks to address ‘Self Actualization Needs’. This
is the most obtuse, yet an equally fundamental need. It is the need to feel that one
has achieved one’s full potential, as also the need to express one’s creative energies.
This is the level at which a judge experiences a sense of accomplishment. He begins
to feel the need to do his job well, the need to look beyond himself. He now wants to
‘make a difference’, ‘be the change he wants to see’, ‘have the leadership of men’ and
so forth. He wants to be admired and remembered. This is the level at which he
aspires to be a superb judge.
What is the point I am making here? As we view the actions of most humans,
it begins to dawn on us that security, power and then selfless service appear on the
horizon in that order of priority. It is only when the ‘lower’ needs are met that a judge
addresses his higher needs. For sure, these needs don’t exist in cast iron silos and
there is plenty of fluidity between categories. Still, there is a certain mental, intellectual
and spiritual evolution that every judge experiences as he continues to perform his
duties over time. Why do judges succumb to the subtle psychological pressure of being
lenient with lawyers they know? This is because the satisfaction of that need lies lower
down on the pyramid than the need to be ‘above such subjectivity’. Why do provincial
judges so easily issue notices requiring movie stars to appear before them to respond
to all manner of bizarre cases filed by local lawyers? They do this because power lies
lower in the hierarchy of needs than the soul satisfaction of being utterly impartial, or
in the self-actualization imbedded in excellence of judgment. I can multiply examples
endlessly.
In the same way, I can use as examples the other major stakeholder in the
Justice Machine: the lawyers. We could run a similar analysis past you and for sure,
we will come to the same conclusions.
What we get in the result is a kind of celebrity bias. This is unexceptional. If

you were a judge, you would want to decide a high stakes case between two rich
49
people about a multi crore scam before you would want to decide a case between two
peasants about a street dog. If a movie star is listed as a party in a case, you would
want him to appear before you. Very likely, you would not want to compel a politician
to appear before you, perhaps because he has power over you! I will therefore cut to
the chase and suggest to you the three basic rules driving the order of priority in which
the Justice Machine proceeds to redress cases before it:
1. The Financial Substance Principle: Money begets speed. The value of the stakes
decides what is decided and in what time frame. High value cases will always have
priority over nothing cases. Lawyers’ routinely demand that a judge prioritize their
case because “thousands of Crores are riding on it”. It makes every player in the
game feel more substantial.
2. The Pecking Order Principle: Every primate society, every group and every tribe
have its pecking order. This pecking order locates every member of the group
within the hierarchy. It is no different for lawyers. Celebrity counsel will always
get a better and more patient hearing than younger lawyers. This may be because
they are more satisfying to hear, but droning on incoherently does not mean that
celebrity counsel get cut to size and shut down summarily. Other things being
equal, lawyers further up the pecking order get better treatment than those below
them.
3. The Visibility principle: Everybody wants fame, especially those who say they care
nothing for fame. Fame is infectious and it is very virulent. If you are in the
company of famous people, you are a famous person by association. If what you
do is going to trigger fame, you want to be in that fame frame. You can be a
nobody abusing a court on the road and no one gives a damn but if you are a
latter day Arundhoty Roy, similar abuse can send you to jail for contempt. This is
why cases reported in newspapers are decided on priority. A nobody lawyer can
file a case in a mufassil town claiming to be offended by the sight of a movie star’s
cleavage revealed one inch too much and it will be nothing. If this same news hits
the paper, it would be only human if the magistrate would decide it with much
fanfare.
The moral of the story if any is that before you knock the doors of the Justice
Machine, you must ask yourself how far you, and the legal injury you represent,
addresses the Hierarchy of Needs of the stakeholders in the Justice Machine. If you
are high up on the ladder, you are already ahead of the curve and your passage
through the system will be relatively, and I repeat, relatively painless. If you are not
located high up on the Hierarchy of Needs, you will find that you receive little attention
50
and your case soon grinds to a near halt. You would then need a strategy to beat the
bias in the system and find a way to compensate for your insignificance.
* * * * *
Noble Truth 4:
Justice can’t easily be privatized.
‘Alternative dispute resolution’ has existed in India for a very long time.
Generally speaking, hearings were held in the village chaupal under the peepul tree.
The problem was the arbitrators always had collateral agendas. We tried to formalize
a more objective arbitral process in 1940 but still failed to address issues that dogged
the traditional peepul process! And there the matter remained, unaddressed for the
next fifty years, till Narasimha Rao’s liberalization front-burnered it once more.
India opened up to foreign business in 1992. We lawyers worked at a frantic

pace to write cross border contracts to reflect these new economic linkages. Very
soon, these inbound investors realized that the contracts we wrote for them were
meaningless unless India’s Justice Machine was able to quickly resolve commercial
disputes under these contracts. What was to be done? Could they bypass our Justice
Machine instead? We were asked to write foreign arbitration clauses into these
agreements; indeed, these agreements came to be written ‘subject to’ foreign laws
and jurisdiction.
It wasn’t a smart thing to do though. Alternative dispute resolution is a huge

business opportunity and it makes no sense to open your market to foreigners but
then not exploit the potential benefits it brings. Could we replicate these foreign
arbitration rules in India and dispensed quick justice under our domestic laws?
Stakeholders in the Justice Machine started to passionately advocate the beauty of
arbitration as a solution to most ills of the Justice Machine. Arbitration came to be
seen as a fast-track way to get past the logjam of crores of cases clogging Indian
courts.
In 1996, we amended our arbitration laws in an attempt to conform them to

the international standard. It has not worked. There were any numbers of reasons
why. Privatizing a forum and the process it follows does not mean that you have
altered the attitude of the service providers that run the forum. Noble Truth No 1 to
3 continued to apply. The system architecture that prevents the Justice Machine from
providing efficient service continues to apply to Arbitration Tribunals. I have already
told you a story in the opening chapter demonstrating some of these limitations. To
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make it worse, there are also a number of new reasons hampering Tribunals from
functioning efficiently. Let me attempt a snapshot.
That we are a low trust society is our first problem. With our network of
relationships, obligations and favour trading traditions, it is impossible to find an
arbitrator who both sides unreservedly trust. Inevitably, we end up with three
arbitrators. Each party appoints one arbitrator and then these two arbitrators together
appoint the chief or presiding arbitrator. This means your cost of arbitration triples. It
also means that you can’t use arbitration to resolve small claims. Parties have the
option of agreeing to appoint a single arbitrator but they never seem to agree. You
can always go to a court and ask it to appoint a single arbitrator: it may well be able
to pressure the other side to agree. This is not necessarily a good thing. A court can
always appoint someone inappropriate only because a favour is owed etc. The bigger
problem is that courts are so busy it can take a year or two to appoint an arbitrator
even when parties agree. Sometimes, it takes longer for parties to appoint an
appropriate arbitrator thought a court than it takes a set of foreign arbitrators to
decide a case before it!
This is only the beginning of the logjam. On the perfectly reasonable

assumption that only judges are trained to decide legal issues, Indians like to appoint
judges as arbitrators. Regrettably, judges are not available to deliver this service till
they have retired. Let me put it bluntly: the constitution of India considers a man of
65 too old to judge a case in court but Indian parties routinely appoint retired judges
as arbitrators’ decades after they have retired. Parties are then confronted with a
whole host of practical realities. Many judges are very sharp and alert even decades
after they retire but there is no predicting the age at which this may suddenly change.
If that happens, the arbitration becomes unpredictable.
Its downhill from there. In these golden years after retirement, priorities and
motivations change with each passing day. After years of slaving on the bench, a
retired judge wants to relax a bit, have leisurely vacations, tickle his grandkids as they
sit on his laps, play the professional baraati, and regale litigation teams with stories
about the good old days, and so forth. A retired person feels he or she has earned the
right to a little comfort, a little leisure and a little of the good life. That’s true for all
senior citizens, not just judges. I for one totally sympathize with this evolved attitude,
but how do you then manage the unfolding litigation?
These realities create uncertainty and escalating costs. Hearings are cancelled
at short notice for health reasons. When hearings are held, declining health and rising
need for comfort create cost challenges. Arbitrators prefer to live in suites in luxury
52
hotels, travel business class, eat exotic foods, drink exotic drinks and meet their
extended family and friends in the hotel. For any older person, the main way to get
youngsters to visit them is to offer the kids a fine dining experience. Guess who is
paying for it? Arbitration law allows arbitrators to decide where to hold hearings:
parties invariably face pressure to hold hearings in exotic locations. It can be
relentless, spiralling up costs and decimating legal budgets.
This mindset also reflects in the frequency with which hearings are scheduled
and the way proceedings occur in arbitration. Retirement sometimes brings on a
regrettable social isolation. Hearings become extensions of social life. There are a lot
of tea breaks, a lot of interruptions because of ‘hamare zamanae main’ stories, and
not all attention is focussed on the legal issues at hand. Retired judges may be less
likely to spend fewer off-time hours updating themselves on the latest evolution of the
laws. If, in the meantime, a new law is legislated from a different legal paradigm,
some retired judges may still see the new law through the prism of the old law’s
mindset. It’s sometimes difficult to get focussed attention from the entire tribunal for
a prolonged period of time. When one does get the required focus, it may be patchy
and legally flawed.
There is too the problem of fees. Arbitrators charge by the ‘sitting’ and most
sittings are two hours long. The system has a built-in incentive to increase the number
of sittings. This is easy to do with chai breaks, joke sessions and political discourse. If
you get 45 minutes of effective work during a two-hour arbitration hearing, you are
ahead of the curve. By the time the next sitting comes along a few months down the
road, everything is forgotten and lawyers must start again. Not that the lawyers mind:
they too charge by the hour! It gets worse if a party files something of any length
before the Tribunal. The Tribunal is free to charge ‘reading fees’. These can go up to
30 lakhs for a set of pleadings and evidence. I have had a case where reading fees
were charged six times during the course of a case: in the beginning, after a successive
set of amendments were allowed, before final arguments, while writing the award and
then again when post-award clarification were sought. The bills pile up.
If you were terminally cynical, you would make the argument that at the end
of the day, arbitration is a post-retirement sinecure no one wants ended. Everyone is
being paid to keep the show on the road and most likely, at least one contending party
also wants the decision in the case deferred indefinitely. We have seen this already in
the case we encountered in Chapter One where for much of the time, both parties
didn’t want the case ended. What you have then is more of the same: anything the
Justice Machine can fail to do; alternative dispute resolution can fail to do even more
spectacularly.
53
In 2015, India tried to fix the most pressing of problems of our arbitral
processes with yet another set of amendments. Two changes were particularly
relevant to our discussion here. First, they limited the time a Tribunal had to finish a
domestic arbitration to 12 months following the date the Tribunal ‘entered on the
reference’. ‘Entered on the reference’ means the date by which all arbitrators became
aware that they have been appointed to the Tribunal. Naturally, the time taken to
appoint arbitrators etc was not included in this period. If the arbitrators needed further
time to make the award, parties were at liberty to agree to one extension of 6 months.
Further extension was not permitted except on the orders of the court.
As you can see, this is an escape hatch. Arbitrators can hear a matter for 17
months and then throw up their hands and tell Parties to go to court and get them
another extension. What choice does a party have? Can any party write off 17 months
of effort in such circumstances? Then again, courts do not decide anything very quickly
which means that it could be a year or more before they grant an extension. In any
case, the Court has only difficult choices before it. Should it extend a process that has
gone on for some time and made some progress or should it give up on the Tribunal
and start a new process with new delays?
The other significant amendment is far less ambitious. The amended arbitration
law now recommends a ‘model fee’. It is not mandatory. By definition, once arbitrators
are appointed, they are at liberty to reject this recommendation and ask for a higher
fee. Refusal to agree means the Tribunal may choose not to proceed with this. This
works to the advantage of the party that doesn’t want the case decided. Noble Truth
Number applies once again!
It is too early to say if either amendment will have any impact on the total
picture. I am not optimistic. In the larger scheme of things, these two are but tips of
the iceberg.
Perhaps the greatest concern of all is the uneasy alliance between the courts
and these tribunals. Who has priority over which part of the legal process? Do
Tribunals have sovereign power over the actual case and its decision? Or did courts
have the power to overturn what the Tribunals do? If the courts can overturn what
Tribunals do, then arbitration before the Tribunal is only round one of the dispute
resolution process. Once the Tribunal has given its decision, the loser can go to a court
and start a fresh process of re-deciding everything again based on the same facts.
54
When India created a new arbitration law in 1996, it was largely based on the
international model law so we know there was no ‘in principle’ reason why it would
not work efficiently. That’s not how things turned out. A lot of the responsibility rests
with the courts. Indian courts do not like to restrict their power, and sometimes it’s
for very good reasons. Let’s just say that for a variety of reasons, arbitrators,
bureaucrats, politicians, and whoever else you can think of do some very strange
things. We are a low-trust society as I have said. We are unable to make the
assumption that if someone exercises authority over another, he shall do so fairly,
with no collateral motive. In such a society, courts hesitate to abdicate their ability to
correct any and every error that ‘pricks their conscience’. The courts ‘powers’ have
expanded and contracted from time to time depending on where and how the
pushback came ever since Independence. This ebb and flow is a central part of India’s
judicial history.
As an example, we can look back at the ‘Emergency’ in the Indira Gandhi era
and examine the manner in which the Government tried to restrict Judicial Review. At
that point in time, the courts’ powers contracted considerably. Conversely, we can
look at the Manmohan Singh era and examine the manner in which the Supreme Court
went about cancelling telecom licenses (and practically tell the Government how to
run the country) even though some of these licenses were backed by Government of
India sovereign guarantees. Then again, we can look at the law specifying the manner
in which senior judges are to be appointed and promoted. In a series of three ‘judges
cases’ between 1981 and 1998, the judiciary usurped to itself the sole power of judicial
appointments. The legislature then pushed back with the NJUC Act of 2014 and the
judiciary pushed back with their decision in the fourth Judges case in 2015. The
resulting uneasy truce holds for the moment but no one is holding their breath. Seen
from a big history perspective, the Legislature on the one hand and the Judiciary on
the other hand have always been engaged in a never-ending tussle to decide who will
have the last word on every subject under the sun.
Within the context of privatized justice as an alternative to our Court system,

similar wars have been fought for a long time. I will give you one example. The 1996
Arbitration law tried to severely limit a court’s ability to interfere with the final award
of an Arbitration Tribunal. Procedural violations apart, it said that an award may be
set aside if it was “in conflict with the public policy of India”. Its explanation stated
that “an award is in conflict with public policy if (a) the making of the award was
induced by corruption, (b) it is contravention of the fundamental policy of India, and
(c) it is in conflict with the most basic notions of morality and justice.”
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The Supreme Court did not like these limitations, perhaps because weird
decisions were placed before it and it could not find a way to fix them within the
limitations of its powers. The obvious answer was to expand their own powers of
judicial review, and they did so in a succession of cases, reaching a zenith in the 2014
decision in the ONGC case. The court now held as follows:
(a) The court defined the ‘fundamental policy of India’ to include: (i) compliance
with Indian Statutes and judicial precedents, (ii) need for a judicial approach(iii)
compliance with natural justice, and (iv) judgements must meet the standard of
‘Wednesbury’ reasonableness.
(b) The court also empowered itself to remedial recourse on the ground of justice
and morality if an award ‘shocks the conscious of the court’.
(c) The court approved of ‘patent illegality’ as a ground to set aside an award defined
as one or more of three heads: (a) contravention of the substantive law of India,
(b) contravention of the Arbitration Act, and (c) contravention of the terms of
the contract between parties.
Please note that none of these grounds found place in the plain language of the
1996 law. In truth, the words ‘patent illegality’ as a ground to set aside an award in
the statute were not to be found in the law at all. If you are a layman, may I suggest
that you ought not to be surprised. We are a diverse and difficult country; our law
makers are less adept than they could be and the courts frequently improvise on their
feet. Many of our laws are ‘judicially constructed’. Our objection to this judicial
assertiveness would have to find its source elsewhere.
As you can see, the result of the ONGC judgment was that courts acquired the
authority to overturn anything and everything an Arbitration Tribunal had done.
What’s the point of going to a private judge if a Court can overturn everything a private
judge has done: doesn’t it make sense to simply cut to the chase and go directly to
the Court?
The saga is nowhere near ended though. Our Legislature didn’t think the courts
had done a great job so far in giving quick justice to our citizens. It pushed back. In
2015, the legislature inserted Section 34(2A) into our arbitration law stating that an
award “shall not be set aside merely on the ground of an erroneous application of the
law or by re-appreciation of evidence”. Still, in deference to the judges, it also provided
that in the case of international commercial arbitrations, a court could set aside an
56
award if “patent illegality appeared on the face of the award” . At last, India’s
arbitration law had the words ‘patent illegality’ somewhere in its text!
This amendment came up for judicial review in the 2019 Ssangyong Engineering
case. The Supreme Court now had a choice to make: it could either sail with the
legislature or lean back on it. It chose to limit its power in a sophisticated judgment
that is still being widely studied. As I understand the judgment, the expression ‘public
policy of India’ now means the ‘fundamental policy of Indian law’. What is India’s
‘fundamental policy’? The court has the answer. Typical examples would include the
Foreign Exchange Management Act (because it’s in the national interest to conserve
foreign exchange) or orders and judgments of a court (because they bind everyone
without exception). As opposed to this, granting compound interest on an award for
instance is contrary to an Indian law but it’s not fundamental to the policy of India.
Now here comes to supreme irony embedded in the Ssyangyong case. After
approving the idea of limiting judicial review, the court still proceeded to do something
that had never been done before in the history of Indian courts. It set aside the
majority award (which it held was contrary to the most basic notions of justice) and
upheld the minority award using its special powers under the Constitution of India!
What we have now is a bunch of narrow rules where the court has limited its ability
to overrule what Arbitral Tribunals but we have introduced the concept of minority
awards eventually becoming the final decision of a court. For the legal community,
that is just magic!
Lawyers have now changed strategy. If we can’t win an arbitration outright any
more, all is not lost: we just have to make sure we get a top-class minority award!
Bear in mind that most arbitration tribunals have three arbitrators, one of whom is
appointed directly by each client. Is it too outlandish that in the years to come, we
will now grow a generation of sponsored arbitrators whose main job would be to write
a quality minority award? This will set off three rounds of litigation in the courts at the
end of which process, hopefully, we will have a minority award being made a rule of
the court. Don’t you just love the Justice Machine?
* * * * *
This brings us to that point where every man is forced to confront the Noble
Truths of the Justice Machine and ask himself what he is to do in the circumstances.
How do you navigate through the system architecture of this vast and complex
organism and find a way to solve your legal problem? It’s a complex question, and
that’s not the best place to find an easy answer. Still, we need an answer and so I
57
have fashioned one. In my opinion, we can navigate the labyrinth of the Justice
Machine if we use four ‘rules of the road’, rules that I call the Four-Fold Path. It is to
these that we now turn.
-x-
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Chapter A5
The Four-Fold Path in Indian Courts
Darwinism is a theory of biological evolution first proposed by the English

naturalist Charles Darwin (1809–1882) and then developed further by a varied group
of his successors. At its core is the proposition that all organisms evolve through
‘natural selection’. Every species contains within its members minute variations which
either increase or impair that member’s ability to compete for survival in its
environment. The more appropriate a specimen is to the environment it lives in, the
more likely it is to do well in it and therefore out-complete other specimens who are
less appropriate to that environment.
In the century since Darwin’s passing, Darwinism as a concept has been used
to both understand and justify a variety of social and political processes. Cultural
evolutionists for instances have argued that humans adapt to their environment much
faster than biological evolution because we are able to pass on information about the
environment and how to deal with it over generations through teaching and imitation.
Indeed, they argue that through such cultural evolution, we actively create new
environments!
I would argue that something similar is at work as we confront the Four Noble
Truths of the Justice Machine. Let me put it this way: we know the Justice Machine
has certain properties and works in a certain way. People who adapt themselves to
work in harmony with these properties find that they take better legal decisions. Such
people thrive. People who are ignorant about the Justice Machine, or refuse to adapt
to it, march to the beat of an inappropriate drummer. Such people often run afoul of
the law. If they get into any kind of trouble, the Justice Machine fails to help them.
The solution is simple: to get on in the world, you must understand and accept the
Four Noble Truths and adopt behaviour that would optimize your ability to resolve
legal problems in your favour.
I call the rules governing this adapted behaviour the Four-Fold Path.
The Four-Fold Path
Rule 1 Adapt business method to harmonize with the Justice Machine
A story is often told of that irrepressible American soldier George S Patton giving
this timeless advice to the Third Army during the Second World War in 1944, and I
quote:
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“No bastard ever won a war by dying for his country. He won it by
making the other poor dumb bastard die for his country”.
We have already noted Noble Truth No. 1 which states that the Justice Machine
punishes the victim of a legal injury. This is not deliberate. It is the inevitable
consequence of the ideological foundation on which the Justice Machine is built. The
question then is this: given what this animal is, what are we to do? It’s simple really.
If you live and work in India, you must modify your behaviour so that you never need
to approach the Justice Machine as an injured victim. It makes far more sense to go
about your business using methods through which your counter party ends up injured.
Let him knock on the doors of the Justice Machine and seek redress against your
actions. In practice, this means that you live pre-emptively. If someone is going to
hurt you, hurt him first.
This has immediate application in the world of business. We know that the Justice
Machine takes forever to decide a simple case of an unpaid debt. It is true that as a
creditor, you are likely to win and you may get interest on the outstanding. Still, the
rate of interest is bound to be lower than the interest you pay to your banker on your
business loans. It makes no sense for you to ever put yourself in a position where you
would be a creditor in any commercial transaction. In India, the secret of a successful
business life is the ruthless management of credit risk. You simply never allow your
credit risk to exceed your available working capital. If you run out of cash to run your
business, your business will fail and it was be very difficult for you to raise more
capital.
This compulsion changes business behaviour? If you can at all help it, you simply
never supply goods unless you are paid in advance. I am remodelling my home as I
write this chapter and every supplier wants to be paid before he will deliver goods to
the construction site. If you don’t have the bargaining power to demand payment in
advance, you have to supply the goods or services in instalments and collect on your
‘running bills’. Although you may still take a bad debt, at least your credit risk is limited.
This is not enough of course. Your buyer can always place bits and pieces of his total
order on half a dozen shops and then default everywhere. You also need a hook on
him. Withholding supply of critical parts is one such hook. Making part supplies of
items not freely available is another. In the construction industry, if you supply ceramic
tiles, you would supply part of a particular design and then hold back further supplies
till you received payment for the first part of the supply. You would only supply the
last of the tiles after you receive full payment.
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What if you can’t supply the goods in part? You are not out of options. You can
demand collateral security before you part with possession of the goods. Do please
carefully mark my words. We need to remember the Buffalo School of Jurisprudence.
It matters little who ‘owns’ the goods: what matters is who has possession of the
goods. If you have possession, you can always fight off a claim as an unpaid seller.
The law says something else but by the time your buyer gets the Justice Machine to
apply the law to the case, everybody will be dead. In circumstances where you unable
to hold on to possession of the goods, you would ask for counter guarantee or similar.
In all cases, you have to be sure to not end up on the injured side of the equation. If
you do, you can be sure that it will be a very long time before the Justice Machine will
help you find your redress.
In a nutshell then, you must anticipate your business associate and break the
contract on your terms before he does. Whatever happens after that, it is vital that
you let him go to court and suffer the misery of cranking up the Justice Machine.
* * * * *
The Four-Fold Path
Rule 2: Manoeuvre to get misbalanced commitments.
By now, you would have understood that business in India is basically all about
managing risk. In any deal between two parties, the guy who took the bigger risk is
the one who ends up on the injured side of a transaction. Take the case of a contractor
who agrees to rebuild your house. You give him a small advance and then you let his
bills pile up. You keep delaying payment. In time, he is in the hole for millions of
rupees. He risks losing this money if he fights with you. So, he reluctantly keeps
building very slowly, haltingly, and you keep stalling payments, letting him have dribs
and drabs of cash. A twelve-month project becomes a 36-month project. It is not
efficient, but it is better to suffer delays than spend a lifetime in the embrace of the
Justice Machine. In the end, you know that you have possession of the house. If the
relationship breaks down completely, you will be able to hire a second guy to complete
the unfinished rebuild of your house. The contractor knows this, so he slows down
construction only to reduce his risk. You, on the other hand, are trying to make sure
that he has more to lose than you.
Actually, everyone in India knows this instinctively, or soon learns it. I was 25
when I started private law practice. I needed a stenographer, a court clerk and a
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general dogsbody runabout man. People were not hard to find, at any rate, easier to
find than clients. Those were the days before ‘India shining’ and jobs were hard to
get. In no time, I found that all my staff members had severe family crises erupting
all over the place. One had a dying mother, another a sick wife, another needed to
finish his jhuggi but ran out of money and so forth. All of them basically wanted
money. They promised to have these loans deducted from their salary. They were as
good as their word. I would deduct a part of their salaries every month. They accepted
this with good humour. Strangely though, when they had repaid about 75% of their
salaries back, another crises would hit them full in the face and they needed more
money. So, I would be back to deducting the second loan as well. It took me time to
figure it out. They repaid loans to build credit histories and took loans to have job
security. I mean how do you sack a guy who owes you money and you have no
security? In time, their performances started to fall off but still the loans piled up and
the monthly deductions became bigger. Then it dawned on me one day: I had a very
small law practice but a substantial business in Islamic banking distributing interest
free loans!
Let me not labour the point or write a book about something that even semi-
literate country bumpkins fresh off the bus understand very well. When you are in a
contractual commitment, you have to make sure that you are on the upside of a
misbalanced commitment. One way or another, you secure that your counter party
commits himself deeper into the relationship than you. There are countless variations
to this theme. At the very simplest, you make sure that in any business deal, he has
more money to lose than you if things don’t work out. If you can’t be sure that he has
more money to lose than you, to need him to commit to something else he will lose
which he values more than the money you will lose. You have to do this type of
analysis at every stage of a contract’s performance. Buying a car is a one-shot deal
but building a house is not. It takes two years. Over this two-year period, there will
be times the owner has given more advances than there is construction and other
times when the contractor has put in more work than there is money. Both parties
must jostle for position, securing that they have less skin in the game than the other
party.
This is a matter of practical management. What a contract says doesn’t matter that
much. What matters is the reality on the ground. If the owner stops dragging his feet
on regular payments to his contractor, it is often difficult for the contractor to actually
stop work. He may have hired labour over a longer period. Maybe he has pay salaries
whether or not the construction project progresses. He may have taken supplies of
construction material from the market and he needs to pay for them. He may have
rented machinery which he needs to pay for even if it is sitting idle.
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The reverse is equally true. You may have a construction contract which has a
‘disputed payments’ clause. Assume this clause provides that if there is indeed a
dispute, the work must continue and the dispute will be decided after the job is done.
You can immediately see the incentive built into this contract. Your contractor has
every reason to submit inflated invoices. He knows you must pay these inflated bills
immediately and then try and claw the money back later. Why would he not do it?
That’s at the heart of how the Justice Machine works. It encourages every party to
engage in anticipatory dishonesty because that where the incentive of the system is.
It’s the same when we talk about business partnerships. There are of course many
types of partnerships but this simple rule applies to all of them: joint ventures,
unincorporated joint ventures a.k.a consortiums, registered partnerships, even LLPs.
These entities differ greatly in the way they work but if you want to optimize your
position, in every case, you have to ensure that you control the decision-makers. In a
company for instance, decisions flow from the Board of Directors so that is what you
need to control. Board control is a game of numbers. In practice, you must have the
ability to nominate the majority of directors. Since directors can be removed, your
position improves immeasurably if you control the shareholding too, even if it’s by only
one share. If you control neither the Board of Directors nor the shareholding, you
must make sure that you have operational control of the company. This is common
experience in foreign owned companies: you may be the minority everywhere but as
the local partner, you can still rule the roost simply by commanding total loyalty of the
ops level troops.
Finally, in any business structure, some key functions give disproportionate ‘power’
to the man who holds that lever. From a purely ‘legal’ standpoint, two of the most key
functions in a company are the Company Secretary and the Finance Manager. Why do
I say this? The law has no respect for the truth, whatever that means. The law respects
pieces of paper. You can call night the day so long as you can produce the paperwork.
I can stand in front of the pension officer, scream my name and claim I am not dead
but it means nothing. I need a piece of paper from someone very ‘respectable’ to say
I am me (A gazetted officer?) and I need an expert (a doctor??) to certify that I am
not dead. I can be married and live openly as man and wife with a lady but to truly
‘prove’ the marriage, I need a piece of paper manufactured by a petty bureaucrat!
When you have the Company Secretary on your side, you control the company’s
‘history’ and every truth about it.
The Finance Manager is of equal importance. Businesses survive on money. The

Finance Manager, the authorized signatory, the man who keeps the accounts including
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the cheque books and cash: these are the people who make it possible for the
company to function. If you take away the money, your company will fall apart in no
time. Employees will rebel and leave. Suppliers will refuse to supply raw material.
Electricity and water supply will be disconnected. You know this story.
As you can see, this rule has more applications than I am capable of writing books
about. In the end though, it’s very simple: when you have control of a partnership or
your partner has more to lose than you, the Justice Machine will ensure that you win.
* * * * *
The Four-Fold Path
Rule 3: Live the ‘low trust’ life
When I transformed my career in 1992 to learn the ropes in ‘corporate law’,

my first European client was a Nordic company. They wanted to bid for mobile
telephony licenses in the country. Regulations at the time required foreign investors
to have Indian partners. Writing joint venture agreements became quite the flavor of
the month. For the most part, foreigners understood these businesses, and were
putting in the money. It was easy for them to negotiate substantial management
control over these companies. The problem was they didn’t understand India, or
Indians. They also did not have enough ‘boots on the ground’. In practice, they
depended a great deal on their Indian partners. My Nordic client didn’t mind at all.
Isn’t that what local partners are for?
That is not how the Indian minority partners saw it. The Indians were coming
from a License-Permit Raj. They saw themselves as renteers: quota holders with
superior entitlements! They didn’t want to put money into these ventures but they
wanted complete management control. I watched this process with utter fascination.
They came up repeatedly with the most incredibly convoluted reasons why my clients
must invest ever increasing sums into the JVs while yielding exponentially greater
managerial powers to the Indians. I would reason with my client, only to find that my
client would not accept my cynical interpretation of these demands. It seemed to be
something congenital. If I told them someone was lying, they would ask me to prove
it. Eventually, it dawned on me that Nordic people will believe almost anything you
tell them because almost no one up there lies in the ordinary course. They were (and
remain) a truly ‘high trust’ society in the finest sense. The problem was that they were
functioning in India, which is not quite that. That generated wide errors of judgment.
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What do we make of trust levels in society? High trust societies are those who’s
actors follow broadly understood norms of behavior and are transparently governed
by the rule of law. In such societies, members behavior is predictable and fair with
the result that each member accumulates substantial social capital. A low trust society
on the other hand is one where the norms of behavior are opaque, or groups refuse
to agree on what constitutes acceptable behavior. It then becomes difficult for
individuals to accumulate social capital. Worse, low trust societies are often riddled
with nepotism and corruption. Much modern writings on this subject take their
inspiration from Francis Fukuyama’s 1995 book ‘Trust: Social Virtues and Creation of
Prosperity’.
The distrustfulness of low trust societies creates wide ranging consequences.

These societies are often kinship based so it becomes difficult to trust institutions, and
that includes the judicial system, especially the criminal administration of justice.
Norms of corporate compliance and governance are difficult to enforce. Redressal
mechanisms against arbitrariness in public life and dishonesty in private life are often
dysfunctional.
I need not tell you which category India belongs to. This means that contractual
relationships are always hostile. You do not sign a contract and naturally expect that
your counterparty will perform it. You expect to be disappointed. Your contractual
counter party is never a friend. You watch constantly for a backstab. You don’t focus
on getting your contractual obligation done and delivered: you focus on not being
betrayed. Worse of all, because you know you can be backstabbed at any time, you
are always ready and willing to backstab your counterparty in anticipation. The result
of all this distrust is a society where nothing is predictable. Life becomes a different
kind of adventure, and a very unpleasant one. You go to work and have no idea what
the day will bring. You may find that the man who is to brief you on your work for the
day has decamped with your confidential data and there is no simple solution. The
man who was to close a deal and bring you the good news has poached the client and
taken the business elsewhere. The man who promised to deliver goods to you by the
afternoon has filed a criminal complaint against you in the local police station instead.
You learn to be paranoid.
To me, being distrustful is not the worst of it. The real problem is when such
things happen to you, there is no simple way to fix it. If you go to the police, you find
most of them exhausted with overwork with no time to help you. Others are looking
for a reason to help you. The Justice Machine is overflowing with cases and judges
are snowed under work. The system is slow and slothful, making justice hard to get.
Think about this. If the Justice Machine worked the way it should, you wouldn’t worry
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about betrayals and broken contracts. You know you have a solution. All you have to
do is to approach a court and viola, it’s all fixed. But in India, that option is not open
to you. You are forced to modify your behavior. You do this taking into account the
dysfunction in the Justice Machine. Bluntly put, Social Darwinism has arrived at your
door: the environment has shaped you, exactly as the Social Darwinists say it does.
The good news is that you are doing the right thing. That is the third noble
truth!
* * * * *
The Four-Fold Path

Rule 4: Criminalize every dispute
It begins with the Buffalo School of Jurisprudence. The Justice Machine is

designed to preserve the status quo till the courts have had time to weigh all the
issues and come to a decision on who is right. The Justice Machine usually takes years
if not decades to decide who is right. This is alright if you are in possession of the
buffalo and can drink the milk while this leisurely process plays out. But what if you
are not in possession? Will you allow your neighbour to milk the buffalo and enjoy the
kheer while you sit next door fuming for several decades? How are you going to break
out of this logjam?
India has always had its share of informal social institutions which help resolve
disputes at least partly because we have long been an under-governed country.
Throughout the British period, and especially after the 1857 wars, our colonial
overlords did not want to mess with our beliefs and passions. They were here to
extract our resources, period. So long as they achieved their commercial objectives,
they were happy to leave us alone. There were exceptions of course. Sometimes, they
just couldn’t stomach some of our bizarre behaviour – the thugs and sati come
immediately to mind – but 150 years after they took over, the colonists left the country
largely as they had found it. Even after they left, many of our social institutions
survived substantially unchanged. Haryana’s khap panchayats would be a very good
example. This ended in the early 1990s. Modern mass communication triggered a
paradigm shift in the power of our social institutions. Cable TV led to a ‘globalization’
of our cultural touchstone. The proliferation of mobile service accelerated that trend.
Our population is more mobile today and this has loosened its social moorings too. As
the situation stands today, a panchayat for instance has a weak persuasive influence,
but it does not have the ‘power’ to resolve social conflict.
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Normally, as societies evolve and modernize, legally prescribed institutions

replace traditional ones. This is only possible when a robust legal system is able to
enforce the rule of law. In this, the Justice Machine has failed us, leaving a vacuum.
Over the last few decades, this vacuum has been filled by a robust alternate industry
which has mushroomed across the police stations of the country. The trend has been
most visible in areas where the Justice Machine is at its weakest: in militant infested
areas, in Maoist areas, in areas overrun by insurgency, and so forth. This is how it
works. If you don’t have twenty years to spare to collect on an unpaid debt, you pay
a visit to the local cop station and have a word with the boss. A policeman has no
‘jurisdiction’ to help you collect a debt but if you can show him a way to contrive a
crime, he has the jurisdiction to ‘investigate’ this crime and come up with a solution.
The difference between a good faith unpaid loan and cheating is not that great.
If your debtor took a loan with intent to return it but now finds he can’t pay you back,
it’s a ‘civil’ debt. On the other hand, if he took a loan with no intention of paying you
back, then it’s a crime. The difference is only in the intention. How is intention to be
investigated and discovered? Intention is a state of mind and our law of crimes makes
no attempt to define it. The law doesn’t have a can opener to look into a man’s mind.
In practice, the police can assume the best or worst of intentions and proceed as they
please.
There is a further twist here. Cheating is generally a minor offense and cannot
be used as a ‘dispute resolution’ crime. If you can find a way to combine the ‘facts’ of
the case and manufacture a more serious offense like ‘fraud’ or ‘breach of trust’, the
police have the power to arrest your debtor instantly. That threatens his personal
security. He then has to go to court and apply for bail. If he fails, he cools his heals in
jail. Therein lies the beauty of this dispute resolution mechanism. All you need to do
is find some sort of legal basis to threaten your debtor with arrest. This usually creates
enough motivation for him to settle your debt very quickly. Allow me to clarify that
you don’t need to make out a case that an objective person (like a judge) would
consider a crime. You need to contrive a case that ‘may’ look like a crime. Bear in
mind that if something looks like a crime, the Justice Machine will take twenty years
to decide if it is indeed a crime. In the meantime, the ‘accused’ will suffer an onerous
process. He has to find a way to stay out of jail and if that fails, get himself bailed out
of jail. He then has to go to court for every hearing, and personally attend the case.
He will attend perhaps 100 hearings before the case is decided. If he misses a hearing,
warrants for his arrest will issue and he will need to get bail again. When the case is
eventually decided, the loser will file an appeal and the whole machine will crank up
again. About the only way to deal with a case like this is to settle it as soon as possible,
if you have the money.
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At this point, there is an impression I need to correct. It’s not as if this dispute
resolution mechanism is a scam being run mainly by crooked cops looking for an
alternative sources of side income. Let me create a scenario for you and you can then
tell me how often you have entertained the same thoughts. You hear about this case:
the victim of a crime claims he was cheated. The cops are not doing anything about
it. How often have you thought to yourself: I bet the cops have been corrupted! Why
else are they doing nothing about it? What is a good cop to do? If he doesn’t
investigate it, he is dubbed a crook. So, he investigates these allegations. He may or
may not find anything but if he doesn’t, will you ask again: is this cop on the take?
Why is he so determined to let the real crook off the hook? I could ask you why you
think the ‘real crook’ is indeed crooked. You will probably tell me there is no smoke
without a fire. The investigating cop understands human nature. Doesn’t it make more
sense for the good cop to simply pass the buck to the next guy upstairs? If I was that
cop, that’s what I would very likely do.
When faced with a contrived case, the logical thing for an honest cop to do is
to frame a weak charge sheet and kick the problem upstairs to the magistrate. After
the usual legal delays, the magistrate will decide if he wants this prosecution to
continue or to throw it out. Bear in mind that throwing out the allegations is taking a
bold decision while letting it continue is letting the law ‘take its own course’. If he
doesn’t want to be accused of corruption, he will decide nothing and let the case
continue. Playing it safe is frequently the same as letting the injustice continue and
that is more often than not what happens in the criminal courts. The real problem is
our attitude. Because we are a low trust society, Indians take a perverted attitude to
all decisive action. We assume everyone who does his job has an agenda till otherwise
proven. The judiciary is not free of this bias. Indeed, the judiciary has coined a phrase
to personify this. They call it ‘acting with unseemly haste’, meaning if you decide
something, you are up to something. So, the Justice Machine grinds on.
It’s not as if mere indecision leads to injustice. We have plenty of cases where
glory hunters and celebrity bashers have filed successive cases against the same
person regarding the same basic grievance in a succession of courts around the
country. Back in the late 1980s, the celebrated artist M.F. Hussain produced a serious
of paintings depicting a variety of Indian divinities in a state of undress. Where that
leaves Konark and Khajuraho, I cannot say. In truth, I would not go so far as to call
them depictions of Indian divinities. They were little more than tasteful line drawings
of ladies in various stages of undress. He chose to give them names of Indian Divinities
and thus began a saga that resulted in dozens of criminal cases against him for
offending religious sentiment, promoting enmity between people and so forth.
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By 2000, he had been hounded to a point where the Supreme Court was
compelled to intervene. It consolidated these cases from Madhya Pradesh,
Maharashtra and Bihar to a single court in Delhi. Subsequently, the Delhi High Court
quashed these complaints but by then, other glory seeks were on it again with new
criminal cases. The artist was forced to flee the country for the Middle East. As late as
March 2006, a lawyer filed a case against the painter in the Hardwar district court for
outraging religious sentiments, promoting enmity between different religious groups,
selling obscene material and disturbing national integrity. Predictably, the Magistrate
immediately issued a bailable warrant. When the artist could not be served in Dubai,
the Magistrate attached his son’s flat in Bombay. This saga ended with Hussain’s death
in 2011. What’s not to love about using criminal courts to settle civil disputes?
Given the ‘power’ criminal law gives to its investigators, why doesn’t everyone
use this alternate route to resolve their commercial disputes? The reasons are many.
Some cases are simply too complex to be capable of being reduced to simple crimes
which the police can fit into their scheme of things. The logistic problem is much
greater though. The police in India are thoroughly overworked. They live and work in
poor conditions, suffer long hours of work on their feet, need to spend vast amounts
of time in court proving the cases they cracked, have little support by way of forensics,
laboratories, expert finance people, etc. If you want the police to act on your case,
you have to have infinite patience and dogged determination. You need to spend a lot
of time waiting, and more time supporting the ‘investigation’. You have to meet a lot
of people, bring serious influence to bear on the situation, and then engage in lots of
favour trading with the people who help you. The process is not transparent and costs
are usually not predictable. Most people don’t have the stomach for this kind of thing.
The real problem though is that this alternative is not designed to deliver justice
however you define it. It is doubtless a service, and it comes at a negotiated price,
but who gets to access it depends on who gets to the service provider first and using
what influence. The service is designed to deliver a result to the person seeking it, but
it is will likely be an unjust result. This is the road to anarchy, not order. India of
course is not on the road anymore; this alternate route to justice is common place. As
a nation, we have already arrived at anarchy!
* * * * *
With these governing overriding thoughts in mind, let us now turn to examine
the rules by which we may optimize results we may possibly achieve by using the
Justice Machine.
* * * * *
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Part B
Do you want to Start a fight?
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Chapter B0
Introduction: Five Rules to decide if you want to fight
You have to be seriously pathological to believe that the answer to every

conflict situation is war! At home or at work, conflict is a central part of the human
condition. Every day, potential conflicts stalk you, plotting your every move! How
it all turns out depends on what you do when you realize that you face a potential
conflict. The choices are generally pretty clear. For one, you can always turn the
other cheek, swallow your pride, and forget about it. If this is what you choose to
do, you do not need to read this book and I do not need to write it!
As an alternative, you may try and find a half-way compromise solution.

This is always a good idea. The problem is that it’s hard to compromise without
first engaging in some serious sabre rattling. At the very least, it lets your enemy
know what’s coming if he doesn’t back down and settle. Call it aggressive
negotiation. To engage in this kind of thing, you need to judge how deep your
sabre cuts if you use it. That is only another way of saying that you need to assess
your ability to fight if you have to.
As a second alternative, you could well decide that you want to fight. There
are times when fighting is very profitable. When reward is way greater than risk,
when benefit is much greater than cost, when punting is the game to play. Call it
speculative litigation. Even when the cost benefit isn’t great, you may decide to
fight because you have other long-term goals in mind: like projecting an aggressive
image; like intimidating all future opponents. Call that strategic litigation. To take
calls on these sorts of issues, you still have to figure out if you have the ability to
fight if you want to.
I suppose I should mention a third alternative. You may well decide that
you don’t want to decide this issue at all. After all, not taking a decision is also a
decision. Call it Narasimha Rao’s BMDD a.k.a the Babri Masjid demolition decision!
The good news is that a decision not to decide something still leaves the door
open to taking that same decision on that same subject at a future date. To take
this call, you still need to figure out if you have the ability to fight the fight that
you may not want to.
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Actually, if you think about it, with respect to their processes, these three
alternatives are not alternatives at all. Without exception, every time you find
yourself at loggerheads with someone, you have to sit down and decide whether
you are capable of fighting. If you don’t have the ability to fight, you do well to
(hopefully!) not pick a fight. On the other hand, if it turns that you can fight, but
only up to a point, you would (hopefully) fight up to that point and then perhaps
sue for peace. Then again, if you decide you can fight and win, you can go at it
with a vengeance. So however you look at it, every choice comes down to the
same calculation: are you capable of fighting?
Why should this matter, you may ask?
It is important to ask this question because if you do not, you can end up
on the receiving end of a bloodbath. Every warrior knows that wars are destructive
affairs and no soldier ever goes into battle with the guarantee that he will never
stop a bullet. The soldier shoots at someone who is shooting back. No boxer ever
goes into a ring thinking ‘I will never get punched’. The man he is punching is
punching back. No businessman ever gets into business saying ‘I will never make
a loss’. The man he is trying to profit from could cause him a loss. Winning and
losing is inherent in every conflict. You can make statistical calculations about your
chances, but you cannot guarantee anything. It’s the same with litigation.
Litigation is inherently destructive and it is resource heavy. Too often,

people starting a case have no idea what price they will pay for the joy of the
brawl. At the very least, it is appropriate for you to ask if you should be starting it
at all. There are many frames in which this question can be asked but it is actually
three entirely different questions:
“Am I able to fight a war?” is the first question. This is no different from a
soldier asking ‘do I have a gun’, or a boxer asking ‘can I punch’ or a businessman
asking ‘do I have a business idea?’ In each case, it’s about the inherent ability to
fight a war. A blind solider would normally not want to go to war, unless he was a
Kung Fu master in a Hong Kong B movie. An asthmatic athlete would not sign up
for a boxing bout. A one-legged man would not normally run the next national
marathon to win. Yet, so many people fighting legal wars never ask themselves
this question and even if they do, they do not have a way to evaluate, let alone
answer the question.
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“Am I able to fight a war with this particular enemy” is the second question.
It’s pretty simple. You may have the ability to make cars, but can you build a
Formula 1 car? You may know some boxing, but can you take on an 400-pound
silverback gorilla. Did Iraq ever have the ability to fight a war with America? Can
a boxer accept a fight three weight classes above his natural weight? Yet so many
people fighting legal wars never ask themselves if they are taking on someone
who is way above their league given his or her wealth, strength, networking,
ruthlessness or resources.
“Am I going to be fighting a winnable war” is the third and last question.
This question is not quite the same as the second question. You may have the
ability to fight. You may have the ability to fight with this particular enemy because
he is not stronger than you, or whatever. But you may be fighting a war that no
one will win. You could be in a situation where the war will grind down both you
and your enemy and end in a stalemate. This war will exhaust everyone and
benefit no one. How does that help you?
How do you answer these questions? I use five simple tests to find my
conclusions as follows:
(1) The Balance of Personal Power, which we discuss in Chapter B1;

(2) The Governing Environment, which we discuss in Chapter B2;
(3) The Field Occupation, which we discuss in Chapter B3;
(4) The Leadership, which we discuss in Chapter B4, and
(5) The Logistics, which we discuss in Chapter B5.
Let’s examine each of these Tests in the rest of this section B.
-x-
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Chapter B1
Rule 1: The Balance of Personal Power
It’s easy to eat a pakora even if you don’t particularly like pakoras. It’s
much harder to become India’s greatest pakora cook unless you really like both
pakoras and frying! You simply won’t last long leaning over a sizzling cauldron of
some rather evocative blobs of something yellowish and amorphous, sweat
dripping off your chin, the crackling oil scalding the back of your hands as you
ladle those seething life-forms around in their inky bath of blackened oil. To
become an expert, you have to believe that on the other side of this self-
flagellation lies a culinary experience worth the pain. To successfully do
anything, you have to believe that it is worth doing. This is true of litigation.
This is also true of what comes after the frying. Eating a green chili
pakora is an act of conviction, and an act of supreme faith. You have to want to
eat that murderously pungent beast but more than that, you have to believe that
its Scoville Heat Unit is within your tolerance zone. You never know if you have
bitten off more chili pakora than you can chew till after you’ve bitten it. And then
it’s too late because as the good Sufi Omar Khayyam nearly said, the moving
teeth bites, and having bit, move on! The good Sufi did not say that it’s the
tongue that takes the heat. If your tongue is not convinced about the joys of
highly pungent pakoras, your pakoras will never be winners. All of this is also
true of litigation.
There are three morals to this completely irreverent pakora story. First
you have to want to engage in cooking. Second, you have to believe in the fruits
of your cooking. Third, those who carry the consequences of your cooking have
to believe in the product created by your cooking. This is the essence of Rule 1
about fighting legal wars. Indeed, this is axiomatic about everything you may
choose to do or not do in your life. The problem though is to understand what
this means. When I say you must believe in cooking, in pokaras as food and in
eating it, who is this ‘you’?
If you are just a single guy on your first job away from home taking a
decision that impacts no one else, it’s pretty easy to decide what you believe in.
If you have a landlord from hell who dishes out crap because he can and
basically shoehorns you into pointlessly hostile situations no one needs just to
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keep you unstable, you can say ‘I’m done with this dung beetle’ and refuse to
vacate the room when he asks you to. For you, it’s a simple decision: do I want
to get a lawyer and pay him to fight a case? I either want to or I don’t. That’s
not rocket science. On the other hand, if you are a law officer in a large
corporation dealing with a complex legal issue in a high stakes contract with an
old company customer, it’s not so simple. A company is not one person. The
owner may think one way, the Managing Director in another and the CFO in a
third way. Very likely you don’t even know what you think because like Lord
Hanuman on his first visit to Sri Lanka, it’s not your wife and it’s not your fight
and it’s not your life but you are hopping all over town with your tail on fire!
Besides, even these hot shot honchos you report to may not know what
they truly think. We Indians practically invented analysis paralysis. We are
erudite, eloquent, incisive and also frustratingly ambivalent! You could get a
series of buck passing “on-the-other-hands” views hammered into the very core
of your skull till you feel like an aging Common Indian Langur with a bad case of
migraine. In contexts like this, the corporate chain of command is nothing: it’s
just a bunch of guys up the ladder who want to preach to you without taking
responsibility for decisions they are pushing you to carry responsibility for. This is
the key to the problem. It’s not about taking a decision: it’s about implementing
the decision. Taking a decision is a process. Implementing a decision is about
belief of all those who have to implement it. In practice, any war is fought by
many people at many levels of any organization. The boss may believe in the
war, but if the foot soldier in the field does not, the Board Decision does not
translate to action in the field. That is a disaster unfolding.
When a company sets out to fight a legal war, and you are the guy who
has to make it happen, you have to ask if the guys implementing your strategy
believe in it. It could be a few people or it could be a lot of people. If it’s a
simple court case to recover money or avoid a tax demand, it’s not a lot of
people. You could talk to the legal guys and the finance guys and between the
two, you can get a buy-in from both the front line and the financier. But when
it’s a dog fight on the street between companies, muscle flexing for the market,
or two major shareholders fighting over who controls a company, a lot of people
get into the mix. Many of these people are now allowed to say what they think.
When the evocative amorphous aromatic yellow matter that is not pakora dough
hits the fan, the guy who comes out ahead is the guy whose team is delivering
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on the plan. When we need many people to implement a strategy, we need them
– or at least most of them - to believe that they are fighting the good fight.
Actually, even people not implementing the strategy must at some level
believe in the fight. When something serious happens in a company, everyone is
impacted. If your enemy gets a stay order stopping you from using your
trademark, your marketing people cannot close deals and start to lose out on
their commissions. You don’t have to be a soldier to have bombs falling on you.
If the civilian on the street cracks up under carpet bombing, the whole army
comes undone pretty quickly. If you are fighting the government over unfairly
levied taxes and the department start sealing your stockyards, your salesmen will
be paralyzed and your competitors will bury you. Sometimes, whipping up belief
in the war is really about getting the weakest links to become stronger. It’s a
mental thing.
It may not even be the company soldiers who are the weakest link. It may
be the lawyer. Your lawyer may not believe in the case you want him to fight.
When this happens, your enthusiasm doesn’t translate into any action at his end.
You may find yourselves stonewalled, unable to get him to do what he agreed
needs to be done. That is another disaster unfolding.
More likely though, the problem is not the professional outside lawyer but
the company man who handles the lawyer. This person may be the Company
Secretary, the accounts department, an in-house lawyer or even the Managing
Director’s Mr. Fixit. This person can fracture the communication channel to the
outside professionals, making it impossible for these professionals to understand
their instructions, leave alone deliver on them. Lawyers need competent
company front men to make sure everything gets done, dusted and delivered.
When lawyers confront a skeptical client, or payment of their bills get delayed,
they lose interest in the case. How often have I seen a perfectly good strategy
screwed into the ground because the front man just wouldn’t push it? The whole
command control chain has to run smoothly or it’s a disaster unfolding.
Let me simplify the conclusion. Before you set out to fight a legal war, you
have to ask ourselves if you have the personal power to fight a legal war. If you
don’t have your team’s buy-in, you are best off not starting a fight. If your fight
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is going to entail some effort from the whole company, you have to have
everyone’s buy-in.
* * * * *
Even that is not enough though. It isn’t enough for you to have your own
forces primed for battle. This rule is about the balance of personal power. It
takes two to make a war. This means that when you take a decision to fight a
legal war, you have to see how the balance of personal power stacks up on both
sides. On the principle of it, power is not evaluated in a vacuum; it is evaluated
in the balance. There is no perfect power in this world: all power is relative. No
one is invincible. Everybody suffers from some form of weakness. This weakness
is only noticeable when you compare a guy to the other guy. To fight a war, you
need to have substantially more power than the other guy. You have to ask
yourselves about the state of personal power of your enemy.
I am going to use some illustrations to explain what this calculation is

about. Take this case.
The Scantel case
In 1995, the government announced an attractive new telecom

policy. Many foreign companies found the opportunity interesting even
though they could not own more than 51% of the operating Indian
telecom company. Scantel, a telecom player from Europe, was one of
them. Because of the cap on foreign shareholding, Scantel hunted
around for an Indian partner. They found Indotel, a local wireless
equipment manufacturer. Together they bid for paging licenses and
won four licenses in four states. To operate these four licenses, the two
shareholders incorporated a joint venture company – the Indoscan
India Limited, or IIL - and rolled out the paging network.
Actually, IIL was doomed from the start. It was in the interest of
every operating company to quickly roll out a network, offer a cheap
service and start paying its shareholders back. Scantel, the foreign
shareholder had pretty much the same agenda. Unfortunately, the
Indian partner Indotel did not have the same agenda. Indotel was a
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wireless equipment supplier. It saw the operating joint venture as a

captive customer who would buy billions of rupees of pagers and
paging transmission equipment. That was the mother of all conflicts of
interest right there.
And so it proved in practice. As a majority partner in control of

the board, Indotel forced IIL to buy stripped down radio paging
transmission equipment at fully loaded prices. As a result, IIL build an
obsolete network at a very high cost. On the consumer equipment side,
Indotel pushed low quality, low specs overpriced pagers into the IIL
ecosystem. Bear in mind that as a cross border joint venture company,
IIL was manned mainly by Indotel employees. IIL placed order for
large quantities of pagers on Indotel on the basis of the most
optimistic projections and collected the money immediately. Indotel
did not care that IIL was carrying unnecessary inventory, or the wrong
type of inventory: it had already been paid for those pagers.
Scantel, as the minority partner, found it impossible to do

anything about any of this. Indotel, the shareholder, became profitable
very quickly while IIL, the operating company, started to bleed.
Scantel knew that sooner rather than later, these losses would wipe
out the capital of the company and Scantel would be asked to inject
more cash or be diluted. Indotel was sucking profits out of IIL before
IIL made any profits! IIL board meetings were like something out of a
Salvador Dali painting. Item one on the agenda: pay for a million
pagers. Item 2: approve quarterly budget showing a million unsold
pagers. Item 3: approve negotiation for another loan from a bank to
pay for more pagers. Item 4: approve purchase of another million
pagers.
By the time Scantel decided to argue the point, IIL existed for
only two purposes: (a) to buy network equipment from Indotel and (b)
to carry large stocks of Indotel pagers purchased without a credit line.
In time, IIL also paid in advance for network building equipment and
pagers, which were then not delivered for months afterwards. All this
occurred even as the overall business environment in India worsened
in 1997-8. Curiously, at this point, all paging companies offered
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subsidized pagers to customers, but not IIL. As a matter of industry

practice, manufacturer and service provider generally shared this
subsidy. Indotel would not agree to discount their pagers, forcing IIL
to bear the entire cost of subsidizing all pagers. IIL’s business and cash
flow went to hell.
That wasn’t the worst of it. Every paging company offered every
brand of pager to its customers. IIL offered only Indotel brand pagers!
Scantel tried to amicably persuade IIL to offer all brands of pagers to
its customers. It asked Indotel to share the cost of subsidizing Indotel
pagers. It asked for lower pager inventory levels for both pagers and
network building equipment. Indotel wouldn’t agree. Partners started
to argue. Over the next several months, the relationship between the
partners deteriorated. Someone had to quit the venture. Scantel
couldn’t run a 100% subsidiary in the telecom business in India at the
time. Exit was Scantel’s only option. But who would buy a loss-making
company held captive by a equipment manufacturer with a different
agenda? For sure, Indotel would never pay a decent price for the
minority shareholding in a company it already controlled. Scantel
consulted its lawyers.
Would Indotel buy out Scantel at a reasonable price? Indotel had

shown bad intentions so far. Scantel had already contributed all its
capital into the company. It had already shared its technology and
know-how. It had no further role. Indotel had majority control of the
Board of Directors and owned the majority shares. It could run the
business as it wanted. It did not need Scantel. If Scantel wanted to do
better, it had to fight.
Legally, Scantel had a good case under company law. Indotel had
bled the joint venture. Indotel had mismanaged IIL’s affairs. It had an
even better case under its Shareholders Agreement. Indotel had not
acted in the best interest of IIL. It had bled IIL to profit itself. It had
engaged in illegal transfer pricing with its controlled subsidiary. In the
process, it had ripped off its minor partner. It had forced IIL to buy
overpriced obsolete equipment in advance against delayed deliveries.
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It had stolen Scantel’s confidential information. The list went on and

on.
But Scantel did not go to court because it didn’t think it was

capable of fighting court cases in India:
(1) Scantel suffered from a problem of cultures. It was a traditional

government owned company. In its home country, the
compromising culture meant that it had no experience of
litigation. It had no skill in fighting cases in a foreign land.
Management would not support litigation.
(2) IIL was a small investment for Scantel. Scantel didn’t want to put
in the effort or manpower into fighting the case.
(3) Scantel was not structured to support litigation. It had no legal

department. It had no archiving procedures which saved
correspondence between joint venture partners. Putting together
the legal case was going to be a nightmare.
(4) Scantel did not believe in the Indian court system. At the very
least, it did not believe that justice delivered in a decade was any
kind of justice at all.
(5) Scantel’s Indian managers at the time were not instrumental in

coming to India. If the investment went down the toilet, they
could blame their predecessors. On the other hand, if they lost
the litigation, their careers would be on the line.
Scantel was pretty poor on personal power.
Conversely, Indotel was managed by a great dictator whose

employees were frightened of him. Indotel’s CEO had both the board
and IIL management under careful and close control. His entire army
was as one, totally committed and totally beholden to him. Indotel
would fight on home soil. They had the power.
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Thus, the balance of personal power did not favor Scantel at all.
If Scantel wanted a fight, it would have to first address its five
weaknesses. Scantel did not want to address these weaknesses so it
did not start a fight.
Scantel is a great example of a war that shouldn’t be fought. The case

was good. But a good case is never enough. You have to have what it takes to
fight it. Scantel did not have the ability to fight. The lesson here is clear. If the
balance of power had not been considered, Scantel would have run head first
into a court and then collapsed under the weight of indecision, self-doubt and
personal contradictions.
The postscript to this case also teaches us something. Scantel announced

its exit and then started a price negotiation with Indotel. The result was
disastrous. Scantel wanted a ‘net present’ valuation. Indotel asked for a valuation
on a ‘net asset’ basis. Indotel argued that if Scantel was not ready to share the
risk and realize shareholder’s value, it had no business to encash a future value.
Eventually, Scantel sold its shares for whatever it could get and left.
There is a larger message here. Scantel was right not to litigate in the
circumstances. But could it have changed its circumstances instead? It did not
ask this question and it did not answer it. If trusting in the good intentions of
Indotel was not a solution, Scantel could have done what needed to be done to
make sure it was able to fight a war. Here is a deeply pro-active process which
didn’t bring full benefit because the big question was never asked.
Let’s now look at another case where the balance of personal power was
examined and the client found it did not have the ability to fight. Yet, the
company decided that it was going to fix its weaknesses, rather than give up.
The Weizmann Case
Weizmann was an engineering multinational with ventures in

40 countries. It had a huge technology edge in the auto component
manufacturing business. When the Indian auto market opened in the
early 1990s, Weizmann was slow off the line. By the time it arrived in
India, the big boys had already found their joint venture foreign
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partners. Weizmann could either partner with a minor player or it could

start a green field project and ‘learn’ the local market all by itself.
Weizmann decided to go slumming instead. It acquired a sick

listed company protected by the Board of Industrial and Financial
Reconstruction (BIFR). This company was owned by a maverick called
Gupta. Gupta was flamboyant, he had superb PR and his charm was
irresistible. He claimed his business had failed because he didn’t have
the technical know-how to survive the bad market of the 1980s. We
don’t know if this is true. He did have a state-of-the-art production line
in his factory and Weizmann wanted that production line.
Weizmann made the deal, signing a joint venture agreement by

which it purchased majority shares and got the right to appoint the
majority of the directors of the company. They then submitted a
rehabilitation scheme to BIFR and had the bargain rubber stamped.
Weizmann’s directors joined the board and appointed a

professional deputy managing director to assist Gupta in running the
company. Within days, Weizmann realized that it had been ripped off.
Gupta had perpetrated an accounting fraud if ever there was one,
hiding losses that were four times larger than what had been revealed
to public shareholders. Weizmann panicked and immediately
authorized an independent audit. The results were scary. In a nutshell:
(I) Ten years of producing third rate products meant ten years of
accumulated market rejects. The Company never reflected this in
its accounts because the share price would have collapsed.
Besides, Gupta argued, with such losses now revealed, BIFR
would have liquidated the company. He trivialized the fraud,
claim that ‘non-reconciliation of debtor accounts’ wasn’t that big
a deal and besides the company was too busy nursing itself back
to health to worry about accounting fine print! As far as
Weizmann was concerned, it has purchased a grossly overvalued
company.
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(II) To hide losses, Gupta had up-valued inventory, showing junk as

stock in trade. Gupta had another name of this accounting fraud:
he called it ‘non-reconciliation of inventory’. Yet, again,
Weizmann had purchased a company with junk for assets.
(III) To paint a more optimistic picture for BIFR, Gupta had shown
fictitious production and sales. To this category of accounting
fraud, he gave the name ‘Pre-booking of sales’. He argued that
he had shown this year’s production in the previous year for
accounting purposes. He didn’t think this was strange: after all
the orders had been verbally received in this year and only
dispatched in the subsequent year!
(IV) The Company had large volumes of unsupported expenses. Gupta

and his executive Directors drew itsy bitsy salaries but claimed
large cash expenses on the company account. The accounting
department was awash with fake vouchers towards travel,
miscellaneous expenses, foreign trips, foreign exchange
withdrawals, entertainment and so on. As far as Weizmann was
concerned, Gupta was a thief.
(V) Gupta also re-routed creditor payments to his personal accounts.

He had a large number of unpaid creditors on the street. Gupta
paid them by bearer cheque and pocketed the money himself. To
Weizmann, this was immoral.
(VI) Finally, Gupta advanced loans to lowly employees and round

tripped the money to himself. He then put this money back as
promoter’s capital contribution. In this way, he satisfied BIFR
that he was committed to his company and was prepared to keep
putting money into it. Weizmann could not see any message in
this except that they had a devious and unscrupulous partner.
Weizmann was sitting on a time bomb. This was a listed

company. To be silent was to become party to the fraud and join Gupta
in perpetrating it upon the lenders, BIFR and public shareholders. If
Weizmann did not speak, Gupta would soon be in a position to
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blackmail Weizmann. What was Weizmann to do? It could not clean

out the toxic accounts without perpetrating another cluster of frauds.
About the only thing it could do was come clean, inform the world,
remove Gupta from the Board of Directors and restate its accounts.
This meant war.
In early discussions, Weizmann decided that it was not ready for

war. It had spent a lot of money and entered a third world market. It
had done so because it believed it was buying a company. It could not
explain back home why it had purchased a litigation instead. It was not
structured to fight a war in a distant exotic eastern land. It had no
legal department at home. It was a trans-national corporation. It did
not understand India leave alone Indian law, Indian lawyers, or Indian
courts. It barely knew its own Indian management and it did not know
its labor force.
By way of comparison, Gupta was the Managing Director of the

company. The company was full of ‘his men’. He knew all the workmen.
He knew the bankers. He was the face of the company for the public
shareholders. He may be the minor shareholder, but he had the
executive power from the Board of Directors and he controlled the
company. Clearly, the balance of personal power favored Gupta.
But Weizmann did have other things going for it. It had money,
which Gupta did not. It had employees around the world, lots of them,
and it could hire more Indian managers to run the litigation and the
company. Its problem was psychological, not logistical. Weizmann
didn’t want to quit and make a deal with Gupta. Sweeping the
accounting crookery under the carpet was the same as getting into bed
with a crook. If you sleep in muck, some of it is bound to stick. It had
to fight, whether it wanted to or not. It made more sense to fix its
weaknesses. How was Weizmann to fix its weaknesses?
To fight any kind of war at all, it had to get management control

of the Board of Directors. Weizmann had appointed the majority of
directors but Gupta was the Managing Director. When the battle
opened, removing the Managing Director would have to be the first
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action. This wasn’t that much of an ask. It’s hard to kick out a director
in India, but you can take his executive powers away without breaking
a sweat. The sweat comes afterwards when he goes to court but if you
have the paperwork to prove he is a crook, it isn’t that big a deal.
Gupta’s network of contacts and quick decision making was his

strength and Weizmann’s second weakness. The only way around it
was to get a lot of consultants and get ready to pay a lot of fees. If
Weizmann could hire lawyers and liaison men in every relevant town,
Gupta’s plans – whatever they were - could be thwarted.
BIFR was the third big issue. The company was still sick and it
was still implementing a BIFR rehabilitation package. BIFR would be
horrified to hear that Weizmann had entered the company and then
violated the rehabilitation scheme. BIFR would expect Weizmann to
talk to them before they did anything at all. If Weizmann did this,
Gupta would immediately paralyze the company with stay orders. The
only way around this was to take the company out of BIFR’s
jurisdiction. This could be done if it put a lot of money into the
company so that it wasn’t sick any more.
As we shall see in subsequent chapters, this assessment was

critical to the battle as it then developed.
The Weizmann case is a pretty good example of what the personal power
test can do for you if you want to fight a legal war. It’s a sure shot way of
unearthing your strengths and weaknesses. It also an equally sure shot way of
finding the enemy’s strengths and weaknesses. When you make such an
analysis, you are able to develop strategies that bring out the best in you and
exploit the worst in the enemy. In short, the analysis of personal power will
reveal to you how to win the war.
-x-
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Chapter B2
Rule 2: The Governing Environment
Deciding to fight is not that different from running the Paris to Dakar rally.
First things first, you need a driver with the skill and strength to navigate the
grueling ten-thousand-kilometer journey. He has to have the personal power to
be able to do it. We have looked at that piece of it in the previous chapter. But is
it enough to have a driver who can do it? Wouldn’t you need to understand road
conditions so that you can pick the right car for the race? Perhaps even the car is
not enough. It’s a desert out there in the wilderness. You need to equip yourself
for the desert. You need appropriate food, water, supplies, spare parts, fuel, and
so forth. You need to think about the high temperatures and the low humidity
and how it may impact both car and driver. Each of these factors combine to
create the Governing Environment impacting the outcome of your war.
The Governing Environment consists of factors that come not from the
contenders in the legal dog fight: they come from the general environment
around the warring parties. These are the larger forces impacting the theatre of
war. This is the key thing about the Governing Environment: it’s the same for
everyone, but it impacts different people in different ways. The sun in Jaisalmer
in summer is the same for everyone but the Indian and the Eskimo don’t react to
it in the same way. In a conventional military battle, heavy rain is good for a
defender and bad for an attacker. In a liberal modern democracy, marriage and
divorce laws naturally favors woman over men. In any traditional society,
regardless of what the law says, the enforcers of the law are biased towards
men. In any third world democracy, voters favor large public subsidies and low
or no tolls for publicly supplied service. This is the bias of the environment and
it’s a harsh fact of life in every environment. The misbalanced impact of the
environment makes the fight harder, or easier, depending on which side of the
impact you stand. Only a fool operates in ignorance of it.
Just so we don’t get bogged down with faddist subjects, let’s consider this
rule in an industrial context. Think about labor in a shareholders’ battle for
control of a company. Because labor doesn’t have long term financial staying
power, its focus on short term survival and solvency is pretty obsessive. It
frequently doesn’t have the will to see the “big picture”, big in the context being
long term. If labor is a factor in a corporate dog fight – and it often is – the
86
contender who shakes the money bags will tilt the balance in his favor. Even if
there is no immediate cash payout, the contender with the deeper pocket will be
able to persuade the union bosses that he will raise wages very high very soon.
He can then leverage the trade union to create a favorable political climate. He
can get the local petty politician to whip up opinion in his favor. He can get
lawyers representing trade unions to intervene in a court case between
shareholders and support him in the proceedings.
Here’s another example. Notwithstanding all the global gobbledygook you

hear in urban Indian print media, rural India is still pretty insular and there is a
visible distrust of outsiders. While everyone wants to make a fast buck out of the
incoming foreigner, a bias for the local person is still pretty common. When you
walk into a small town as an outsider, you have to fight a mindset. Getting
favorable court orders in this kind of environment is just that little bit harder. It’s
the same when you deal with regional, ethnic, class, caste and creed perceptions
in the environment in which you choose to fight your wars.
There are of course many kinds of Governing Environments. Here are a

couple of examples:
1. First, to go back to bare bone basics, fighting on home soil is always a

huge advantage over fighting on foreign soil. This isn’t necessarily about
nationality. It could be about culture and language, but it could as easily
be about networking relationships. A north Indian is as foreign in Tripura
as a Brazilian is in Delhi. It’s a long way away and a challenge to manage
the case, an unknown place to manage it in and a strange language to
communicate in. Here, simple geography and logistics are dominant
elements of the Governing Environment. If you want to fight a legal case
on truly foreign soil, you have to develop strategies to neutralize the
home advantage.
2. The party with relevant resources in the Governing Environment will

generally win. What do I mean by relevant resources? Most small towns
generally have one great lawyer and a whole lot of wonnabes who were
very likely his juniors not so long ago. If you have easy access to this hot
local lawyer and hire him first, you have a huge head start. Likewise, if
you have World Bank and non-profit institutional support on an
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infrastructure project, you will find it a lot easier to combat green peace
activists. In a society that is generally religious, you will find it just a little
bit easier to resist efforts by the municipal corporation to demolish the
illegal temple you built at the gate of your factory on that encroached bit
of forest land!
3. The party fighting on an issue that has popular sympathy will generally
have a huge advantage. For example, in the 1990s, labor was a holy cow,
no less, and the pinko-socialist tenor of the times meant that they could
do no wrong to the money-grubbing mean-minded industrialists they
worked for. Today, unionized labor is seen as either slothful problem
children, or worse political pawns in an extortion racket being run by a
class of politicians who need to be ruthlessly suppressed. Trade union
strikes in Haryana for instance are routinely dealt with through coercive
police action. Similarly, up until the mid 1980s, press, public and judiciary
were generally sympathetic to the tenant, as opposed to the landlord. The
opposite is now true. Again, in the 1990s, journalists were deeply
respected, indeed revered in many cases, their word was definitive. The
journalists are the same today but they are now projected as tradable
commodities, paid to run to agendas or worse, despicable propogandists.
In some notable cases, individuals we know well have transformed from
sages to demagogues in the space of a few years!
Simply put, the Governing Environment is often about the ‘popular

cause’. If you are fighting a popular cause, you have everyone’s ears and
everyone’s heart, even the judiciary. The spirit of the land, and the spirit
of the times, will determine what happens to your case.
* * * * *
This brings up the real question: how do you know whether the Governing
Environment is on your side? The trick is to figure out what factors of the
Governing Environment are relevant to your case. Ask yourself this question:
apart from the hard-core law, what other factors will come into play if you
choose to make a fight of it? If you know what these factors are, you know how
they will impact you, and you know how they will impact your enemy. In a jiffy,
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you will know whether you are going to win or find yourself in a spin dryer with
no exit and no kill switch.
I can add that this is not a static, passive, evaluation of fixed realities.
Just because the Governing Environment is not in your favor doesn’t mean that
you have to give up. The exercise is pro-active in nature: if you decide that (say)
three of five factors shall hurt your case, you can find a way to either neutralize
these factors or bring them to act in your favor. How would you do such a thing?
Well, it depends on the factor, and it depends on you. Half the time, it’s
about…well, lobbying. You can take out press advertisements; publicly contribute
funds to popular causes; purchase…dare I say it…news items, hire a lobbyist,
donate to local charities, fund NGO’s, open schools, kiss babies, influence the
influential, whatever… it depends on what looms before you that has the power
to hurt your interests. It’s only if you decide that you absolutely cannot do
anything about the Governing Environment that you roll up your bags and admit
defeat.
Let us look at a case where in the face of otherwise overwhelming odds, a

single individual was able to prevail over a mega corporation only because he
was a master of the Governing Environment.
The Hargear case
In 1993, an Indian engineering company called Hargear entered

into a technology and equity partnership with Lerion, an Italian
company. Lerion had been wooing Hargear for years before the
marriage. They placed lucrative export orders, year on year, in ever
expanding volumes, and talked about taking their mutual cooperation
to the next level. Hargear got the impression that Lerion was a major
European distributor of engineering products. Those were the days
before the Internet, when information was scanty and the culture of
investigation had few takers. At some point, Lerion told Hargear that
they would like to move all their manufacturing to India if Hargear
would take them as equity partners.
Hargear was at this time a one-man show, run by a technocrat

named Hooda. Many of his shareholders were friends and family. As
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business grew, Hooda became increasingly autonomous in his ways,

consulting his shareholders little and listening less even though he
directly controlled only about 37% of the equity of his company. A lot
of his friends thought he had become very haughty and
unapproachable.
As the deal developed, Lerion signed an amateurish Shareholders

Agreement and picked up 26% of Hargear equity. They also took the
option of buying 23% more shares within two years. They agreed that
the price of this second share purchase would be based on Hargear’s
financial performance in these two years. In short, the better the
company did, the more Lerion paid. You can say that Lerion had no
incentive to improve Hargear’s business for at least two years!
Curiously, Lerion also sweet talked Hooda into ceding board

control. Lerion insisted they wanted a technical director on the board,
and they wanted a very small Board of Directors. Hooda agreed to 2
directors each, which meant that both partners had to agree to pass
any resolution by majority. Hooda soon found he had to persuade
Lerion, a mere 26% shareholder, on every decision he wanted to take.
This gave Lerion a lot of power and even more capacity for mischief.
What would happen if Lerion took its equity up to 49% and added
some voting power by joining hands with some disgruntled minor
shareholders?
Almost immediately after joining hands with Hooda, Lerion

orders from Italy started dropping, as you would expect. Hargear’s
financials plummeted and with it dropped the price at which Lerion
would buy the remaining shares, when they chose to buy them.
Simultaneously, Lerion started to cozy up to some of Hooda’s small
shareholders. Within a year, Hooda faced a stonewalled Board of
Directors, hostile small shareholders and declining business. At the
same time, Lerion became increasingly belligerent. Hooda was in
trouble.
Hooda went to see a law firm. They gave him no joy. His partner
had 26% equity and could pick up another 23% cheaply. In
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comparison, Hooda had 37% and didn’t have the money to pick up
more. Lerion didn’t have to buy more equity to beat Hooda: they just
needed to convince a few small shareholders to vote with them. As it
was, the small shareholder knives were out seeking Hooda’s back.
Lerion had the technology, they controlled the sales and marketing and
now, they practically controlled the Company. Any which way you
looked at it, Lerion had the balance of personal power. But did they
have the Governing Environment?
Lerion was still new to India. They were barely at grips with the
company’s shop floor. They did not understand the bureaucratic
environment. They struggled to deal with the procession of predatory
babus, inspectors, enforcement official, preventive staff and meter
readers who came sniffing in search of snacks every other day. They
did not know their raw material suppliers. Perhaps, Lerion had moved
too early.
In any case, Hooda decided that he was done with Lerion. He

wanted his company back and would kill or die for it. It helped that the
Governing Environment was with him, more or less. And then again,
the environment is what you make of it. Hooda was a first-generation
entrepreneur and he could deal with conflict. If he could create an even
more adverse environment for the Italians, he surely would. He started
with the suppliers. He had excellent relations with all local vendors.
The vendors were already upset that Hargear orders had declined as
orders from Italy had declined. He made sure that Hargear suddenly
developed vendor supply problems.
Hargear had long had its shares of tax problems. Now that Lerion
nominees were on the board, they carried the can for its tax problems
too. Hooda started dragging his feet on his tax compliance. The
revenue departments reacted by increasing the pressure on Board
members. It did not help that both Italian directors had executive
powers. The Italian directors started to flinch.
Hooda was also pretty good with customs. All of a sudden,

exports became a nightmare. The consignments to Italy would not
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clear. Hargear faced supply defaults with foreign customers. It all

started to look very edgy and out of control. Hooda made a real mess of
the Governing Environment for Lerion. What had seemed like a
cakewalk was now beginning to look dodgy.
Lerion needed to do something. They decided that they had to

get Hooda out completely.
The war started with Lerion exercising their call option on the
additional 23% equity. Hooda stonewalled, demanding that Lerion get
their Indian law approvals first. In those days, a foreigner could not
invest in India without approval from something called the Foreign
Investment Promotion Board. This being India, in the best Orwellian
tradition of those days, FIPB spend more time blocking investment
proposals than promoting foreign investment. Lerion wilted and
approached FIPB. In the meantime, Hooda made the necessary moves
and stonewalled the application before FIPB, entrapping Lerion in a
web of procedures and clarifications.
Not much later, the Excise Tax department raided Hargear. They
followed up this traumatic visit by issuing summons asking 8 different
officers of the company, big and small, including both Italian directors,
to visit the enforcement directorate and record their statements. Lerion
came to believe that its directors face eminent threat of arrest: a fear
that Hooda did everything to fan.
Not long after, Hooda quietly encouraged the Government to

investigate the declared value of some equipment Lerion had supplied
to the Company. Authorities investigated the foreign exchange impact
of over-invoiced capital imports. A different authority also investigated
the customs duty impact of under-invoiced imports! Lerion could not
believe they were damned if they did one or the other and had no idea
how to prove that the declared value of these machines was exactly
right down to the last paisa. It all seemed like a nightmare.
What broke the camel’s back though was Hooda’s confidential

disclosure to Lerion’s Technical Director that he had not obtained
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employment approvals for him from Indian authorities. It appeared

that they were working illegally in India. If there is such a thing as
perfect chaos, this was it!
Meanwhile, the supply chain started to come apart. Suppliers

became tardy in accepting orders and delayed executing them. Hooda
blamed Lerion for the deteriorating vendor management situation.
In all this mess, Hooda upped the ante and sued Lerion before
the Company Law Board for oppression and mismanagement even
though he was the largest single shareholder. He asked for all kinds of
absurd interim orders which of course he did not get. He made the
wildest personal allegations against the Italian directors knowing them
to be wild. Lerion found itself running a contracting business and an
expanding litigation. Lerion directors lost their nerve, fearing they
would carry personal potential liability. Their enthusiasm began to flag
and they started to signal headquarters that compromise may be the
more commercial way to go.
In six months, Lerion caved in. The technical director was

probably the single biggest reason why. Lerion asked for a solution and
Hooda gave Lerion two choices: Hooda could buy Lerion out at their
acquisition value, or Lerion should give up management participation
and become passive shareholders. Lerion chose to exit and the matter
was wrapped up without further disruption.
The weirdest thing about this case is that so little happened in court.
Lerion issued a single notice under the shareholders contract asking to up its
equity holding. Hooda filed a single case and CLB didn’t actually didn’t do
anything. The whole game was played out in smoke, mirrors and perceptions.
Hooda created a pressured environment at work and a menacing environment in
the legal system. The Italians became fixated about the form of the legal action,
rather than the substance. They started to think as many professionals do. At the
end of the day, it was only a job. They didn’t need to stick their necks in a noose
in a strange land very far away from home. It worked like magic potion.
* * * * *
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What do we learn from this story? There is no doubt that Hooda was
weak to begin with. His enemy controlled the Board of Directors and would have
controlled the shareholding if a meeting had been called. His enemy controlled
the technology and his enemy controlled the customer. So how did Hooda get
what he wanted? The short answer is that Hooda understood everything
everyone ever wants to know about the Governing Environment but never dared
ask. He correctly surmised that Lerion was not at grips with the business side of
the Governing Environment. He structured a legal strategy that specifically
attacked the business side of the business without focusing too much on filing
cases. He added to the chaos when he instituted a litigation he did not expect to
win, intending only to create a certain impact and as we have seen, he made the
correct call. Hargear’s case shows us that if you want to win your legal war, you
have to manage your Governing Environment. If you create a hostile Governing
Environment for your enemy, it is going to play on his mind. Hooda created a
hostile Governing Environment in which Lerion could not operate, and he won his
fight for that reason alone.
Every now and then though, you stumble on a situation where the
Governing Environment simply cannot be mastered. Very often, these are the
cases where the ‘tide of the times’ are against the litigant. Let us look at a
telecom case where the plaintiff never had a chance to win.
The Telemobil case
Back when the ‘new telecom policy’ was announced in 1995, a

host of Indian and global businessmen swooped in to cash in on the
opportunity. Unfortunately, the policy was flawed in two fundamental
ways.
First, it was based on the principle that the highest bidder wins.
At that time, India was in the middle of a brutal License Permit Quota
Raj. Indians were told what to produce and in what quantities, who
they could sell it to, and frequently, at what price. It was punishing,
but it also offered exceptional arbitrage opportunities. Indians knew,
like no one knew, how to corner a license and then flog it for all it was
worth without doing an iota of work. Besides, in a business where no
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one knew the size of the market, and everyone rode on a wing and a
prayer, the wildest and most optimistic gambler would always win.
Second, the policy required Indians to have the majority equity in

all telecom companies. Where did the Government to find that many
Indians with deep pockets? Indians were encouraged to become
sleeping partners of underground foreigners, and boy, did they make
money out of bedding aliens!
Telemobil, a chop suey of a company, was one of the bidders. It

had one major European shareholder, one major South East Asian
shareholder and six surrogate Indian shareholders. One of these six
was a fixer named Kathuria who held a British passport. He projected
himself as Telecom minister Sukh Ram’s gulli-danda buddy. Kathuria
claimed he could deliver a license, and asked for equity in return. As
the deal developed, the European and Asian companies together took
46% of the equity, Kathuria took 20% and the other Indians took
39%. Its was a strange gaggle of bedfellows, and shareholders
meetings were chaotic at best.
This configuration had one potentially messy piece. Kathuria held

a British passport, which meant that any equity he owned was not (at
the time) “Indian equity”. Kathuria needed his own sleeping desi
partner! Soon enough, Kathuria introduced a well-known Indian
company as his Indian surrogate: a once eminent but now rapidly
declining Indian business house called Lakshmi. Lakshmi agreed to
lend its name to Kathuria for an agreed price. The bids went through,
Kathuria claimed to wave his magic wand whatever that was, and
Telemobil won the telecom tender.
Then corporate greed took over. After Telemobil received its

license, Lakshmi declared that it had no intention of accepting the
agreed fees and going away. It wanted triple the money for lending a
name to Kathuria. Kathuria was incensed. Kathuria stalled while he
looked at his legal options. Legally, Kathuria was on slippery ground.
Lakshmi had signed the Joint Venture Agreement. Lakshmi was the
declared partner in the Bid papers. The license specified Lakshmi as a
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party. Kathuria was a British national, not an Indian. For the partners
to admit in public that Kathuria was the actual owner was to publicly
admit that a fraud had been perpetrated. What were the partners to
do?
Eventually everyone agreed that it was Kathuria’s equity and

Kathuria’s problem. Kathuria liked that because it meant he could fix
Lakshmi without trouble from his partners. He persuaded UT, one of
the five Indian shareholders of Telemobil, to hold Kathuria’s equity in
Telemobil. Kathuria then made sure that Telemobil allotted Kathuria’s
equity to UT and Kathuria funded this acquisition by giving the money
to UT. Lakshmi had been hung out to dry.
Lakshmi sued Telemobil, and demanded its equity. Lakshmi’s

case was simple. It was a joint venture partner who had successfully
bid for a license and now it had been double crossed. How could it
lose? Conversely, Telemobil’s case hid behind technicalities. It argued
that the company was not concerned with deals between shareholders
and could allot equity as it wished. This was legally correct of course
but that was hardly the point. Telemobil had told the government who
its shareholders were and it had won the license on that basis. It had
to have the same shareholders when it rolled out the network. To do it
different was to breach the license. Clearly Lakshmi had the legal case.
Surprising, the court did not help Lakshmi. The Governing

Environment was the reason. Here is the substance of it.
a) Quite apart from Kathuria’s supposed leverage with the Indian

telecom minister, 1995-6 had been a time of great churn in the
political and business environment. The Department of
Telecommunications (or ‘DOT’) knew that all kinds of wheels
were turning within other wheels. Then as now, many political
figures had surrogate equity in companies riding on Government
approvals. No one quite knew who Kathuria fronted for. In this
opaque environment, DOT wasn’t going to stick its neck out and
upset this politician or that. Let’s just say that the Governing
Environment was one of ‘don’t show don’t tell;B just get on with
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it’. If DOT had no objections to whatever was going on in

Telemobile, the court was not going to go there. DOT’s lawyer
did not open his mouth in court, and Lakshmi could not progress
its case.
(b) Lakshmi’s reputation wasn’t that hot. Its finances were

precarious and it was heading for bankruptcy. It had a lot of
disgruntled public shareholders braying for its blood. The court
did not want to support a company with a long track record of
financial perversity. The court did not want to help a company
which had participated in the scheme and was now blackmailing
the real owner.
(c) Indian telecom reforms made a hesitant, confused start and soon
ran into serious trouble in the face of an uncertain political
climate. The bidding had been astonishingly aggressive and the
bankers were very skeptical about funding those levels of license
fees. High fees meant high airtime rates and customer off-take in
those years was pretty poor. The judge understood the
commercial reality. The Governing Environment was to not sweat
the small stuff and get on with it. The court was not about to
destroy the Telemobil project in order to support an Indian
participant who clearly didn’t have the money to participate in
the project.
This first suit was not the end of the matter. Lakshmi filed four
successive cases but neither DOT nor the courts were inclined to help
Lakshmi. Lakshmi eventually abandoned the litigation.
The Telemobil case teaches us that legal issues can never to be seen in
isolation. All life is lived in its context, even the legal life. Every legal case is
understood by the judiciary only in relation to the environment in which it is
agitated. In the old world, through to the end of the 1990s, the law was always
on the side of the poor, the workman, the small contractor, the David of the
piece seeking to battle the Goliath. It was not a good time for the big boys to be
seen to be crushing the little boys. This has now changed and the pendulum has
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swung the other way. The Governing Environment now is about naked money
power, unhampered by elevated sentiment.
We can part with Rule 2 on this note. Before you set out to start a war,
ask yourself this question: can you battle the Governing Environment facing you?
If you can’t battle this environment, you have to ask yourself if you can influence
the environment and change it enough so that it doesn’t hurt you? If you can
change the Governing Environment, that is your pathfinder to victory. On the
other hand, if you can’t change the Governing Environment, you’d better find
something else to brawl about.
-x-
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Chapter B3
Rule 3: The Occupation of the Field
If you are fond of war movies, you know it doesn’t take too many men to
defend a hilltop. There are two reasons for this. First, your enemy is shooting up
and you are shooting down meaning that at worst, you may have to duck from
time to time but you can blow his brains out! The main thing though is that he
doesn’t get to see you till you peek over the side. You can see him crawling up
all the time and he is far more exposed than you.
There is another second reason too: you control the battle. What do I
mean by that? He can keep shooting but if you decide not to stick your head out
over the side, all his bullets are completely useless. On the other hand, when you
start shooting down, he has the lead flying all over the place no matter how
much he grovels behind the rock. This means that you can start or stop shooting
whenever you want and there’s not a lot he can do about it but cower behind
cover. For this reason, the first fundamental objective of every soldier has always
been to quickly occupy the ‘commanding heights’ of the battlefield as battle
preparations begin. This is also true of legal wars.
Let’s take a simple case. In the civil court, a great many cases begin with
an attempt to get an ‘ex parte stay order’. What’s that you may ask? Ex parte is
a sexy Latin gobbledygook way of saying that the court doesn’t hear the other
side before giving you the order you want. Stay order means some sort of orders
restraining your opponent from doing something or not doing something. In
short, the court hears your story, believes you and passes the order stopping
your opponent’s plans in its tracks. Now, your opponent can come and convince
the court that you weren’t telling the whole story or that the court should have
had some other consideration in mind when it passed that ex parte order.
How does this work out in practice? I agreed to sell you my house for Rs
One Crore. You pay me Rs Ten Lakhs advance and sign an agreement with me.
Meanwhile, I find someone else willing to pay a higher price. I try to return your
money. Alarmed, you rush to your lawyer. If your lawyer doesn’t do something
immediately, I will sell the property to this third party and then you can spend
the next 20 years trying to get your money back from me. Very likely, your
lawyer goes to the court and gets a stay order stopping me for selling the
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property to someone else. It’s true that stopping me from selling to someone
else doesn’t mean that you get my property or your money back immediately.
The law will still take its own course and a long lazy course that is too, lazy like a
boat trip to China.
The main thing to understand here is that before you go to court, I hold
the high ground. I have the property and your money, and all you have is an
agreement that will take you 20 years to enforce through a court. I can sell my
property to a third party and use your advance of Rs. 10 Lakhs to pay my lawyer
to fight any case you may file against me. As the situation would stand at this
point, you would have financed my defense of the litigation against yourself!
Clearly, you are on really low ground.
But if you go to court and get a stay order, everything changes. Now I
have the property but I can’t sell it to anyone else. I have your money its true
but because I can’t sell the property to anyone else, what you’ve done is
“booked” the property for the price of the advance. So your stake in the property
is ten lakh and my stake in it is One Crore. You don’t have to do anything for
the next twenty years! Even if the court asks you to deposit the total sale price in
court, you still earn interest on the deposit while the case goes on. If I am
determined not to sell the property to you, we really could end up in a situation
where the property price will keep rising and neither of us will be doing anything
except fighting a very slow-moving case. Meanwhile property prices will rise
exponentially. My original aim was to sell the property but I can’t sell it now and
all I have to show for it is Rs. 10 Lakhs and one case. You can say that I am not
sitting on high ground any longer. On the contrary, you are on higher ground.
Consider what happens next. After the excitement of the first few months
or maybe some years from now, you and I will be fed up and will have a
conversation. I will probably say to you “Look you agreed to purchase the
property for One Crore. The property is now worth five Crores. How about you
taking two Crores from me and giving up your claim”. On the other hand, you
may say to me “I purchased it for one and its worth five so how about you
selling it to me for three Crores?” If we can’t agree, I am stuck with a property I
can’t sell and you have me on hot coals on an investment of Rs. 10 lakhs and
your lawyer’s fees. This kind of situation is pretty common.
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So, to close the loop on this point, getting an ex parte stay order is the
same as occupying high ground and becoming the “master of the terrain”. The
rule that flows from this is simple enough. At the start of every fight, both guys
in the fight must race to get the natural advantage of “higher ground”. If you
manage to get to the higher ground, your enemy will do everything in his power
to dislodge you a.s.a.p.: it’s your job to hang on to it as best you can. This
principle applies to simple cases as well as complex corporate battles. For
instance, if two shareholders are fighting for control of a large company, the
case can be won or lost depending on who is in control of the company when the
case begins. If you control the company, you decide what the company does as
the shareholders fight for it. You also decide what is written into the records of
the company. In this way, you ‘control’ the records of the company. To control
records is to control history. History decides what happens to a case. If you
control the company, you win the battle.
Why is controlling the Company critical? Once you have your company by
the scruff of the neck, you control what is ‘officially’ said at a board meeting and
what decision is taken by management and under what circumstances. You
control what is filed with the government and the regulator as the ‘truth’. The
fate of the company is also now in your hands. This control allows you to expand
the equity of the company, to take a ‘controlling’ interest in the equity, to
appoint additional directors and so forth. At its absurd limit, once you have
‘control’ of the company records, you have the ability to completely change the
ownership of the company, the constitution of its management and the Board of
Directors. Doubtless, the other side will challenge these moves. I am not
suggesting your enemy is half-witted and will all but roll over and offer you his
soft underbelly for that fatal bite. The point is that in theory, all this is possible,
which tells us why it is important to seize ‘control’ of the commanding heights.
Now, if I am the shareholder not in control of the company, my single

biggest agenda has to be to find a way to get some sort of control on the
company. Most of my energy will be spend on finding a way and if I can’t find a
way, I would be smart to put off the fight till I’ve figured it out. As it turns out,
there are cases where the fight begins when one party decides to occupy the
high ground. Recall that in the property sale case, the court case begins with
your lawyer getting a stay order preventing me from selling the property to
someone else. The key learning here is this: the circumstances of the case
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decide whether you occupy high ground before the case begins or as a first
move in the case. Either ways, occupying high ground is the key to successful
litigation.
* * * * *
Let me summarize the story so far. Before setting out to start a war, you
must ask yourself if you occupy the high ground. If you do, you are at a material
advantage and you can start your much beloved brawl. If you do not control the
terrain, you then have to find a way to do so. You can do it either before the
fight begins or as the first action in the fight but either ways, just do it. I don’t
need to rub it in, but I may as well say this too: if you don’t have the high
ground and don’t know how to grab control of it either, you really are sitting on
the poop heap and need to bail out.
Let us now look at a simple case where the guy who started the fight
occupied ‘controlling terrain’ even though he was agitating a pretty poor case.
The Michael Jackson case
Michael Jackson was a brilliant InfoTech entrepreneur, with a

great career record. He claimed back in 1991 to have first thought-up
the idea of setting up a direct satellite based mobile phone system.
This system could bypass the cellular telephone network of any country
by bouncing messages directly off a satellite from one mobile to
another at reasonable cost. He had the credentials to put together a
project of this type and he personally knew the people who
manufactured all the bits and pieces that went into the project.
Sometimes in late 1991, Jackson claimed to have discussed this

idea with an Indian businessman, a certain Mr. Raut. He claimed that
he had sold the idea to Raut and they had agreed to go into business
together. At some point, Raut double crossed him after stealing his
idea, technical data and business plans.
It is true that Raut was at this time actively pursuing the same
idea. Raut was a pretty dynamic guy and had been leading from the
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front with several ITES ventures for at least ten years. Early in 1992,
Raut signed a deal with an American telecom manufacturer and service
provider for the construction of a telecommunication satellite of this
type. He also signed some deals for a ground support network that
linked mobile phones via satellite. I can add that this may not be
conclusive on the point: ICO Global and Iridium were on to the same
thing too at the same time using pretty much the same vendors. But
the others were different.
Three features of Jackson’s system stood it apart. Unlike Iridium,

Raut expected his handset to look like a mobile phone, rather than
Iridium’s ‘suitcase’. Second, Raut ordered a geostationary satellite.
Geostationary satellites sit much further away from the earth, and
while this increases the gap between the time a speaker speaks and
the listener hears the speaker speak, it substantially reduces cost.
Theoretically, it is possible to cover the Earth’s surface with only four
geostationary satellites, while systems such as Iridium, which opted
for low earth orbit satellites, needed 60 or more satellites to perform
the same task. Third, Raut ordered a satellite with on-board switching,
meaning that all the connections were made up there in space and not
from a switching office somewhere on planet earth. So every call is a
single ‘hop’ from caller to satellite to listener, not a double hop from
caller to satellite to switching system on earth to satellite to listener.
When Jackson learnt of Raut’s contract with the satellite

supplier, he immediately moved an Indian High Court to restrain Raut
from implementing the project. Jackson claimed that he had met Raut
in Hong Kong and revealed his satellite hand set telephony system for
India to Raut. He showed that he had confidentially disclosed the
essential technical parameters and the business plans. He claimed that
Raut had taken his idea, and his business plans, and created his own
business model based on Jackson’s Intellectual Property Rights and
Confidential Information. He said Raut was always free to pursue this
business but he couldn’t use Jackson’s disclosures to do it. He asked
the court to stop Raut from proceeding. The court was sympathetic. It
restrained Raut from “proceeding with the contract between Raut and
the satellite construction company based on Jackson’s ideas”. Since no
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one knew where Jackson’s ideas, business plans, IPRs and Confidential
Information ended and Raut’s ideas, business plans, IPRs and
Confidential Information began, Jackson basically shut Rout’s project
down.
In getting this injunction, Jackson immediately occupied the

commanding heights of the battlefield, prevented Raut from
proceeding and in effect held him to ransom.
Raut was quick to file his defense. He rubbished the whole

verbiage about confidentially communicated top-secret idea and
business plans. He said that half of the space communication
community had been talking about such a project. The ‘confidential
information’ was all in the public domain. He said that he had hired
Jackson to help with this project but Jackson had run off and joined a
competitor. Finally, he argued that the idea, or whatever it was that
Jackson claimed ownership of, could not be protected because there
was no IPR in it.
Raut was right on the law. Jackson’s case was pretty thin.
Jackson structured his case mainly to look good in court and get his
stay order. First, Jackson claimed that what he sought to protect was
his right under a contract, not an IPR. He argued he had a right
because Raut promised confidentiality with the intention that the two
will be in business together. Raut should now be prevented from using
the confidential information by himself. Second, he based his case on a
theft of ‘technology’. To impress the court that it was a ‘technology’, he
gave it a name and described it in terms of some 20 unique and new
‘features’. It was all incredibly ingenuous. Everyone knows that the air
and space industry has got to a point where individuals simply do not
develop ‘technology’ any more. It was fuzzy stuff but Jackson didn’t
care about that. He was trying to throw a heavy technology steal plea
at the court to confirm a court order because he knew that at this early
stage, a court would be reluctant to question whether this technology
was technology at all. He wasn’t trying to win the case. He just wanted
to hang on to ‘controlling’ terrain till Raut got frustrated and settled.
He succeeded.
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The moment the court informed Raut of the stay order, Raut
found himself stone walled. Since no one knew what Jackson claimed
as his technology, Raut could not proceed with his project because he
did not know what he was allowed to do and what he was not. The stay
lasted a year and in all this time, Raut made no progress at all.
Occupation of the heights was the only reason Jackson was able to
keep this charade going with no case and no strategic strength at all.
Everyone talks about law’s delays but not everyone talks about how this
has changed the way lawyers practice law. Today, no one expects to learn how
to conduct a proper trial in court. Cross Examine witnesses? You must be joking!
Business horizons are way shorter than legal horizons. If you want the court to
do something for you, you have to find a way to get a stay order. That is often
the only criterion on which lawyers judge the strength of a case. Put another
way, a case is only as good as the stay order you can get on it. It doesn’t matter
very much if it’s a great case you can win. If you can’t get a stay order, you can’t
get a decision in your lifetime anyway so who cares how good it is? Besides, if
there is no pressure point, the other guy isn’t going to settle with you either.
Conversely, it doesn’t matter how bad a case is so long as you can get a stay
order. In such circumstances, the other guy is going to settle with you or leave
his litigation as part of his estate to his children.
As an aside, we now have two kinds of lawyers practicing in Indian courts:

those who can get stay orders most of the time, and everyone else! This is also
why every court has a very small and select band of ‘successful’ lawyers who are
raking it in when all other lawyers are scratching a modest living out of their
profession. So next time you want to say something harsh about a lawyer you
know, do remember that success isn’t only about knowing the law!
* * * * *
One of the main learning of the Michael Jackson case is that very often,
one party may have a natural advantage but it makes no attempt to occupy the
battlefield. If the case is headed for war, this is a big mistake. What do I mean?
Raut was going ahead with the project. He had his supplier contract in place.
The key element of the terrain here was the IPR or Confidential Information or
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whatever it was that Jackson was talking about. Raut was vulnerable. Jackson
had nothing to lose and could attack Raut at any time. Still, Raut did nothing. If
he had decided early that war was coming, he have gone on the attack. He could
have asserted his ownership of the Confidential Information and projected
Jackson as an employee, possibly a thief. He could have refused to settle
Jackson’s account after he left and demanded that he return all company
Confidential Information. He could even have sued Jackson and tried to
restraining him from disclosing his project secrets to third parties. I am not
blaming Rout for real and imaginary failings or lack of strategic foresight. Not
everyone runs his business expecting to be sued every minute of the day. I am
merely pointing out that if a battle is coming, he who occupies the controlling
terrain has all the advantage. The learning then is merely that if you know a war
is coming, you better move first and occupy the high ground. If you don’t or
can’t occupy the high ground, someone is going to start shooting down at you!
At this point, I’d like to go back to the Weizmann case and look at it from
the terrain viewpoint. In that case, no one occupied the high ground on the eve
of the battle and it was not clear who could. There’s a learning here that will
follow our review.
The Weizmann case
First a quick recap. The Weizmann case exploded because an

incoming foreign shareholder discovered a huge accounting fraud days
after taking over the management of a publicly listed Indian company.
The company was sick, the Board of Industrial and Financial
Reconstruction (‘BIFR’) had approved the new ‘scheme’ and the
scheme had been recognized in the Joint Venture Agreement. After
BIFR approved the scheme, Weizmann appointed six of its directors to
the board of directors. It is true that Gupta, the Indian promoter, was
still the Managing Director but the entire Board was vulnerable
because if the accounts of a listed company are toxic: you have to
either tell the world about it or run the risk of someone accusing you of
being complicit in the fraud. Weizmann decided it had no choice but to
go public with this fraud. Gupta would not appreciate this. Litigation
was inevitable.
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At this time, Weizmann had serious problems with three key

elements of the terrain: management, Board and shareholding. The
position was clear enough in the Joint Venture Agreement but the
paper deal did not translate into effective control on the ground.
Weizmann had several expats working in the company but the
executive management had Gupta as Managing Director and his
nominee as the finance director. That apart, the entire middle and
lower management was loyal to Gupta. As long as everyone in the
company saw him as the local tiger, everyone would do what he
wanted. The tiger had to be taken down and that was the key to
occupying the management terrain.
Weizmann also had incomplete control of the Board. It had

nominated six of twelve directors and Gupta had four but the other two
were professional outside directors, one nominated by lenders and the
other by BIFR. The outside directors knew Gupta, they did not know
Weizmann but mainly, their attitude would be to avoid rocking the
boat. Weizmann could not do anything without getting at least one
outside director to vote on its side and this was impossible. The Board
element of the terrain was a standoff.
Finally, Weizmann also did not have control of the shareholder

terrain. To do many things, it needed 75% of the shareholders to vote
in favor of its proposals. In a listed company, that was a heavy hill to
climb: most outsiders would think a foreigner had come in and
promptly started a demolition derby.
How was Weizmann to occupy these three elements of the

terrain? Weizmann needed to do some inspired scheming and
maneuvering. Let me tell you what happened next.
First, let’s deal with this business of management control. For so

long as Gupta and his finance directors were in charge of the day-to-
day management of the company, this piece of the terrain could not be
controlled. These guys had to go. How to do it? Weizmann could start
some sort of legal process but it would take years to prove such
allegations. It needed a confession. To get this confession, a Weizmann
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honcho met Gupta and persuaded him that no European shareholder

will agree to perpetuate the fraud. A disclosure to public shareholders
just had to be made. It was the Satyam story twenty years before
Satyam, and the issues were the same. Gupta understood that he was
free to pick the language but the declaration of guilt had to be drafted.
Unlike Satyam’s owner Raju, Gupta framed disclosures that spend as
much energy on ‘justifying’ as they did on ‘disclosing’. To Weizmann, it
made no difference. Once the cat was out of the bag, it would chew up
Gupta for lunch. In two days, Gupta and his finance director had signed
and delivered their own company exit plan!
How to action the exit plan? Weizmann needed a Board

resolution to kick them out. A Board meeting was coming up the
following week. It was perfectly obvious that Weizmann could not set
down an agenda item asking the Board to consider terminating the
services of Gupta and his finance director. They couldn’t possibly go to
a Board meeting with an agenda item suggesting expulsion of two
executive directors. It would take Gupta one minute to get a court
order against that kind of resolution. Subversion was necessary.
Weizmann settled on a surreptitious way to do it. Weizmann

prepared a resolution on “consideration of accounts of the Company”,
and added this confession as an “explanation” to the consideration of
these accounts. The die was cast.
Weizmann lucked out with attendance at the Board meeting. One

of Gupta’s nominee directors did not show up. Eleven directors
attended the meeting, of which six were Weizmann nominees. When
these accounts came up for consideration, the lender director
abstained. Weizmann had hoped that the BIFR nominee would be
neutral as well but it was not to be. He wanted nothing done without
BIFR approval. Anyway, six for, four against and one abstaining was all
that Weizmann needed. Given the confession of fraud, a Weizmann
director proposed that Gupta and his finance director be stripped of
their executive powers. The resolution was carried. Weizmann seized
complete management control in a single masterstroke.
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How about the second element of the terrain: control of the

Board itself? In the days immediately after this crucial board meeting,
the missing Gupta director sent in his resignation. He disclosed that he
was now in litigation with Gupta and could not continue as a director.
There was nothing to be done: Weizmann now had Board control.
Weizmann did not accept this resignation, concluding that this was a
no-lose situation. If this director did not come to Board meetings,
Weizmann had numerical advantage. If he did show up and voted
against Gupta, it still worked well for Weizmann.
Not that Weizmann was lulled into any complacency. Although

Gupta had already made an enemy of one of his own nominee
directors, Weizmann still wanted to remove one more Gupta director,
just to be sure. Weizmann kept fishing around for a way to do this.
Those employee loans were one option. Recall that Gupta had
syphoned money out of the company to bring it back as promoter
equity. He did this by allowing his trusted employees to take out loans
which they then delivered to him in cash. The law did not allow a
director to directly or indirectly take out a loan without government
approval. If a director did that, he could be removed from his Board
seat.
This solution has its problems of course. You can’t remove a

director without giving him a chance to defend himself. You have to
produce all the evidence, to a legal standard, and only then can you act
on it. Getting confessions out of Gupta’s trusted employees was
another kettle of fish. Weizmann didn’t go looking for a confession, it
simply spread the rumor that Gupta had disqualified himself as
director. Gupta figured he was in trouble. He calculated that while he
may be personally disqualified, he still had the right to nominate
directors. It made sense for him to put his young student son in his
place. Sure enough, he sent in his resignation and nominated his son
for appointment. That played right into Weizmann’s hands. At the next
Board meeting, Weizmann accepted Gupta’s resignation but refused to
appoint his son to the Board. It was a defensive decision. A bankrupt
publicly listed company needs mature board guidance: it can’t be run
by students perpetuating dynasty rule. Weizmann got what it wanted.
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That left only the last of the terrain questions: shareholding

control sufficient to pass special resolutions. How was Weizmann to
get 75% of the voting power? Weizmann was not going to put more
money into the company. It made more sense to persuade the lenders
to support its moves. This was easy to do. Once the bankers
understood what Gupta had done, they came out on Weizmann’s side
and this problem solved itself quite easily.
Thus, in one fell swoop, on one single day, at one single Board
meeting, Weizmann decisively occupied the high ground and became
the master of the terrain. Events cascading out of this key trigger then
worked to further strengthen Weizmann’s position. How it then used
this position of advantage is a question we will study in subsequent
chapters.
Thus, we see that in any conflict situation, who occupies the high ground
is never preordained. One day before hostilities started, Gupta ran the
management, he had a split board and the shareholding pattern made any kind
of aggression difficult. Yet, he signed one piece of paper and this allowed
Weizmann to charge up hill, dig itself it and start shooting down at Gupta. It
could have been the other way around. Gupta could have gone to court the
moment he heard that Weizmann planned to make a disclosure. Instead of
signing a confession, he should have been signing a lawyer’s powers of attorney.
One stay order would have been the difference between keeping control of the
company and getting booted off the Board.
So where are we on the moral of the story? To my mind, the main moral
here is that in many circumstances, both parties to a fight have the ability to
occupy controlling terrain. It’s the warrior who has the brains and foresight to do
it that comes out ahead by a mile.
The other thing to bear in mind is that you must not start a war till you
have occupied controlling terrain, unless it’s a war the first move of which is to
occupy controlling terrain. This activity must occur before the battle has begun
because this occupation determines who wins. Seen in this way, it is clear that
most battles are won and lost before they begin.
-x-
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Chapter B4
Rule 4: The Leadership
You may recall that 2004 was the nearest thing in development economics
to an all-night beach rave you will ever get from a society as traditional as ours.
The economy seemed to be ticking over at 8% growth, Government seemed to
be doing its job and everyone agreed that India was the next superpower. You
could practically see our aircraft carriers just over the event horizon majestically
patrolling the oceans as the world abandoned MacDonald’s in favor of Haldiram
Gujia and Chicken Pakora! By the end of 2012, the acid trip had turned into a
surreal nightmare. The economy had slowed to 4%, scams sprang eternal like
daffodils in spring, the political discourse had turned abusive. Now,
confrontational regional leaders, faces contorted grotesquely, engaged in
stomach churning slander night after night. How did we get here in 8 short
years?
In our sober moments, we know that we live in a complex world where

many factors come together to synthesize ‘reality’. Who would you blame for
what happened to India circa 2012 and thereafter? Whatever your political
predilections, you would blame our fate? Would you blame it on the perfidy of
opposition leaders who made it impossible for parliament to function for a
decade? Would you blame it on immature political leadership of successive ruling
parties? Either ways, you will likely blame somebody, not something. In our
hearts, all of us know that most things that come to pass, or don’t, do so, or
don’t, because of some one. That someone is generally the leader who holds it
all together.
You can do this exercise on any historic event and you will get the same
result. Did India achieve independent in 1947 because Gandhi’s morally
righteous tactics so frustrated the British that they left? Was it because US
President Roosevelt argued that England can’t have American support to fight
fascism in Europe in defense of freedom and yet have colonies where it enslaved
others? Was it because Hitler bled England leaving it with no will to fight its own
colony after the war had ended? At one level, we don’t need to answer this
question at all because whatever answer you choose, your finger will point at
one or more guys who you hold responsible. It’s always about the leaders.
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You can run the exercise in the negative and still have the same result.
Would India have become a license-permit-quota-socialist paradise allied to
Russia if Nehru had been a market obsessed capitalist as opposed to a Fabian
socialist? Would Reliance have existed without Dirubhai Ambani? Would any
Indian politician of the time but Indira Gandhi have declared a state of internal
emergency and suspended our democracy because she lost a court case? Would
a significant part of Delhi been half razed to the ground in 2007 if
Y.K.Sabbharwal was not Chief Justice of India? Could the Delhi Metro have been
built without Shreedharan? The truth is that other railways have been built
without Shreedharhan and democracies have been subverted without Indira
Gandhi. Credible counter-factual historical analysis is always an elusive beast!
This brings up the crack to this code though. It is true that one person
can’t make things happen if historical conditions don’t exist to make it happen.
On the other hand, if historic conditions do come along but you don’t have the
person to make it happen, it won’t happening. If you want a hundred persons to
get together and do something, you are going to need someone to keep them
together and pull in the same direction. Leaders give direction and purpose to
teams. If you don’t have good leaders, your team is going to mill about like
bleating sheep and cancel out each other’s effort. This is true above all in the
courts. How many ventures have failed because the leadership isn’t up to it?
The thing to remember is that litigation is a long-term low intensity war of

attrition fought under huge pressure. It’s not a nimbu paani to be made: it’s a
complex infrastructure project to be built using sophisticated project
management skills. No one man wins a complex litigation by himself. It takes a
three-way partnership of Client, Law Firm and Senior Counsel to win any high
stakes war. All three have to act in harmony and maximize their talent and
effort. It is every manager’s job to ensure that these three resources tick over
smoothly and work together seamlessly.
* * * * *
Let us a stop a moment to get under the skin of this one. If you have a
difficult legal problem, you need to find yourself a Law Firm. I say so for the
same reason that you go to hospital when you have something more than a cold.
You don’t deliver your fate to the friendly neighborhood MBBS doing his thing in
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his scooter garage ‘clinic’. Unless he is James Bond, there are only a finite
number of things one person can do well. There are some great individual
lawyers out there, but they don’t know everything. In today’s complex world, a
problem can only be cracked by groups of people hammering away at it.
That’s not the whole problem though. If you go to a solo performing

individual depending on his skill, you are fatally exposed in areas where he has
little skill. Worse, he is not likely to tell you what he does not know. You rely on
a generic reputation based on stuff he does know only to find, sometimes too
late, that you needed a guy who knew stuff this guy doesn’t know. If instead,
you go to a system integrator who says “I am no Mary Kom at anything but I can
put together a great team of experts for you”, you may find that you do end up
with best-in-class advice for the incremental price of the system integrator. All
over the world, groups of legal experts come together under one roof because
it’s efficient and it works for everyone. You’d think the world was on to
something!
What attributes do you need in a Law Firm? First, you need a group of
hotshots with a fair understanding of a range of laws, or at least everything that
is of any relevance to your problem. If you are going to fight over a high-stake
contract, your Law Firm better have written some high stakes contracts in their
time so that they know where to find both the snakes and the ladders. If you are
going to fight the Government over a road you failed to build, your Law Firm
better know something about project finance and environmental laws too.
Second, these guys should know all the specialists you may need to solve
your problem. If you need specialist expert witnesses in forensics, accounts,
damages calculations, bridge building or whatever, your Law Firm better know
where to find them. If you need to go to Sikkim to get a stay order, your Law
Firm better know the movers and shakers in Gangtok’s small legal fraternity.
Your Law Firm also needs to know which lawyer has the most success in which
court room. Now that the topic has come up, I can add that they also need to
know whether you should go to Gangtok or whether you can get the same result
in Delhi or better still…Calcutta!
Third, your Law Firm needs to have tactical depth. What do I mean by
tactical depth? Frankly, I would rather hold off on this point because I have a
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whole section coming up – some 20% of this book – which talks about nothing
but tactics. For the moment, let me explain the context. It is critically important
to understand that litigation in India is a war of attrition like the trenches of
France in World War I: it is not a lightening quick Operation Desert Storm in
Kuwait in 1991 ... well, most of the time, anyway. To win a war, you need a Law
Firm that can foresee events three or four chess moves down the road, who has
worked through the risk of doing this or that, who has contingency plans in
place, and who has the vision, ability and resources to bounce back from a
disaster. That is tactical depth in a Law Firm.
Finally, your Law Firm needs to have logistical depth. This should be a
simple one to follow. Litigation is won by a war machine, not some mad cap
scientist sitting in a lab amidst his pipettes and beakers stirring some devastating
magic brew he will unleash on your enemies. If you will allow a very bad cliché,
litigation is 10% inspiration and 90% perspiration. It’s a method act of plodding
on in a desultory desert of sweat, toil, grime and tears, filing papers and moving
applications, and preparing arguments and briefing witnesses and finding case
laws. To win it, you need young lawyers, libraries, data bases, court clerks, office
equipment, communication tools and all the human or machine support that you
may need. Inevitably, when it comes to high stakes or complex tasks, the
biggest bottleneck is enthusiastic slaves who run the legal machine! If you don’t
have the right Law Firm for the job, you just tied your tail to a millstone and the
race is that much harder to win.
Now, that is just one of three pieces of the puzzle. You need two others:
and the second is the Senior Counsel, the lawyer who argues the case in court.
Why do you need this man? No matter how mature the members of your
Law Firm, some of the advice you need is about what the judge is going to do in
your case. It takes a man who sits in that court all day, day after day, for 20
years, who understands stuff like this. He is the arguing lawyer who spends all
his time arguing cases. In India, we inherited our Senior Counsel system from
our colonial masters. This system is expensive, but it works. Senior Counsels are
generally very smart and they are great orators. They also have great credibility
with the judges. Senior Counsels often stay away from clients. They do this
because they haven’t the time to engage with laymen. They need readymade
case files and they want to be briefed ‘from the record’ and without emotion.
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They don’t want to waste time battling facts that are not before the court. They
certainly don’t want to engage in anger management workshops with teary eyed
clients who think they are tragic Bollywood heroes. It’s quite an art to brief a
Senior Counsel effectively and the good Law Firms win because they are masters
of the art. Mainly though, you need the right Senior Counsel in the right place at
the right time saying the right things to get the right orders at the right time.
Your personal operating structure is the third limb of this troika. To win a
legal war, the Law Firm requires almost continual support from its Client. It
needs to be updated on the facts with documents and records, it needs
management approval to put the agreed strategy into effect and it needs logistic
support in signing petitions, supporting hearings, etc. It also needs some high-
quality intelligence on what the enemy is doing. A Law Firm can’t get very far if
the Client is not decisive, effective and able to get everyone to do what is agreed
to be done. If you want to win your legal war, you need to have the internal
machine to make it happen.
* * * * *
So every legal battle is three guys – Client, Law Firm and Senior Counsel –
acting in concert. The war machine works well when everyone acts in unison. If
the leadership can’t bring together this diverse army, or if the leaders start
bickering, the machine breaks down and brings on its own disaster. It’s easy to
underestimate the importance of this issue. Wars are won not merely because
the warrior has the weapons, but also because the army has great leaders who
know how to use them. You may have the hottest company in town, but if you
hire crap lawyers, you will end up in the dung heap. You may have the smartest
lawyers in town, but they can’t hold their logistic together in a long dog fight,
you’re toast. Companies don’t win cases because they have the people, the
money and the lawyers. They win them because they have the leaders who
know how to optimize these tools to win.
Since we have been on the Weizmann case a lot, let me use that example
to further illustrate the point.
The Weizmann Case
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Recall that the Weizmann case exploded because a foreign

automotive multinational company acquired the majority shareholding
of a Indian sick Company. To do this, Weizmann and the promoter
group went to the Board of Industrial and Financial Reconstruction
(‘BIFR’) and had a new “rehabilitation scheme” approved. BIFR also
approved the Joint Venture Agreement between Weizmann and
Gupta’s group.
Let us now return to the Weizmann case and look at the

leadership on both sides. Weizmann India was led by an expat
foreigner experienced in running companies in the third world
generally. He had no special understanding of India or its legal system.
He did carry the white man’s burden in the sense that he believed he
was the child of a greater God. Factory personnel hated him within
days of his taking up his duties in India. Soon enough, Weizmann’s
Indian Law Firm hated him with the same dangerously incendiary
passion. How could the company litigate effectively when everyone
hated its team leader? Weizmann took the CEO out of the litigation
equation: they asked him to confine himself to business and keep away
from the lawyers. Instead, they put the topmost Indian manager in
charge of the litigation. He turned out to be pretty good. Looking back,
he deserves a great deal of credit for keeping everything quiet as the
fight went on.
Leadership doesn’t end with the client of course. Lawyer teams

need leadership too. As is often the case, this case required two leaders
– a Law Firm boss and a Senior Counsel. How were these guys picked?
The Law Firm boss had to be a corporate legal guy of course.

Such battles are fought in the Board room as much as they are fought
in courts. The Law Firm boss has to understand company law, he has to
understand commercial realities and he has to be able to handle
himself inside a Board meeting. India has an exclusive spread of such
lawyers in Delhi and Bombay. Weizmann appointed one such and left
him to put together his own support team.
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That left the business of picking the Senior Counsel. This is

generally a hotly debated matter because everyone pushes the person
they personally like. The trick is to find one that fits the job description.
Since this litigation could be fought in several towns at once,
Weizmann needed a metro based Senior Counsel who would travel at
short notice. By definition, they could not hire any of India’s top twenty
celebrity lawyers. Weizmann chose to go with a relative youngster
from a family of eminent lawyers.
That said, you still can’t transport a lawyer from one town to
another faster than a court can pass a quick stay order with far
reaching consequences! Weizmann needed a local lawyer in the four
cities in which cases could be filed. Long before they needed to,
Weizmann appointed a lawyer in each of these four court, and briefed
them in advance on what the issues were.
Let us now look at the reality from Gupta’s side. It may well have
been the money, but Gupta was seriously under-supported in legal
terms. He chose to go with only two young independent lawyers in two
courts and no Law Firm. Both were bad choices. The younger of the
two didn’t have the experience and the older was a state level lawyer
on the edge of becoming a high court judge. Neither understood the
high stakes litigation game.
Let’s now see how the plot developed after Weizmann stripped
Gupta of his executive powers. Gupta’s first challenge was to restore
the power equation between shareholders. He went to BIFR, but
Weizmann produced his confession letter. Charges and counter
charges flew everywhere. BIFR refused to decide the case, bailing out
on a technicality. Privately, BIFR took the view that it was here to
rehabilitate the Company, not settle private shareholder disputes.
Gupta was stone walled.
The stalemate changed dramatically the following month. Three

critical decisions required shareholder’s approval. First, the company
needed an auditor. The previous auditor had resigned when he saw
Gupta’s confession letter. Second, Weizmann wanted the company’s
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name to be changed to Weizmann India to help leverage the

international brand in its local marketing pitch. Finally, it needed
shareholders to approve the appointment of the new Weizmann
directors. The company convened an Extraordinary General Meeting.
That gave Gupta his opportunity. Gupta filed a case in the High Court.
In this case, he argued that the Joint Venture Agreement made

him the Managing Director of the Company: Weizmann could not
appoint their nominees to perform this job. Similarly, the Joint Venture
Agreement agreed on what the company’s name would be: no one
party could be allowed to change that. Finally, the auditor of the
company had been intimidated into resigning and Weizmann was really
looking to replace him with their own stooge. On all counts, he argued
that Weizmann’s plans should be restrained. The court bought the
story and stayed the shareholders meeting without calling Weizmann
to court and hearing its point of view.
This was quite a shock. Court’s don’t stop shareholders meetings.

This is commonly understood law. I suppose this order proved that
anything is possible in court.
Weizmann’s lawyers were thoroughly whipped for this one.

Weizmann had appointed a Law Firm, a Senior Counsel, a local lawyer
in every city, asked its Managing Director to shut up and stay out of it,
hired a Director (Operations) to help the litigation and what did it get
for its effort? There was blood on the dance floor!
Then the soul searching began. Why had this happened? Why
had such a move not been anticipated or pre-empted? The answer it
seems was complacence. Two months had passed since Gupta was
stripped of his powers. Everyone had gone to sleep. It was a perfect
example of how not to fight a war.
Weizmann now needed to have this stay vacated. It moved the

court almost immediately. It had the heavy fire power arguments on its
side. The Joint Venture Agreement was a private agreement between
two shareholders but this was a listed company with many public
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shareholders. These public shareholders were not part of any

agreement: why had their rights been suspended? How could a court
force a company to use the services of any servant (read Gupta as
Managing Director)? Why was the Court forcing a public company to
hire the services of a self-confessed fraudster? If Gupta had a salary
claim based on his former status as Managing Director, he could be
compensated, but a stay order?
On the face of it, the stay order was not sustainable. All Gupta
could do was to try and stone wall hearings. That is what he did. His
lawyers used every diversionary tactics they could dream up to avoid a
hearing. Why not let BIFR decide this question? Why not let an
arbitrator decide it in arbitration. The judge understood that Gupta was
stalling. “I am prepared to suffer the labor and the pain of hearing you
both”, the judge stated, “but let it be understood at the end, I have to
deliver something”. The entire court was in splits of laughter.
And hear the case, the court did, all day long. Eventually, the
court stated that it will refer the dispute to whoever the parties wanted
as arbitrator but the stay would not survive. Gupta’s counsel conceded
the point and the day was lost.
Gupta’s loss was a case of poor leadership. His lawyer came to

court to extract an adjournment: he was not prepared to deal with the
legal issues. His strategy was unclear, his papers were not in order and
he did not have masses of case law to cite and waste endless weeks in
argument.
Looking back, it is pretty clear what Gupta needed to do. Once he

had his stay order, he had a week in which to unleash whatever his
next strategy was. He knew that Weizmann rush to court the moment
they received a copy of the court order. What would he do then? He
doesn’t seem to have spent any time thinking about it. He was
strategically weak. In litigation, that is fatal. He could have taken any
number of steps to take the case to the next level. He could have
escalated the fight on shifting battle fields. Instead, he chose to defend
his stay order. He ended up getting slaughtered in court.
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The moral of this story is that the right leadership is not in itself the
difference between victory and defeat. You have to put together a team that will
work together harmoniously. If the client, the Law Firm and the Senior Counsel
don’t fit well, it doesn’t help that each of them know their jobs. Poor
communication between Law Firm and Senior Counsel is a common reason for
failure. Bad fits happen for all sorts of reasons. Culture is probably the most
common. Young people are brash and outspoken, older people are used to
deference and servitude. The result is rising mutual distrust, even conflict.
Brutalizing junior lawyers was the norm in the early 1990s. The Senior Counsel
who does that today is likely to get sabotaged by this briefing lawyer.
Then there is the problem of expectation. Traditionally, Senior Counsel

expected complete support, including case law lists. Clients are now reviewing
Law Firm’s bills more closely and, as an example, often decline to pay for
research. Junior lawyers don’t want to keep awake nights doing things that bring
in no billing. Senior Counsel want the case laws, the juniors don’t supply them
and court case suffers.
In complex litigation, there is too the conflict on who is in the driving seat.
Senior Counsel see themselves as movie stars but know 20% of the facts. The
Law Firm is playing all sorts of games outside the court room which it doesn’t
want to share with the Senior Counsel. The Law Firm also thinks it’s the fee-
paying client and should be driving the decisions. This territorial dominance
struggle brings its share of grief.
Finally, there is the very serious problem of colliding agendas. Law Firms
are here to win the war. They want a happy client. The Senior Counsel is here to
keep his relationship with the court, which is why he gets hired in the first place.
When Senior Counsels play to the court, and ignore the client’s agenda, the Law
Firm gets upset. This leads to clashes.
Here’s a case that went horribly wrong because of a mismatch between

the Law Firm and the Senior Counsel.
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The Orient Organic case
Orient Organic was one of those second rung Indian corporations

who always had potential but lived on the edge of solvency. At some
point, Orient’s owners decided they needed a professional manager.
They found this forceful, innovative no-nonsense personality named
Seth.
Seth did his own investigation and did not see why Orient wasn’t
making money. It was one of only five manufacturers globally of an
arcane sulfuric chemical used in the tire business. They had picked up
the technology from Japan. Frankly, no one understood why the
Japanese had agreed to share it with Orient in the first place. India
wasn’t that big a market to begin with. In any case, handing out
technology for small royalty couldn’t possibly meet any commercial
goal. Under the terms of the technology transfer agreement, Orient
could not sell its product overseas. Seth understood this to be at the
heart of Orient’s problem.
Orient had another great problem though. Orient’s promoter had

implemented the project in typically license-permit-quota style: over-
invoicing imports, drawing down on unjustified credit lines, and buying
substandard machines. Orient ended up with a sub-optimal piece of
junk, not a class facility employing modern technology. Naturally, the
plant ended up producing a substandard product. It sold, but it wasn’t
to global standards. The company’s fate was written before it went to
commercial production.
Orient’s promoters were of course entirely satisfied with the

situation. A lot of lender’s money ended up in trunks beneath their
bolster beds. But that was then and Orient needed to go forward now.
How to make the plant profitable? Seth leafed through the technology
transfer contract and found a loophole. The plant had been in
commercial operation for a year but the commissioning tests had never
been performed. The commissioning tests set out tight output
standards of exceptional quality. There was no way this shoddy plant
was going to meet those standards. Why not claim a breach of
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contract? Why not tell the Japanese that since they had not given
technology which could produce A class goods, they were in breach and
Orient was free to sell its goods anywhere? Orient decided to roll out
this strategy.
Seth hired a lawyer. The lawyers were relieved. The technology

agreement did not have detailed plant specs. It did have detailed
output specs. The Japanese company had assumed that Orient would
build a quality plant. In hard core legal terms, nothing in the junkyard
plant was contrary to the letter of the technology transfer document.
What were the options? Orient could ask the Japanese company to pay
them the money they lost because the plant did not produce a quality
product. Or they could ask the Japanese to let them sell the product
abroad in places like Africa and South America where quality standards
were a little more forgiving. The case was as good as won.
Orient rolled out the strategy. They invited the Japanese partner
to commission the plant. It was a fiasco. The Japanese technician was
aghast when he saw the standing junkyard. Still, he was here to do a
job and he had to go through with the process. It was a seven-day long
nightmare of broken machines, leaking pipes, failing air conditioning,
crashing computers and spluttering gen sets. The Japanese withdrew
in confusion.
Orient wrote the Japanese company claiming breach of contract

and demanding arbitration. The Japanese company asked for
settlement talks. Seth accepted, and took along a Japanese speaking
Indian with him. As the talks progressed, it became clear that the
Japanese executives were worried about their legal obligation to meet
the commissioning tests. It was a crazy situation for sure. Basically,
Orient built a shoddy plant, but the technology partner was guilty for
failing to write detailed technical specs into the technology transfer
documentation. The talks ended in a stalemate. Seth was convinced
the Japanese would pay to avoid an arbitration.
This is where the Law Firm screwed up. The arbitration clause
provided for reference to the Federation of Indian Chambers of
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Commerce and Industry, commonly called FICCI. FICCI’s arbitration

cell is housed one room away from the office of the Indian Council of
Arbitration. The Law Firm’s clerk filed the petition with the wrong desk.
It took the Law Firm four days to detect the error. They promptly
re-filed it at the correct desk but the petition was delayed and this had
legal consequences. The Japanese company moved the High Court and
asked the court to stay the arbitration. It was downhill from there.
Orient needed an eminent Senior Counsel to stop this move. It wasn’t
that hard a job. At least 50 lawyers in the city could have delivered.
Seth had an existing relationship with a giant killer Senior Counsel
called Bharti. He was more than capable of winning the action.
Everyone was happy to engage his services. It was a mistake.
Bharti had all the arrogance of intellectual superiority but he also

wanted to replace the Law Firm with his own son, still a chamber
junior. Instead of focusing on the job, he concentrated on destroying
the Law Firm’s credibility. He was hostile, he was aggressive, he was
offensive and he accused the Law Firm of negligence. In time, Bharti’s
chamber junior started doing the Law Firm’s work. In retaliation, the
Law Firm started withholding critical information from Bharti. Seth
found himself in the middle, hostage to a Senior Counsel and facing a
sulking Law Firm. The case suffered. Briefings were incomplete,
matters were not objectively debated, the Law Firm wouldn’t talk
enough, the Senior Counsel wouldn’t listen enough, and through this
entire charade, lawyers for the Japanese company fell about laughing
helplessly at every hearing. It couldn’t go on. The Law Firm threatened
resignation, the Senior Counsel refused to attend hearings, and the
client was left with a no-win.
To cut a short and demeaning story shorter, the result was that
Orient lost the action. That ended Orient’s relationship with its Law
Firm and it also ended its relationship with its Senior Counsel.
Orient had no choice but to appeal and appeal they did, using a
different and for more modest Law Firm and a much less eminent
Senior Counsel. Predictably, without any great effort, the case was won
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in appeal, with barely a whimper. The case went to the arbitrators. But
for the clash between Law Firm and Senior Counsel, things need never
have gone that far.
The smart warrior knows that winning wars is about both having the
weapons and knowing how to use them well. Before starting a brawl, the wise
litigant asks itself if it has the leadership for the job. Since the leadership is a
bunch of people working together, it makes sure that all the key people work
well together. When the answer to both questions is yes, the litigant is good to
go.
-x-
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Chapter B5
Rule 5: Organization and Management
If you manage anything at all - especially a kitchen - I don’t have to sell

this rule to you. You may be the hottest cook in town and you may be able to
put together the finest parties, but your success probably doesn’t depend on
your exotic recipes or your eclectic cuisine. More likely, it depends on your ability
to get fresh meat and vegetables from the market, cut them efficiently, cook
food and store it afresh till it’s time to serve it hot. Meanwhile, someone has to
keep the soda and the water and the ice and the sliced lemons and who knows
what else besides flowing smoothly to the bar. A good party is about
organization and management, not exotica. If the food and drink fail to make the
cut, it doesn’t matter how well chosen the menu mix is. Every party succeeds, or
fails, in that space between concept and execution.
This is equally true of business ventures. You just can’t make a project
happen unless you put in the human machinery necessary to bring every
element of it together. This is also true of litigation. If you cut out the arty
flourishes, the art of litigation is ultimately the art of employing all available
resources in the most efficient way, in the widest sense. It is the art of putting
together an organization that can deliver, a command control mechanism that
can direct delivery, and the logistic support by which the delivery is optimized.
What do I mean by this?
First, and before everything else, you need resources to fight legal wars.
That means many things. You need money, you need executives, you need
lawyers, you need law officers, company secretaries and runners, you need
telephones, cars, paper, photocopier… okay, you got the picture. If you don’t
have the resources, you can either go get them or you can go home and bury
your nose in the television. There is no third way. This is pretty obvious so far
and I won’t labor the point.
The larger reality is that you need to have organization and management
to use these resources: not used badly, but used well, optimally, to the limit of
their capacity. Organization and management is the grease that lubricates the
machine, the difference between a group of harmoniously moving parts and a
burnout. Ultimately, this is about people. It’s not about any people either: it has
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to be the right people. You cannot assume that if you have a resource, you will
be able to find a way to use it well. If you don’t have the right resource, you
have nothing.
After 40 years in the legal business, I have no hesitation concluding that

most commercial outfits don’t have it. They may have the organization and the
management to sell potato chips or put up a cracker project, but that
organization and management is not automatically good for fighting court cases.
You don’t take a Maruti 800 to the base camp of Mt. Kailas and you don’t take a
Humvee to the narrow lanes of Johri Bazaar in the old town of whatever city you
live in. There is a time and place for everything. Many technical people simply
crack up when they have to deal with highly nuanced non-linear, non-
quantifiable variables embedded in litigation. Many management people simply
can’t evaluate high stake risks in the contexts in which they operate in their daily
life. How often have I seen this: you ask someone from the sales department to
find out what the competition is doing? A day later, he is back with all the
intelligence on what everyone else is doing plus how to deal with it. His mind
works flawlessly when it comes to dealing with the dealer and the customer. He
is even better at figuring out how to manipulate both. But if a stay order comes
along limiting his ability to sell or make deals with dealers or push certain
products, he goes into freeze frame. You just can’t thaw him out. He’s a great
sales man, but he’s the wrong man in a hostile legal environment. The trick in an
upcoming litigation is to have the organization that is able to deal with dog fights
on mean street.
While we are on the subject, let me also add that the rule on organization
extends to your lawyer too. The halos we put around law and lawyers take
attention away from the fact that litigation is 90% logistics, 9% legal training
and 1% inspired thinking. Not everyone is prepared to agree with this.
Predictably, lawyers who don’t agree with this have the worst organizations and
the poorest management. As a general proposition, Indian lawyers are
particularly bad at this. I first had independent verification of this a hundred
times over the decades whenever clients complain about the skewed priorities of
Indian lawyers. So many Indian lawyers simply didn’t understand that clients are
customers to be managed as a business. “I am a revenue stream for you”, one
such customer said to me once. “You spent too much time confusing clients with
complex and conflicting legal percepts, enmeshing us in detail and chaos. All I
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want is a seamless service. If you live in a society with logistic problems, you
have to build redundancy into your system. If you don’t have the organization to
deliver the service I need, your problem will become my problem. I don’t pay
you to buy your problem”. Twenty years after he told me this, I see that this is
still true for a great many Indian lawyers.
In short, the business person spoiling for a fight has to make sure that he
has quality organization and management in two different places: his own
company and his lawyer’s office. If either is off the pace, basically, he runs the
risk of losing the plot. But then, how does he know if the organization and
management can keep the pace? I use three simple sub rules to make my
evaluation: one Organization, two Command and Control, and three Logistics.
Let us look at each in turn.
(1) The Organization
The Organization you need must bring together a group of people who
between them have the skill and experience necessary to take care of litigation.
There are several aspects to this. First, it’s about people with skills. Litigation
requires a variety of skills to come together as part of a team. Even at its
simplest, you need an internal company man who understands the basics of
court cases. He needs to know how to support court cases: he should know
where to find the paperwork in the company’s office. He has to know how to
deal with his lawyer. He has to intelligently react to his lawyer’s requirements
and he has to have a general idea about what is going on in the litigation. What
you don’t need is an ass who doesn’t know litigation, the courts or what is lawyer
is taking about.
When you get to the high stakes complex multiple case battles,
organization gets a whole lot more complex. Organizational failures also become
more pronounced. This is when you end up with a situation when you tell one
court one thing, the other court in a different city the opposite thing, and get to
dig your grave in both for lying! This is when activities are not planned in
advance and frantic last-minute deadline-beating activities lead to blunders. In
every complex litigation, where the theater of battle can spread across a lot of
courts, you have to have an efficient organization everywhere.
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Let’s go back to our Weizmann case and see what kind of organization
was put together to fight the upcoming war.
The Weizmann case
Recall the Weizmann battle, the classic confrontation between a

large global majority shareholder and a small but nimble Indian
promoter shareholder. Weizmann discovered that Gupta had
defalcating funds and faked the accounts of this publicly listed
company. Weizmann had stripped the promoter group of their
executive powers. When Weizmann convened a shareholders meeting
to approve key resolutions, Gupta convinced a court to stay the
meeting. Although the stay was later vacated, this was a serious
management failure, putting the company back by months. Weizmann
decided then that it will never allow another stay order to ever be
passed against the company. It created the perfect litigation oriented
organization, even if it bordered on overkill.
The organization needed depended on what and where the

battles were expected to be fought. Here is an analysis of the thinking
that went into the establishment of the organization.
(a) The Joint Venture Agreement was executed at Delhi and BIFR
had its bench at Delhi. Gupta could file a case in any court in
Delhi – trial courts and high court – and Weizmann needed a
representative everywhere. This sounds like a logistic mess but it
is not. Weizmann’s Law Firm called up a lawyer in each court and
gave token advances to their clerks to watch new filings. The
Law Firm promised these clerks that the first man to spot a new
case against Weizmann would get a hefty reward.
(b) Since Gupta could always go back to BIFR with a new story and
ask for a new protective order, one man was put in charge of
watching for new filings in BIFR.
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(c) Weizmann had its offices in a north Indian hill state. The District
Court and the High Court in this state also had to be watched.
Two more court clerks were put on that job.
(d) Finally, since Gupta’s real weapon was to go to the Company Law
Board (CLB) and claim his rights as a minority shareholder had
been trampled on, one court clerk was told to watch the filing
register there on a daily basis.
In practice, the cost was minimal. One court clerk covered all
trail courts in Delhi, a second one covered CLB and BIFR. A third clerk
watched all courts in the hill state where Weizmann had its
headquarters. In fairness, it was no work at all. These three court
clerks simply contacted their local counterparts and set up their own
intelligence networks. The monthly cost of this intelligence network
was negligible.
As the action rolled on, this system never failed. Gupta tried
three more times to get stay orders and not once did he sneak in a
case. On each occasion, Weizmann’s lawyers were always present to
resist a court order.
The organization you set up depends on the objectives you have. All
Weizmann wanted was to stop the next potential stay order. All it needed was
court clerks who could spot incoming cases quickly and lawyers who could
appear in those courts within the hour. If the objectives had been different, the
organization no doubt would have been different too.
The key thing to bear in mind is that this organization must have instant
communication channels between them. It doesn’t help to spot a case but then
be unable to find your lawyer. It doesn’t help to have the lawyer if he can’t talk
to the company representative immediately. It doesn’t help to find the company
representative if the company representative doesn’t know how to get a quick
management decision. Connectivity is the key to the effectiveness of the
organization. This connectivity must extend to everyone who is contributing to
the litigation effort: finance, legal department, sales and marketing, corporate
controller, the company secretary, even the company regional branches who are
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supporting the litigation. That principle is also good for the lawyers. The legal
team must have a front-end interface, a partner-in-charge and responsible for
the litigation, and a couple of identified juniors who do the foot soldier’s job. The
smart client makes sure this information is down on paper, complete with email
addresses and mobile numbers.
But that is not enough. Connectivity isn’t just about a bunch of people
talking to each other if they don’t actually know what to do. Connectivity has to
be effective and that means it must interface decision makers. You need an
effective Command and Control structure to run the organization. To that we
now turn.
(2) Command and Control
Command and Control is all about power structures and decision-making

trees. I don’t conceive of Command and Control as a separate head quarter that
sits somewhere else and tells the company what to do. Command and control is
built into the structure of every corporate entity. Power and responsibility is
disbursed throughout the entity and people at different levels have different
levels of autonomy. As you go up the food chain, individuals have increasing
levels of powers and responsibility: they command more and they are controlled
by fewer. The main thing with organizations is to make sure that everyone
understands what the Command and Control structure is. Everyone, and that
includes the big boss himself, must also understand the need to progressively
delegate powers down the food chain.
Thus, the Managing Director needs to take policy decision, perhaps

approve strategy, but he does not need to approve every taxi hired to take a
company official to the lawyer’s office at 6.00 AM for a pre-hearing conference.
The Company Secretary has to keep all his corporate records consistent with the
Company’s position in court but he can’t demand that his records be the final
test of what the company says in court. The CFO needs to control cost but this
job doesn’t extend to unnecessarily stalling payments and upsetting service
providers. The trick is for everyone to know what their job is, what they can and
cannot do and what their paramount objectives are. Fundamentally, they have to
know where they can get off their ego trips!
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The Command and Control structure is efficient only if it is pragmatic. If

you can’t get a case filed because you couldn’t authorize the payment without
the signature of someone who is not back in India for two weeks, you may want
to ask yourself if you have your marbles quite where they belong. Too many
legal actions are lost for the silliest of reasons and many of them proceed from a
lack of delegation of power and control.
Let us look at how Command and Control was established in the

Weizmann case.
The Weizmann case
The Weizmann litigation was led by an independent consultant, a

qualified company secretary who ran his own consulting practice. This
was Weizmann’s choice. Since Weizmann’s skill lay in running the
business, they decided to outsource the running of the legal cases to
an independent Company Secretary. The independent company
secretary reported to the shareholder in Europe, not the Indian
company. That was smart thinking. This war was ultimately a battle for
control of the company between two shareholders. It did not make
sense for local business people to drive the litigation. The litigation
could not be run by expats either: they simply didn’t have the tools to
take practical decisions. Indeed, they didn’t even have the vocabulary
to understand what Indian lawyers said from time to time!
In the lawyer group, a mature litigation solicitor sat at the apex

of the pyramid, pulling all the legal strings. He did the ideating and
took the strategic calls, and he commanded two team tagging front
end partner level lawyers who ran the war on the ground. The solicitor
did not take to the battlefield, but he always knew what was going on.
The front ending partners had a lot of autonomy in the field. It was
their job to react quickly and they did so when necessary, without
waiting for headquarters to clear this or that. So long as the strategy
was clear, they knew what needed doing, and they did it without
interference. All outstation and third-party external lawyers and clerks
and consultants reported to the front ending Partners, never to the
Solicitor.
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At the level of the outsourced external help, each potential battle

location had one senior and one very junior lawyer on retainer. The
junior was hired to do the leg work and the senior to do the in-court
work. The junior could manage his own court clerk, for which he
received a small monthly retainer.
Bear in mind that Gupta extracted an order because Weizmann

had no Command and Control structure in place. It wasn’t that
Weizmann was short of legal help. Weizmann employed a top-quality
corporate law firm who had written their joint venture documentation.
They could explain the contract but it wasn’t part of their mandate to
solve the ensuing litigation problem. Weizmann also had a litigation
law firm in place but they were not mandated to engage local lawyers.
Weizmann started out by engaging its own local lawyers and then
recommending them to the litigation law firm. These Weizmann
recommended local lawyers identified Weizmann management as the
client but found themselves receiving instructions from an external law
firm even as the company was silent. They had no idea how seriously
to take these instructions. They did nothing, with disastrous results. It
could not have been otherwise. There was no structure by which
intelligence could be gathered and pushed through to the decision-
makers for action. There was no clear understanding of the level at
which any decision would be taken. The company and its consultants
were simply not geared up to fight a war. Even if a local lawyer had
found out that Gupta had applied for a stay order, he didn’t know who
to talk to. There was no way to deal with the crises.
“Political” instability is the bugbear of every organization. Companies are

often ridden by factional feuds and seniority disputes. So are Law Firms. Any
effort to set up a team that does not also specify command and control
structures is going to look like a rural wrestlers’ mud pit. This means a messy
litigation. Even if you don’t lose, you are going to end up with a legal team at
war with itself. That is not smart management.
Not that smart Command and Control management ends the story. You
can have the sexiest organization you ever saw, and you can have a Command
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and Control structure slicker than a Teflon coated politician. Still, if you don’t give
them the tools to do the job, the axe man cometh for your neck. It’s to these
tools – logistics – that we turn next.
(3) Logistics
A European client recently told me we Indians are so philosophical we

have no common sense! I was not offended because he took me around the
business class lounge of Delhi’s spanking new airport and showed me exactly
why it was a shoddy piece of work. It’s true: we can’t even see the details leave
alone deal with them.
I find this everywhere, especially in my world of legal service. It seems to

me that logistics are critically underestimated because the need for logistics is
insufficiently recognized. We blunder along, like an Indian wedding, and
eventually stumble into a happy ending heralded by the wailing of the bride as
she departs with her husband. As often though, especially when we deal with
commonwealth games, the ending is less than happy. We struggle with the idea
that it’s no use having a great idea which you cannot implement, because you
can’t manage the logistics of it. We will set up a large organization, we will
specify the Command and Control structure but we will then forget to provide
the cars, the phones, the laptops, the stationary and the thousands of other little
detail things. We never seem to do forward-planning down to the minute details
and we never write down standard operating procedures. When a bunch of
Pakistani terrorists attacked Bombay, it took our crack counter terrorist team half
a day to react. Every day on the Gurgaon highway a short distance from my
office, a traffic tragedy unfolds. Day after day, the administration does not put in
place the logistic support necessary to deal with it. Victims die bleeding to death
and onlookers peer at them in a macabre zoo-like environment. This is our
national culture.
Unfortunately, the national culture does nothing for you when you end up
in a legal war. It seems that in India, we address logistic issues after we have
made a decision to deploy: logistics neither precede deployment nor does the
decision to deploy depend on whether we have the logistics to deploy. This is
suicidal contrarianism. To decide whether you should fight a war, you have to
know if you have the logistic support to do it. You cannot first decide to fight a
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war and then find that you haven’t the logistic support to actually do it. Think
about the average stay order attempt. If your enemy makes a move and you
catch it, you have to be in court within one hour. Imagine losing the case
because your in-house lawyer doesn’t have a car, is not authorized to hire a taxi
and can’t reach court. It is worse if he does get to the court but your lawyer is
clueless about what to do. No doubt, he will jump up in a desperate attempt to
stop a stay order, but if he is not ready with very good reason why the court
should do nothing, he would be better off not getting up at all. His second-best
option would be to buy time. The judge will at best postpone the case by a day
to allow your lawyer to prepare his reply. If your lawyer still can’t react in that
one day, you’re going to face a really tough order.
Let us now return to the Weizmann case one last time in a very long time
to see how logistics are handled.
The Weizmann case
Following the fiasco of the EGM, Weizmann spent a lot of time

and money to get the stay order vacated. They decided that they will
now pay for the Organization and Management necessary to make sure
this never happened again. The company then issued public notice for
a new shareholders meeting. Sure enough, Gupta was at his games
again.
At this stage, Gupta knew that he couldn’t go and get a stay for
himself. He now persuaded a marginal shareholder of the company to
go to court instead. This new case claimed that a shareholders meeting
should not be held because its proposed resolutions violated his rights
as a minority shareholder. It was rubbish of course but a lot of rubbish
gets fair mileage at district court levels. The local court clerk spotted
this matter as soon as it was filed about 3.00 PM on the day before the
shareholder’s meeting. He immediately informed the local lawyer who
promptly told the court that this issue had already been rejected by
another court. He took a day’s time to show the paperwork.
Within the hour, he then electronically transmitted the case

papers to Delhi where Weizmann’s Law Firm prepared a defense
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overnight. By dawn next day, they had transmitted the entire defense
back, compete with the case law. In this time, one front end Partner
also traveled overnight and reached the office of the local lawyer. The
case was called at 10 am, argued for less than five minutes and
dismissed out of hand. The shareholder meeting was held without
interruption.
It wasn’t smart lawyering that won the day. It was the ability to
work overnight, overwork some IT infrastructure and travel at short
notice. In a country with a lot of power cuts and poor connectivity, it
was logistics that won the day.
It is important to always bear in mind that litigation is largely a method

act. If you know the method, you don’t have to do too much maverick acting.
That apart, brilliance finds an audience only when the stage has been set for it.
After all, if you are battling with the air conditioning in the desert summer, sweat
dripping down from your brow making little puddles on your Agenda papers,
your ball pen leaking all over your starched designer shirt, you are not going to
have a great deal of energy to devote to the Next Big Idea.
-x-
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Chapter B6
Conclusion: Litigating to win
As the first section of this book comes to an end, you may find yourself
going back to the questions you asked at the beginning:
(a) Am I capable of fighting a war with my enemy?

(b) Am I going to be fighting a winnable war?
How do you go about answering these questions? We have run

through five tests that help you make these decisions. These rules are: the
Balance of Internal Power, the Governing Environment, the Occupation of the
Field, the Leadership, and Organization and Management. We have also seen
that if you come up short, you can either find a way to pass the tests or you
can back off and disengage. Throughout this whole process, you cannot
forget that you want to fight a winnable war, not a war you can fight but not
win.
We need to nuance this. What do I mean by winning? Do I mean that

in every case, you should get handed down a judgment saying you are right
and your enemy is wrong? Of course not! Litigation has to be judged by the
objectives you set for it. When you set out to recover money someone owes
you, you haven’t won till you have been paid. The objective then is what the
case says it is. On the other hand, if you fight a war to keep living in a rented
house, surely you don’t hope to live in it forever. Your objective can only be
to drag things out till you have found another place to live. Similarly, if you
file a criminal case against someone who has your property, your aim is not to
get him to jail: it’s to settle with him on terms that works for you.
In a majority of cases, the objective of litigation is frequently not what

it appears to be. At least half the time, the objective is stonewalling. In this
situation, if you meet your stonewalling target, you win, even if you lose in
the end. This is as true for individual cases and it is true for each small case
in a big complex litigation.
Let’s now go back and illustrate this principle in the cases already
discussed. Let us also in that context discuss possible options that were
offered to the client but not taken because they did not meet the larger
objective, or were not cost beneficial, or were partial solutions or were high
risk solutions.
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The Weizmann case
When Weizmann discovered Gupta’s accounting fraud, Gupta

had three nominee directors out of ten, four if you count the one he
had fallen out with. The Board also had one BIFR and one Lender
director. Both should have been neutral but they were not. These
directors knew Gupta for a long time and they didn’t know
Weizmann at all. If you were a director of a company run by Gupta
for decades, how would you feel about a foreigner coming along and
kicking Gupta out in a board coup? You may have known that Gupta
was not the best manager on earth but how would you know that
Weizmann was not worse? If you were a parochial type, thoughts of
the British East India Company may well be in your mind. In this
situation, would you stay neutral merely because you were an
independent director? I would think not.
Look at the situation from Weizmann’s standpoint. As a

majority shareholder with huge technology and business skills, you
would expect it to be upset to be faced with hostility at the Board
level. You would understand that it needed the market and the
factory – notably the workmen – to acknowledge that there was a
new boss in town. Inevitably, Weizmann asked its lawyers to find a
way to reconstitute the Board. To put it bluntly, it wanted to kick out
one or more independent directors from the Board of a publicly
listed company supervised by BIFR so that it could be in the
majority!
Now how are you going to do that under Indian law without
making a huge spectacle of yourself? A director once appointed is
hard to remove. You have to go to shareholders and this is a public
company. The director you want to remove has the right to defend
himself, He can make a speech at the shareholders meeting. How
long will it be before you become the bum of the month in India’s
frenzied media circus? That apart, if you do this, any shareholder
can go to any town in India and get a stay order. How would you
control the fall out?
While we are on the topic, what about BIFR? The BIFR Rehab
scheme envisaged a Board structure. BIFR had a nominee director
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on the Board. Lenders had a nominee director on the Board. Who

precisely would you try and remove? You can’t muck around with
the BIFR scheme without opening a Pandora’s Box of charges and
counter charges. Any which way Weizmann looked at it, this fight
was not winnable because the objectives of removing any, leave
alone all, of these directors could not be achieved.
As Weizmann thought about it, it questioned its need to do

this. Gupta had already been cut to size when he was stripped of his
executive powers. All the employees could see this. This did not
require protracted compliance with the Companies Act, shareholder
approval or BIFR approval. It was a winnable battle and it was done.
As we have seen, it also served substantially the same purpose.
The main thing to understand in litigation is that on any given set of

facts, the strategic possibilities are practically limitless. The same facts can be
twisted this way and that in the same way that the same battle-ground can
support a variety of ground attacks. Litigation cannot be fought on the basis
of inflexible standard form tactics. You have to think outside the box, and
decide if the standard form is a winnable form.
Let us look at another example of a standard form strategy which, if

employed, would have ended in disaster. Here is another case where a road
was not walked because it was not winnable.
The Hargear case
Recall that Hargear was a relatively small Indian company

‘captured’ by an Italian shareholder. Hooda, its promoter, had been
dealing with the same chartered accountant for years. When the
fight started, the chartered accountant recommended an oft used
strategy. This strategy consists of calling for a Board meeting
without actually issuing a proper notice to the enemy, holding it only
“on paper”, expanding the capital of the company and calling up the
money. The Company then fakes another courier receipt, does not
actually call for the capital but proceeds to dilute the enemy so that
Hooda ends up with an absolute majority of shares.
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Hooda checked this back with his lawyers. They advised him to
drop the idea. This ‘methodology’ has been done to death in India
and every court knows what goes on. If Lerion showed up before the
Company Law Board with these facts, it would get a stay order
without hesitation. In such a dispute situation, CLB could well
appoint its own director or observer to the Board. It could order that
all Board decisions be subject to its approval. It could order that
video records of the Board meetings be filed in court. All of this
would further tie Hooda’s hands.
Hooda clearly understood that the only solution to the Hooda-

Lerion fight was for one shareholder to buy out the other. Left to
fend for itself, Lerion would struggle to chuck out Hooda. On the
other hand, if this buy-sell process was supervised by CLB, the
playing field would be way more level. It was no part of Hooda’s
plan to exit the company. He was fighting for control, not for
extracting the value of his shareholding. Lerion had already run
down the value of the company by denying it practically all its
foreign business. Hooda needed to squeeze Lerion out at a
commercial level without creating a court case where he was the
culprit.
As we have seen, Hooda did this successfully. He created

conditions where they could not run the business. He vitiated the
Governing Environment and in this, he achieved complete success.
Every legal situation throws up multiple strategic options. Some of

these options will be winners, some not. The trick is to pick the option that
meets the objective.
-x-
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Part C
Preparing for the Fight
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Chapter C0
Litigation Preparation: Five action points.
Part B of this book is about that space between the fishing and the frying,
or the kissing and the crying. Hopefully, if this book delivers all that it claims, it’s
not the space between the living and the dying! Between the decision to fight
and the commencement of litigation lies a critical period when you must prepare
for what comes next. Legal wars are not started on a whim, they are not fought
casually, and they are not won without great effort. If you have decided to fight
a legal war, you have to grimly go about the business of preparing for it because
once it begins, you won’t have the time for it. Part B is devoted entirely to the
business of preparing for war.
In a sense, litigation planning starts even while you decide if you want to
go to war. As you assess your capability – and we looked at that in Part A – you
would probably have found that you had a number of vulnerabilities you needed
to rectify. No doubt you would already have taken steps to fix those gaps in your
capability. For example, if you found that you didn’t have the Balance of Internal
Power because your local management was weak and indecisive, or the legal
department won’t support it, you would probably have made some discreet
management changes. Similarly, if the Governing Environment was hostile
because public opinion was against you, you would probably have launched an
effective media relations plan. Still, even though you have already addressed
your weaknesses, there remain five processes you must independently roll out as
part of your pre-war preparations. We can summarize these five processes into
five simple action points as follows:
1. First, there is the planning process. Litigation last considerably longer than
a big fat Punjabi wedding. It is not something you decide to do and then
make plans up as you go along. Your whole approach has to be “project”
based meaning that your planning process has to be totally objective,
morally neutral, and result oriented. Your organization has to understand
that you are doing this for specific objectives and that the business case for
this cost and effort is good. Your organization has to understand that
litigation is intended to defeat and damage, to annihilate, and to destroy.
Your organization has to completely divest itself of all thoughts of fighting
the good fight or complicate the challenge by mixing a moral construct into
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the noodle soup. Moral Legal war is an oxymoron. Litigation is not a game
of moral vindication and it cannot be fought from a moral standpoint.
Sometimes it can’t even be fought using moral means. You must recognize
that everything that is legal is fair planning, what is not legal is not. In
setting out to prepare for war therefore, the first Rule prescribed that every
litigant must plan amorally. This matter is addressed in Chapter B 1.
2. Second, you must to recognize that every warrior both suffers and causes
damage. Which boxer ever went to a fight expecting never to be hit? You
must internalize the reality that fighting increases vulnerability. After all,
the enemy too has weapons and it is quite capable of using them to inflict
serious injury. Rule Two of litigation preparation therefore prescribes that
you must prepare for war by increasing your defense capability to the
point of invulnerability. We pick this up in Chapter B2.
3. Third, you must recognize that not everyone, and not every situation
within an ongoing war, allows you the luxury of choosing whether or not
to fight. Wars can be thrust on you, as battles can, and it is entirely
possible to plan a defensive war. Rule three therefore deals with planning
defensive wars, and we take this up one in Chapter B3.
4. Four, we look at the whole issue of when to attack. You may be ready for
attack but even so, you still have to decide when to attack. Wars can be
won or lost depending on when you attack because there are times when
the enemy is vulnerable and times when the enemy is not. Rule four deals
with planning attack timing and we look at this in Chapter B4.
5. Finally, you must clearly recognize that there are limits to what litigation
can achieve. War planning is always about the art of the possible.
Inherent in this idea of the art of the possible is a situation where you end
up in a stalemate. This is another take on defensive litigation, where you
fight to preserve, not annihilate, and where the whole endeavor is to
preserve the stalemate. This issue is addressed in Chapter B 5.
With these initial words, we may now proceed to examine the art of Litigation
Preparation in detail.
-x-
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Chapter C1
Rule 1- Planning amorally
The collapse of the Soviet Union in 1991 brought with it unforeseeable

ideological challenges. In one fell swoop, the world order of the time lost its
ideological foundation! How were we to divide the world now? Who is ‘us’ and
who is ‘them’? As public intellectuals groped for a new narrative, Samual
Huntington argued (in ‘Clash of Civilizations’, 1996) that the primary axis of
conflict in the post cold war world will now be along cultural lines. He argued
that cultural identity is the highest expression of every civilization and
incompatibility of culture cannot find accommodation. Thus, for instance, the
battle between Islam and America at the turn of the century was about cultures.
Huntington has always had its detractors but as the world’s focus moved from
Islam to China in the wake of the Covid scourge, we can now see how similar
arguments can be made about these new fault lines, and just as easily criticised.
My own difficulty with this cultural conflict storyline is the misleading

morality in which it is clothed. Cultural preoccupations permeate us with
otherness, exclusivity, and ultimately a sense of superiority. We come to believe
we are better than the other, and we then find elevated reasons why we must
stoke this conflict. The truth is that the ongoing conflict between China and
America is about world dominance, not culture. It is a war for control of
resources, technology, and ultimately power. There is no space here for morality.
Power seekers are fighting for turf in one sense or another and the moral hoopla
is just the side show for the naïve and the gullible.
Indeed, this true of all war. There is no glory in war; there is no

superlative principle to protect. Wars are about power, its acquisition, control
and exercise. The Clash is not of ‘civilizations’; it is of power, often economic
power. This is also largely true of litigation. Litigation is war by other means, and
it is fought with more or less the same mindset. This overriding thought has
already found reflection in our study of litigation so far. We have pondered the
fact that every litigant must always consider the cost of any war in which it
engages. In making this assessment, a wise litigant looks not only at its ability to
win, but also the damage it may take. It follows that the smart litigant will only
fight legal wars that it knows it can win and at a realistic cost. I would go
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further, much further. The really smart litigant will only fight a war that has been
won even before the fight starts!
In all this reasoning, the one complexity the litigant does not need is
moral angst. It is important to internalize this. It is irrelevant that bombing
civilians in London in 1942 was wicked. It is irrelevant that fire bombing Dresdan
in 1945 was evil. It is irrelevant that napalm bombing the Vietcong in 1972 was
unconscionable. Bringing down the twin towers in 2001 was also despicable. It
makes no difference. War is about destruction. These examples merely object to
‘who’ takes damage: they make no attempt to condemn all violence and damage
as a legitimate tool. Unless you are willing to say all violence is bad (= all
litigation is unacceptable), cherry picking the acceptable subject of violence must
remain arbitrary. This is why I reserve a lot of my anger for the plight of ordinary
domestic help in middle class third world homes. We don’t have to go too far to
confront gross brutality.
In short, if you wish to efficiently fight and win your battles, you will do
well to embrace this fundamental principle of war. Let us look at an example
where amoral planning led to a successful result.
The Indian Boards case
There was a time in India when no one lost their jobs, not till
they were ready to retire. The nanny who brought me up cooked for me
till she was 75 or so, and then we had her looked after in an old age
home till she passed away aged 90 or so. In her later years, she didn’t
work very much at all but she spent a lot of energy terrorizing my
young bride, fighting over turf! Allow me to add that this was not
unusual at the time. It was the same in offices big and small around
the country. India had no culture of downsizing: it had a culture of
loyalty.
All this started to change in the 1990s. I would love to blame

Cable Television for the introduction of ‘global’ values into our
landscape. The truth is probably more complex and better described as
the rise of materialism, or a belief that the quality of your life could be
measured in what you own and consume. In this world, wealth
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mattered more than relationships and job losses became normal.

Today, if Covid-19 has led to joblessness, the morality of it does not
even cross our minds. It seems appropriate that we should use such an
example to illustrate this point about amoral planning.
As a US owned entity in good standing, IBL represented a perfect

example of remote-controlled management! The moment the company
slipped a quarterly target in the wake of a global slowdown, IBL’s
Indian managers were told to address shareholder sensitivities. The
work force must be cut to half. Management argued that labor costs
represented 7% of the cost of production, that savings would be
negligible. They argued that a 50% cut in labor would mean a 25%
increase in outsourcing at higher cost and reduced efficiency. They
reminded Head Office that previous contract labor efforts had created a
variety of legal issues. Head Office was unmoved. It wasn’t about the
money. A shareholder advisory had been issued and local management
had to deliver, period.
IBL had two plants, located one each in north and south India,
servicing both ends of the country. The southern plant was newer,
more efficient, and produced construction board some 5% cheaper per
meter than the plant in the north. Curiously, the southern plant had
excess labor, even before the decision to downsize. Logically, it should
have seen the first job cuts. Not so. Labor in the south was more
productive, less hostile and far more adaptable. It’s the north that
would face the brunt of the downturn even as the south was turned
into the main production hub. Both plants had unionized labor and
non-unionized blue collar ‘staff’ such as drivers, sweepers, cleaners,
peons, and so forth.
Should IBL announce some sort of VRS? Indian management

were unsympathetic. RS packages are very expensive, and you still
have to sell the idea to general resistance. Everyone would have to be
pushed out using whatever stratagem was available. It was time to
engage in amoral planning.
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Investigations into labor contracts revealed that union

agreement contained a clause permitting workers to be transferred
from one plant to the other. Why not simply transfer everyone to the
southern plant, 25% percent at a time, and let their stomachs deal
with the alien food? English speaking people like us underestimate the
effect an alien language and culture have on vernacular speaking
people be they workmen or staff. That said, one must never
underestimate the destructive potential of union action, especially
when ambitious local politicians get in on the action. Union members
could not be the first to face the brunt of the strategy. Blue collar staff
obviously were easier to push around since they had no union to back
them up: they would have the face the first wave of transfers. If they
resisted, they would be sacked.
Action began at the northern plant with artfully placed rumors.

This uneconomic plant was going to be shut down and production
shifted to the south. The company entertained quotations for
dismantling the plant and transporting it to the south. HR manager
generally visited local labor authorities and hazily inquiry about plant
shutting procedures. Senior managers contacted neighborhood
factories and inquiring about job openings. Routine workmen benefit
not specifically contained in the union agreement - free tea, free extra
safety shoes, leave travel concessions and so forth - were withdrawn.
The rumor mill went into hyperdrive.
At this point, IBL transferred a quarter of the blue-collar staff

manning the northern factory, handpicking the managers favorite
people so to speak. Others inevitable concluded that since the factory
was history, the favored few were getting to save their jobs by moving
south. Favorite or not, blue collar staff are far more immobile than
white collar executives. Many approached the management in search
of an honorable exit. Others joined duty, but then found the
combination of an alien culture difficult to adapt to. In a month, the
mood in the factory had changed. Rapid negotiations ended with a
payout of “90 day for each completed year of service”. At that point,
half of the blue collar downsize target was achieved. Two days later,
half of the remaining ‘tougher nuts’, were also handed their transfer
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papers. Simultaneously, IBL transferred ten percent of workmen as

well.
Workers now woke up to the methodology being applied by the

management. They went on strike. In retaliation, Management
immediately announced the implementation of a “no work no pay”
formula. In due course, the Conciliation Officer constituted under the
Industrial Disputes Act intervened in the matter. It made no difference.
Successive conciliation meetings degenerated into a farcical face off. It
was highly debatable if management’s actions were legally defensible.
Protest and sloganeering shattered the peace of the factory. The
management was compelled to approach a civil court and obtain an
injunction restraining workmen from holding any protest within 100
meters of the factory gates. IBL strengthened internal security
arrangements and arranged police presence at the gate. Talks ground
to a halt, all conciliation efforts ended and proceedings moved to a
labor court.
Management now adopted stalling tactics, tying all court

proceedings down into a plethora of procedural and jurisdictional
objections. In due course, the “no work no pay” formula started to
impact workmen resolve.
When talks between Workmen and management first

commenced, Workmen wanted all transfers to be cancelled. Ultimately,
a solution was found by which, a percentage of Workmen would accept
a VRS on the lines already agreed and Workmen salaries would see a
small upward revision at the end of the following financial year. The
strike was called off, and workmen joined duty. In this manner, the
Indian management was able to report that downsizing targets had
been successfully met.
If one pauses to consider the IBL case, it is clear that victory was always a
foregone conclusion. The workers could not threaten anything that was valuable
at that point in time to the management. Management had the capacity to turn
off their salaries. Right sized Workmen and Staff did not have a case they could
quickly take to court and obtain an injunction. Their only weapon was striking
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and that was of no concern to management. Further, the management did not
view any of the proceedings in moral terms: whatever may have been the
feelings of individuals; they did not as a group allow their personal concerns to
impact their actions as managers. In all respects, they acted impeccably and the
result was resounding victory.
When contemplating any litigation therefore, the litigant keeps two action
points in mind. It plans its battles without moral considerations and it persuades
itself only to fight battles that are won before they are fought. At the risk of
repeating myself, let us remind ourselves that wars are not for the squeamish.
They are impossible to win if we also burden ourselves with additional moral
considerations which have no relevance to the business of fighting. If a litigant
should find that a war raises moral issues for it, it is best off employing some
other means to achieve its objective.
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Chapter C2
Rule 2 - Planning defense
“Everyone has a plan”, the great boxing legend Mike Tyson once said, “till
they get hit”. This is above all true of litigation. We know that litigation is a
double-edged sword. For every blow you strike your enemy, you may get one
back. In going to court, you may have a plan to hurt your enemy but he has a
plan to hurt you back. Where will the balance sheet meet its bottom line? If you
think about it, wars are as much about endurance and survival as they are about
triumph and victory. Cases have a way of rebounding, causing you damage,
sometimes damage so serious you are unable to fight any longer forcing you to
admit defeat.
From a purely practical standpoint, it follows that for you, victory always
has to be your second lower priority. As a litigating party, your primary job -
indeed duty - is to ensure at all costs that whether or not you win, you must not
lose. When you start your war preparations, you first have to figure out how to
make absolutely certain that you do not lose. If there is such a thing as
invincibility, you must focus completely on getting to that point, before you start
planning on hurting your enemy.
Naturally, to do this well, you have to be ruthlessly practical, driven by a

great understanding of the reality facing you. You will recognize that there is no
such thing as absolute unconquerability, complete invincibility. You have to ask
yourself how much damage you are capable of suffering. Indeed, you will ask
yourself how much damage you are willing to suffer before it begins to really
hurt. Then again, you would ask yourself what is the likelihood that you will
absorb such loss or damage. If you should decide that there is fair chance that
you will take a lot of damage, or that you are not truly capable of absorbing a lot
of damage, you would plan to protect yourself a great deal and become
unconquerable.
But then, how are you going to ensure that you are not defeated? How
will you make yourself unconquerable?
In essence, this is a process of analysis. To begin with, you must start by

identifying all your weaknesses. You must literally make a laundry list of all your
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known vulnerabilities. In this you must be comprehensive. You would not only be
looking at weakness that prevent you from winning, but you should also look at
weakness that can lead you to a debacle. Let me illustrate my point with some
examples:
(a) Your weakness may flow from your fatally flawed business structure. A
typical example of such a weakness is a case where you own your
business but does not control it. This is pretty common in joint family
businesses where every member is a part owner but one brother or uncle
practically controls everything. In this situation, you cannot control your
own business entity leave alone attack your cousins or uncles.
(b) Your weakness may flow from your business organization being structured
in a way where it cannot be seen to be litigating. A good example of such
an entity is a Private Equity Investment Fund. Typically, such Funds source
their money globally, invest them in certain categories of businesses, help
grow those businesses and then exit at a profit. They have to be friendly
and amicable if they are to have access to any investment avenues at all.
Once inside these companies, they have access to a great deal of
information. They have to be seen to be reliable and very conservative.
When it’s time to exit, they need to get out quietly and with dignity. If
their exit generates controversy, it erodes the value of their investment
and defeats their own objectives. At all times then, they have to be seen
to be friendly with the companies they invest in. They moment the market
perceives them as quarrelsome, the market will shy away from dealing
with such an investor. That apart, if they start legal wars, those that invest
in these Funds see them as throwing good money after bad, money that
should be invested in new ventures rather than invested in unpredictable
litigation in old ventures.
(c) A third weakness may be found in businesses that are highly employee
dependent. This is probably true of a lot of specialized businesses, good
examples being software services, stock trading companies, IT enabled
services or even consultancy service companies. All these businesses are
very dependent on the high technically qualifications of their employees.
Now consider a situation where a gifted employee is undermining the
company, or moonlighting on the side, or planning to steal clients and exit
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the business. If the owner sets out to sue his own employee, he erodes
his own shareholders value in the very process of trying to protect his
business. Basically, it’s a case of heads the employer loses and tails the
employee wins.
(d) Something similar occurs in businesses where the agendas of owners and
employees collide. Owners take a medium to long-term view of the future
of their business as a business: they like to preserve and promote value to
secure the continuing good health of the business. Conversely, employees
take a short to medium view of their salaries and perks as the whole
purpose of the business. Rarely if ever do employees cooperate with
measures that protect the long-term sustainability of the business but do
nothing to benefit to employees. Such a situation is common in businesses
where key employees have large revenue pegged remunerations.
Employees in such businesses engage in short term profit maximization
while owners prefer sustainability. In such a situation, if the owner starts a
legal war with a third party which has the potential to eat short term
profit, he gets no support from his employees, indeed may end up with an
employee exodus.
(e) Your weakness may also flow from the fact that you built a business that
doesn’t need to spend energy in fighting legal wars. This is often true of
the smaller technology driven companies. Any number of fairly large
businesses are also like that. Think about a company selling specialized
packaging, where it is the only supplier of its own packaging raw material.
Such a company would almost never have a dispute with its customer, or
distributor, or vendor. It’s not just that such businesses don’t maintain a
proper legal department, it’s that no one in the business has any skill in
dealing with the litigation world, and no one seems to know what to do if
a legal war comes knocking at the door.
(f) Your weakness may flow from financial precariousness, meaning you don’t
have the money to sustain litigation for very long, nor are you willing to
raise or commit substantial resources to warring with your enemies. Have
you noticed that highly profitable companies are always more willing to
get into a legal brawl than those that are not? You can end up with similar
results in a case where the owner is just trying to get out of the company
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and wants to collect what money he can rather than raise new potential
liabilities.
(g) Finally, to take one final example, your weakness may also flow from the
generic social and cultural environment in which you operate. If you a
foreign company trying to set up a hydro dam in a remote Himalayan
valley, you will face a lot of prejudice. You will face a similar weakness if
you operate a business which collides with local moral standards. This is
as true of a dance bar in Gujarat as it is true of a massage parlor in
Ayodhya. In none of these cases would you expect to find much sympathy
for your case if you litigate in a local court.
Examples of weakness can be multiplied endlessly. It is enough for me to

move on with the observation that your assessment of your weakness must be
comprehensive and ruthlessly honest. Once you have identified these
weaknesses, you must then proceed to address them and decide how you will
compensate for them. Thus, if you find that your business structure is
fundamentally flawed in its ability to fight a legal war, you must restructure your
business before you go off picking a fight with your enemy. If litigation is alien to
the character of your business, you must either change the character of your
business or refuse to fight a legal war. If you find yourself dependent on key
employees to carry your war when clearly such a war will hurt them, you first
have to convince them that the coming war will be good for them in one way or
another. If you don’t have manpower to run your litigation for you, you must find
the people to do it. Finally, if financial precariousness or adverse social and
cultural environments are your bane, it will be best if you simply drop the whole
idea of getting into a legal war.
Here is an example of a case where ‘invincibility analysis’ was used to

decide if the client was to get embroiled in a legal war.
The ‘Call Me’ case
In 1998, the Department of Telecommunications, commonly

called DOT, started offering Premium Price Telephone Services in India.
These were generally charged at Rs. 20 for a three-minute call (which
at the time was a lot of money!) and this revenue was shared between
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DOT and its customer. The way this worked, DOT set up dedicated lines
to the customers premises. The customer then offered premium priced
telephone services a customer was happy to pay for. Now you may ask
yourself: what kind of telephone calls would most customers be most
happy to pay premium prices for?
Although most businesses started out with good intentions, Rs.

20 was a great deal of money to pay for a three-minute call and DOT’s
revenue share was arguably too high for the business to be viable. In
time, service providers gravitated to offering telephone sex and similar
services. The whole industry acquired a reputation for sleaze. By the
turn of the century, the back page of most city supplements displayed
a dozen blaze’ advertisements for telephone sex, all under the baleful
eye of a very morally upright government telecom department with its
eyes wide shut!
That’s not to say that all businesses had the same appetite for a
fast buck. Call Me was one of many companies offering premium
services, and as far as I now, its offerings were entirely legitimate.
They had an astrology advisory line, an agony aunt help line, a
business advisory service and a gaming show where prizes were given
away for successfully answering a series of quiz questions of increasing
complexity. It didn’t help though because the company was a saint in
sinner’s clothing!
It is a common experience in India that when something is

perceived as being at the edge of middle-class decency, a multitude of
instrumentalities of state – police, telephone company staffers, urban
planning land use authorities, tax inspectors and utility inspectors - all
move in for a shake down. Call Me found itself under relentless
pressure to pay off one and all or face harassment. Call Me had the
distinct feeling that DOT staff wanted to join the shakedown party.
Under the contract, the payment cycle was way too long. The
person calling in would typically receive a bill for calls made up to two
months after he made the call. He then had some three weeks to pay it.
DOT thereafter had three months to reconcile its account and pay the
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companies operating these lines. In the event of a dispute, DOT had no

obligation to pay anything till the dispute was resolved by arbitration
held before someone nominated by DOT. Basically, under the contract,
Dot didn’t have to pay these companies for six months after a call was
made. After that, if it claimed that 3 calls had been made in a billing
cycle instead of 30,000 as had actually been made, it only had to pay
for three and the dispute about the other 29997 calls would be decided
when the DOT appointed arbitrator decided to decide it. Basically,
operators were lambs for the slaughter waiting their turn.
Between the sleazy reputation of the business and the structure

of the contract, Call Me soon found itself receiving a thinly veiled
succession of extortion demands from DOT payment facilitators
(should we call them consultants?). Kick backs were quoted at
fantastic percentages. Even as these companies did their best to ignore
the threats, DOT slowed down its payments to a trickle within the year
of launching the service. Call Me was not in a dubious business and
didn’t want to pay these kickbacks. It tried to explain itself to DOT but
who was listening? Approaching superiors didn’t help either. Was
everyone on the take?
Call Me went looking for a lawyer. It even issued a mild-

mannered legal notice, almost apologetic, more to raise a claim of ten
million rupees with no intention of going to court. I suppose Call Me
wanted to communicate its seriousness and test the waters.
Meanwhile, DOT discontinued the service. Call Me found itself

owed some ten million rupees. It had spent another half a million in
advertising already. It had expanded staff, expended more funds on
capex and was generally gearing up for a substantial rollout of new
services. Losses looked like they were going to touch twenty million.
Call Me proposed litigation.
Call Me’s case was simple. The license was not terminable at will.
It had a substantial investment in its business. It wanted the service to
continue and it wanted to be paid its outstanding. It seemed like a
good case for a civil writ.
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The lawyers couldn’t convince themselves to do it. Call Me

operated a clean service, but the whole industry had a dubious air
about it. It was a case of guilt by association and besides, how do you
combat the argument that an agony aunt service is only an invitation
to engage in dirty talk? How much sympathy does one expect from a
judge? How could a judge protect Call Me’s totally legal business
without also being seen to have a sneaking sympathy for the sleaze in
the industry? Lawyers decided it was not possible to become invincible
and Call Me was persuaded not to litigate.
Call Me is a classic example of a litigant who is inherently vulnerable. Its

business segment, its operating environment, its regulators, its compatriots, all
have a certain vulnerability to them. The establishment doesn’t support people
like this and this weakness all too obvious. Such a person cannot expect any
sympathy from the Justice Machine and makes for a poor case. In such
circumstances, asking the Justice Machine for help is dangerous, frequently
counter productive. When such a business files a case, it in effect becomes an
investigation into the character of the business. In the confusion that follows, the
simple legal dispute is lost and the issues get obscured.
The real problem here though was that there was no way to get past the
weakness, to remedy the vulnerability. If people see you as part of the paid sex
industry, what can you possibly do to change that perception? But there may be
other cases where an analysis of the problem does allow a solution to present
itself. There are even cases where an analysis of the problem presents solutions
that become the greatest strength of the case. Let us now look at a case which
provides an instructive lesson on achieving invulnerability by addressing
vulnerability.
The Metro Cable case
Satellite TV crept into Indian homes in 1991 long before either

business or government perceived the enormity of the revolution then
underway. Almost without warning, Star TV was up in the sky and
consumers wanted it. It was a simple system in those days, one dish
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antenna, one front-end converter, some cable running down through

the roof to the floors below and a color TV on the other end.
Even so, many could not afford to install these systems. This is
when Indian ingenuity had another of its eureka moments. Every
colony, every building, indeed every slum cluster suddenly sprouted a
local cable operator. In time, this cottage industry then started to
improvise. It was a time when the Video Cassette Recorder ruled the
entertainment world! Cable operators started to offer multiple
channels, many showing the latest bootleg movies on ‘local cable’
channels. The quality sucked but the novelty of movies at home hit the
spot. Cinema halls started to go empty.
Then events queered the pitch again. Given its deep penetration
into Indian homes, Satellite TV became the favored target of a vast
amounts of advertising revenue in a way that cinema could never have.
Sat TV channels were awash with cash. Every business house and their
uncles set out to become TV Mughals. Channels followed channels and
in no time, there were some 50 Satellite channels of rubbish on the TV
to choose from. No one watched those bootleg movies on the VCR
channel anymore because these Satellite TV stations now had the
money to legally buy and show the latest Bollywood masala movies to
a much better quality-standard soon after they were released.
These changes decimated the cottage industry cable operators.

Each operator now needed to create a technologically advanced Head
End and control room, complete with half a dozen dish antennae
pointing at various satellite TV stations and an equal proliferation of
down stream equipment. To pay for all this equipment, operators now
needed to service a much larger consumer base across many colonies,
which meant the cables had to cross roads and parks and rivers too.
That also required the cooperation of a variety of municipal, police and
administrative departments. Investments became substantial and the
economies of scale rendered small operators unviable. The big players
moved in.
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The big players had the money to put up the Head End with its
expensive equipment and technical support resource base but they
could not possibly feed, control and support every nook and cranny of
the last mile. They needed localized management to support them,
someone with a stake in the local level business, someone who knew
the customers, more or less like your press wallah. Collecting those
modest monthly cable bills from Individual housewives and keeping an
eye on every cable connector and splitter was too much of a headache.
Why not let the cottage industry cable operator keep their local
operation for a cut of the take but save them the trouble of making
huge investments by providing them multi-channel TV feeds? It was a
great idea but how were these big boys to get the last mile cable
operator to sign up with them?
This back ground now brings us to the case at hand. Metro Cable
was already a large Indian cable company with interests across half
the country. It was able to do this because it was able to consolidate
large networks in a great many cities and make local cable operators
sign up with them. It did this by identifying local strongmen in every
area to effectively implement the consolidation. It was the local dada’s
job to collar the variety of local operators and get them to sign on the
dotted line. They did this by running a protection racket, cutting cables
of operators who refused to sign up, intimidating repair crew and so
forth. They couldn’t do this without help from the local cop station.
This was a dirty job and it required strong-arm tactics. That this was
achieved seamlessly is one of Indian’s untold stories of the good, the
bad but mainly the ugly.
Metro found a structure to reward these “consolidators”. It

created local joint venture companies, of which Metro controlling 51%
of the equity with the rest being held by the consolidator and his
family. Each of these Joint Venture Companies leased a ready-built
Head End from Metro and operated it. The TV signal from this Head End
was distributed to last mile Cable Operators. Cable Operators in turn
managed the last mile, kept their cable network operational, collected
monthly charges from end users and shared this revenue with the JV
Company. In turn, JV Company revenues were employed to pay lease
rental on the Head End at an agreed price. Any excess revenue
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collected by the JV over its costs was profit and was to be declared as
dividend.
While this model served to consolidate the industry across India,

it created a complete mess in the medium term. Metro could not be
everywhere. While it had the controlling equity in these JV Companies,
their management was in practice left to the consolidators who were
also usually the Managing Directors of these JV Companies. The
Managing Director had the run of the place. They knew all the Cable
Operators, they understood the revenue stream (most of which came
in cash!) and, because these consolidators WERE Mr. Metro Cable in the
territory, they acquired enormous local influence.
How did the consolidators end up with so much local influence?

In the main, I would say two reasons. First, only the consolidator knew
how many households each Cable Operator actually connected to his
network. It was a cash business. Cable Operators under-declared their
connectivity to the JV Company, and the Managing Director of the JV
further under-declared his connectivity to Metro. If the Managing
Director needed extra money at short notice for whatever reason, he
took ten of his henchmen and raided the Cable Operator territory,
unearthing undeclared connections to households. A compromise was
generally arrived at in due course whereby the Cable Operator paid
spot cash to the Managing Director! This money never found its way
into the coffers of the JV Company. The Managing Directors grew
richer, the JV Companies continued to bleed and Metro received little if
anything by way of lease rentals for the Head End. What was there in it
for Metro?
Metro viewed the whole thing as interim misery. They believed

that in due course, the cable industry would be the vehicle by which
the whole converged access-information-entertainment-marketing
industry would find its consumer. It was a matter of occupying the
segment and they had the money to support the losses. With the
benefit of hindsight, we know now that Metro was wrong. but that’s
another story!
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Managing Directors of JV Companies also acquired another

unanticipated kind of muscle. Most Head Ends also ran two or more
local channels. One of these would typically be a local news channel,
the TV equivalent of a provincial rag. The other local channel run at the
Head End would show pirated movies, little locally produced
documentaries on friendly neighborhood rising stars and so forth. It
was a great place to project politicians and the politicians made sure
that the Head End didn’t get raided for airing bootleg movies. As the
years went by, a whole politician-police-Head End- Cable Operator
nexus ruled the roost.
This was exactly the situation Metro’s lawyers were expected to

confront when they were called in advice Metro on the fate of Metro’s
Hyderabad based JV Company AP Cable. AP Cable had a peculiar
problem. The Managing Director of this Company, a local henchman
called Sai Reddy, had failed to collect revenues from Cable Operators
for some six months. He had also purchased two cars employing AP
Cable funds in his name and practically emptied all bank accounts of
cash. Substantial defalcation of money was suspected. He was now
talking to Metro’s competitor and had offered to move all of AP Cable’s
Cable Operators to the competition in exchange for a substantial sum
of money. Metro was under pressure to forestall impending doom.
Could Metro cable use its 51% shareholding to take over

management of the JV Company? A quick review of the reality on the
ground revealed many near fatal weaknesses. AP Cable’s Board of
Directors had three nominees - Reddy and two Metro nominees – but
Reddy had complete authority to run the company as he chose. AP
Cable’s accounts were entirely controlled by Reddy. To this end, all
Tally statements were held in his personal desktop computer
exclusively. If Metro wanted to prove defalcation, it needed access to
this stand-alone desktop computer.
It got worse. The Head End was located in a building he had

rented in his personal name and then sub let to Metro for a significant
up-side. He physically controlled the Head End. He was the authorized
signatory for all Bank accounts. He had excellent contacts in the city
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with men of influence, the local administration and the police. He had
money, money that belonged to AP Cable. Metro had no control over
the Cable Operators (i.e. its revenue source), the Head End (i.e. its
manufacturing facility,), the Bank (i.e. corporate funds) or the local
environment. To put it bluntly, Metro had no ability to take charge of
its own business.
If Metro wanted to take over AP Cable, it needed control at four

key points, all of which were its weak points viz (1) Operational
control, i.e. control over the Board of the Company; (2) Financial
control, i.e. access to its accounts and revenue stream; (3) Market
control, i.e. control over Cable Operators and its revenue stream; and
(4) Product control i.e. control over its Head End. Metro could not
possibly fight a legal war unless it had control over all four key points.
Metro found no simple way to address these weaknesses. Control

cannot be wished into existence: each weakness was a potential court
case. Metro would have to find a pre-emptive strategy that would
address the weakness, give it control and allow it to them go into a
court room. If any of these four weaknesses remained unaddressed, a
court case would be unwinnable.
As the battle commenced, Metro opened the first fuselage by

calling for a Board Meeting at the local hotel. Reddy came prepared for
a long argument. He didn’t realize that the only purpose of calling the
Board Meeting was to physically separate him from the Head End. The
Board Meeting was amicable. Metro’s nominee directors proceeded in a
leisurely manner, slowly taking up each agenda items with frequent
breaks for tea, biscuits and local gossip.
Meanwhile, a team of retired army men led by a trusted hand

entered the Head End and physically took control of all assets. This
team found the computer, backed up the Tally statements and e-mailed
them off to the Board meeting venue. They then posted security guards
around the parameters of the Head End and prepared an inventory of
everything lying in the premises ably supported by a notary public.
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Meanwhile, back at the hotel, Metro’s nominee directors now

changed tack. They flashed printouts of the Tally statements and
accused Reddy of financial skullduggery. Reddy was taken aback.
Where had these accounts come from? He tried belligerence but that
didn’t help explain the defalcation. Eventually he walked out of the
meeting. He was barely out of the room that the Board stripped Reddy
of his executive powers, recalled the authority granted to him,
appointed a committee to look at all allegations of financial
impropriety, co-opted another director to the Board, conferred upon
him appropriate executive powers and authorized a change in the
procedure for operating bank accounts. Within two hours, Metro had
control over the Head End, it had a new Managing Director, and the
banks were under control. By the time Reddy reached the Head End,
the new Managing Director was seen occupying his chair.
Within minutes, the police were at the door. The new Managing
Director was in his office and he had certified extracts of Board
Minutes establishing his authority. He also had official documents
proving Metro’s majority ownership of AP Cable, documents
establishing that all Head End equipment was owned by Metro, and
several lawyers ready to argue any point the police wanted clarity on.
From a strictly legal standpoint, there was little the police could do.
After the departure of the police, the new Managing Director

immediately put together a database of Cable Operator and invited all
of them for a meeting the following morning. At the meeting, the new
Managing Director asked Cable Operators for part payment of the large
outstanding so that he could continue providing the TV signal. Cable
Operators in turn advised him that they had indeed made those
payments over to Reddy and they were happy to confirm the details in
writing. By lunch, the Managing Director had in his hands some 26
letters setting out details of payment of large sums of money to Reddy
which he had failed to deposit into AP Cable’s bank account. Metro’s
victory was complete.
This was only the beginning of the case of course. We will come
back to it later on in this book.
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It is obvious that considerable planning went into the strategic rollout in

the Metro case. The whole sequence of action was orchestrated, proceedings
were rehearsed, dry runs were conducted and each of the 15 or so players in the
game were comprehensively briefed on what they must do in all anticipated
scenarios. Battle planning was immaculate and that it succeeded is testimony to
the effort that went into the planning. The conclusion then is simple. Having a
weakness is not in itself a problem. The planning process is capable of
converting weaknesses into strengths. Indeed, the best war plans are those
which begin by quickly making moves that make weaknesses irrelevant or better
still, convert them into incremental strengths.
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Chapter C3
Rule 3. Planning Defensive Litigation
In the previous chapter, we observed that in any upcoming legal war,

your first duty to yourself is to ensure that you do not suffer defeat. We have
observed that the duty to prevent defeat stands at a far higher pedestal than the
duty to secure the conditions for victory. The problem with this statement is that
we assume that you have a choice to make. This is not a fair assumption. All
litigation is not a matter of choice: there are occasions when one has no choice
but to litigate. What happens if you do not believe yourself capable of victory
and do not wish to engage in litigation. You may end up in a situation where you
don’t want to fight but are forced to defend a legal case?
Then again, there may be a situation where you do not want a fight but
you are in a position of advantage relative to your enemy. Here, you would want
to protect the status quo even as you don’t want to achieve any new goals. You
may have assumed so far that the only purpose of litigation is to win something
or get to a certain goal. That’s not true of course. You can use litigation as a tool
of preservation, as a tool to defend your turf so to speak. You can use your legal
war only as a stonewalling tactic. You then fight to keep things from changing.
Then again, you may have assumed that all litigation has a finite life with
a beginning, a middle and an end. This is true in a theoretical way, and you may
think you are justified in conceiving of your strategy based on a “prepare, fight
and finish” model. If your only agenda is to keep things from changing, you don’t
want your legal war to finish. You want to keep the show on the road as long as
possible and to achieve that, you want the fight to last forever. The good news is
that Indian court cases last so long you may well get this result without trying
too hard! This is the main reason why the Buffalo school of jurisprudence finds
such spectacular success in India.
The finer point here is that it is perfectly possible to be the aggressor, to

be seen to be looking for a solution to ‘something’, and yet to be actually trying
to keep ‘something’ (and perhaps even everything!) from happening. Indeed,
given that offense is sometimes the best form of defense, it may well be that you
start a legal fight pretending to be an attacker when actually, everything you do
suggests you are a defender! This posturing is implicit in our study of
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‘Occupation of the Field’. If you have the high ground, why would you do
anything but hang on to the high ground? In this chapter, let us look at the
sequitur to the ‘Occupation of the Field’ rule. This is the rule on Planning
Defensive Litigation. To understand this rule, let us look at a case where both
litigating parties instituted court cases, but one party did so entirely defensively,
with no purpose in mind than to stop anything at all from happening.
The Altel Case
Altel was a US registered company, mainly in the business of

manufacturing telecom equipment. After DOT started aggressively
reshaping India’s telecom sector in the late 1980s, a number of private
players set up manufacturing operations in India even though DOT was
the only customer. The license-quota-permit Raj was alive and well at
the time and we soon had ourselves the usual hellish world of
nepotism, scandals and general discontent.
India meanwhile was trying to leapfrog the technology gap and

span three generations of telecom equipment in one. At that time,
there was wide recognition that India simply did not have the money
to lay out miles and miles of fresh copper in the ground. It needed
access to new technology by which the same copper wires could be
used to carry many times the number of signals over the same pair of
wires. DOT now put out successive tenders for the supply of such
Carrier Subscriber Systems. Since we were still in the stone age at the
time, a ‘foreign collaboration’ was the only way forward.
Bentel, an enterprising young Indian company, persuaded Altel

to exploit the opportunities of the Indian market and successfully
mounted the collaboration bandwagon. Altel agreed to transfer to
India technology embedded in one of its existing Subscriber Carrier
Systems which met DOT specifications. Parties executed a License
Agreement, and the specifications of this Subscriber Carrier System
were written down in an annex. It was pretty clear what exactly Altel
sold to Bentel and for how much.
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After signing the License Agreement, Altel transferred the

promised technology to Bentel, together with some kits. It also helped
train key Bentel employees in the manufacture and use of this
technology. In turn, Bentel set up a factory and strengthened its
‘marketing network’ in the corridors of DOT. When DOT announced yet
another tender for the supply of a large number of Subscriber Carrier
Systems, Bentel was there to play the game but ran into trouble.
For the first time, the fine print in the tender revealed that DOT
now wanted a perfectly legitimate safety device to avoid unnecessary
accidents in the field i.e a “Snooze’ feature. It was all simple
electronics. The moment a human hand touched a telecom wire, the
Snooze feature reduced line voltage to a lowly 50 volts. This new
tender condition found its sleaze fest. Whispers were heard that only
one company in India had that feature pre-incorporated into its
equipment, that the minister had been paid off and that in any case,
the carrying voltage was not such that accidents would occur even
without this feature. It’s true that this one company did extraordinarily
well in that period but then, so what?
Bentel was not stupid. Necessary or not, safety features cannot

be resisted. Bentel asked Altel to provide technology for this feature.
Altel had discontinued this product line at home and didn’t want the
hassle. It said it sold a well described existing technology and had no
ability and no motivation to now start new R&D on old obsolete
technology. This was true, which is why it was cheap enough for Bentel
to buy! In any case, India was still a small market and there was no
profit in sophisticating a technology that had little market in the rest of
the world when everyone else knew fiber optics was the way forward.
Then some middle level executive in Altel screwed it all up. In a

fit of do-goody decency, he wrote that Altel had no interest in
developing the technology, but they knew an independent expert who
would design an Add-On module for US $ 10,000, half of it paid in
advance. Bentel was quick to accept this offer verbally and confirmed
that a Development Order would follow shortly. The advance never
came and that started a legal case.
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To be fair, it is possible to sympathize with Bentel. India had

brutal exchange control laws at the time. To give you a flavor, if you
wanted to travel abroad, your foreign exchange entitlement was eight
dollars. Bollywood even made a movie about it in 1967 called ‘Around
the World in Eight dollars! It had the legendary Raj Kapoor playing lead
so you know this was India’s universal reality!
It seems Bentel hadn’t the time or energy to remit the advance

to this expert so it asked an American contact to place the
Development Order. The American contact placed the Development
Order but failed to pay the $ 5000 advance. That failure did not prevent
Altel senior executives from ringing the panic bells. Altel went into
overdrive. It told Bentel it was not going to accept any such order
though Bentel was free to work directly with the expert. Bentel
protested noisily but did it have a choice? It contacted the expert who
said he was happy to do it but only after his current engagements
ended in four months. Bentel didn’t have four months to spare. Bentel
desperately tried to buy time with DOT. It argued that the ‘Snooze’
feature was unnecessary and tried to have them withdrawn. When it
failed, it went to court against this tender specification and lost the
case. With no orders and unserviceable debt, its business failed. It now
wanted someone to blame.
Meanwhile Altel was sold to another company and the entire

previous management disappeared together with a lot of the
correspondence. When Bentel again contacted the now reincarnated
Altel, Altel had no idea what the claim was and how it had arisen. Altel
asked for settlement talks, but then found no way to understand
Bentel’s grievance. Frustrated, Bentel issue a notice of claim of US$ 5
million and asked for arbitration under the License Agreement.
The Arbitration clause in this case was before a Tribunal of three

members. In issuing its claim, Bentel appointed one arbitrator and
asked Altel to appoint the second arbitrator within thirty days. Bentel
reacted with confusion. What was this case about? They found an
Indian law firm, but then didn’t know what to say to them. When the
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thirty-day deadline ran out, this law firm appointed the second
arbitrator “without prejudice to its client’s rights remedies and
liberties” etc. This was all very well but Altel didn’t want a fight. They
asked Bentel to help them understand the case.
Bentel was jubilant. This looked like a quick out-of-court

settlement. Masses of papers arrived at Altel’s door. It did not have the
intended effect. Altel realized that this claim was all about the Snooze
feature. The License Agreement had no reference to such a feature.
Where was the ‘arbitrable dispute’? Why should Altel pay US$ 5 million
for failure to supply a feature they did not agree to supply? The claim
had other legal fine print that made no sense. This was a claim of a
breach of contract, but the measure of damages was not the breach! In
India, damages are paid to put the injured party in the position it
would have been if no breach had occurred. Bentel was at best entitled
to such profits it would have made if it had won every tender. Instead,
Bentel wanted to be paid for the factory it had set up, the foreign trips
it had made, the people it had hired, the dinners it had consumed and
whatever else it had done in the last decade. In sum, it wanted to be
paid for the factory it built and it wanted to keep the factory at the
same time!
The claim was wildly exaggerated. When Altel added up the

value of all the tenders floated by DOT with the Snooze feature and
derived an average profit, Bentel’s claim was as little as $ 250,000/-. It
was a case worth fighting even though it had no desire to fight an
unfathomable battle in an alien country working to a legal system it did
not understand. Altel now changed tack. It said there was no need to
appoint a third arbitrator because there was no arbitrable dispute
between parties. This forced Bentel to go to court.
Formal hostilities opened in Jaipur when Bentel filed a simple

application asking for the appointment of the third arbitrator (under
Sec 8 of the old 1940 Arbitration law). Altel objected, claiming that
there was no arbitrable dispute and besides Jaipur had no jurisdiction
to hear such a case.
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There was substance in the jurisdictional objection. The Jaipur

court decided this question needed settling before it needed to decide
if this Snooze feature question was capable of arbitration. How do you
decide which court has jurisdiction when the contract between parties
is silent on the point? Bentel would need to bring witnesses to court to
establish this point. It looked like the case would go on a long time.
Altel decided this was the perfect time to raise the bar and
complicate the issue. It was time to start a defensive litigation in a
totally different court on the same jurisdiction question and let the two
courts argue it out between themselves! As it turned out, the law of the
time provided the perfect vehicle to do this.
The old Arbitration Act contained a procedure under its Sec. 33

by which a party to an arbitration agreement could ask a court to
decide if a particular dispute could be decided in arbitration or not. The
scope of the court’s inquiry under Sec. 33 was much wider than the one
under Section 8: the court had the power to look at the total dispute.
This meant that there was much more room for a crafty lawyer to
create the kind of confusion that keeps cases in courts for decades.
Altel decided to file its Section 33 counter attack in Alwar, a dusty
Rajasthani town on the border of Haryana close to the industrial estate
where Bentel had set up its factory.
It was the perfect choice. Alwar courts had just two leading
lawyers who invariable appeared against each other in every court and
neither of them knew anything about the Indian Arbitration Act! As far
anyone could remember, its corridors had never seen an arbitration
case. Altel filed a 90-page petition with about 400 pages of supporting
annexes. It would take forever to get through all this to arrive at a
decision in a court unfamiliar with the subject and unlikely to ever
need to do it in a second case of a similar nature. Altel didn’t care
either ways because it hadn’t filed the case to win it.
Bentel now found itself in a logistic nightmare, prosecuting two

cases on more or less the same subject in two different town against
an enemy who was prepared to throw money at the problem. It sent a
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lawyer from Jaipur every time to defend the case in Alwar. Provincial
India being what it is, Altel’s local lawyer was always able to adjourn
the case every time it came up for hearing. It soon became clear that
whatever happened next, there would be two decisions on the same
subject after many years of this kind of stalling and then several
rounds of appeals would follow. An arbitration on what if anything
Altel owed Bentel in damages now seemed like a remote possibility. In
the face of this stonewalling, Bentel lost heart. Its own Sec. 8 petition
slowly ground to a halt and as it did, Altel also gradually demobilized
its own forces. Eventually, both parties basically abandoned these
cases.
The Altel case is a great example to show that pushing for a decision one
way or the other is not necessarily the best battle strategy. Cases may be filed to
win and they may be filed to complicate the situation and make it difficult to
resolve the problem. Defensive Litigation is filed to secure gains already made
and to preserve the status quo. When faced with a compelling litigation which
cannot be avoided, the smart litigant moves to preserve, to hold off, and to
maintain the status quo. Planning is as necessary to win as it is to preserve.
-x-
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Chapter C4
Rule 4 – Timing the Attack
It’s rare for the situation on the ground to be so asymmetric that your
enemy is much weaker than you are. By and large, while you may be a little
weaker or a little stronger, most warring parties are usually more or less equal.
In any case, when you start a fight, it’s always good to presume that your enemy
is as strong as you are. When you collide with your enemy, what is the chance
that you will come out ahead? If everything is equal, you would be reasonable in
assuming that neither of you will win. In that case, why are you wasting your
time getting into a fight you know no one will win? There is a perfectly rational
answer to this question. Let me take you to basic war theory.
For a start, when you start your war planning, you must ask yourself what
it is you are planning to attack. Presumable, these will be targets that matter to
either you or your enemy. Why should your enemy strongly defend something
that he doesn’t care about, or worse, that doesn’t matter in the larger scheme of
things? It would be a different matter if it is an important target but he neglects
to defend it well because he doesn’t understand its value. Then again, why
should your enemy strongly set up a defense for something you are not truly
capable of attacking? It would be a different matter if your enemy fails to defend
something you are truly capable of attacking.
The real trick though is to know what is worth attacking at what point
time. War gaming teaches us that it is not in your ability to attack alone that gets
you victory: it is in attacking with immaculate timing. Everybody has limited
resources. If your enemy has ten forts to protect, chances are pretty good he
doesn’t have the man power to protect all ten to the same level at all times. He
will have to choose which ones to prioritize and which ones to take risks on with
weaker defenses. This is pretty obvious most of the time. It is not at all times
that your enemy has to defend everything. He only has to defend something
when you are capable of attacking it and if it’s worth your while to attack it. So,
your attack makes sense if, and only if, you attack something that matters, at a
time when it matters, and your enemy fails to defend it at that very point in time
when you attack it. As you can see, timing is everything.
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To take the argument to its logical conclusion, we must always remember

that no one is always invincible. There will always be times in a war when a
warring army is vulnerable in one place or another. Such vulnerability does not
matter at all if it is far removed from the theatre of battle. Becoming
unconquerable is fundamentally about being strong when it matters because it is
only then that your enemy can attack you. This is as true of litigation as it is of
war.
If you have seen your share of war movies, you will immediately see the
second issue here. Wars aren’t just about single stand-alone targets and your
bloodlust: they are about objectives. Why do we attack targets? We attack
targets because they help us achieve objectives! So far so good. The problem is
it is very rare to be able to achieve an objective and win a war only by attacking
a single target. You are forced to attack multiple targets. It is even more rare for
any attacker to be able to attack all targets equally effectively at the same time.
Forces have to be amassed and thrown at the target. Targets are usually
attacked sequentially meaning one after the other. Very likely, you may not be
able to attack the second target till you have successfully destroyed the first. A
good example of this would be a second line of defense. If you are to attack
targets sequentially, you then have to plan that sequences and you have to time
your attack on each target in that sequence. You then have to make a complex
plan. In this case, you don’t just plan the timing, but you also plan the roll out
sequence in a way that gets you to your objectives.
Let us now return to a case we have already look at - the Metro Cable
Case – and examine how the timing of the roll out was critical to victory.
The Metro Cable Case
Recall that the Metro Cable case had some unique difficulties
because Metro had no control over four key elements of its own
subsidiary (AP Cable). Yes, it had 51% of the equity but its JV partner,
one Sai Reddy, held 49% of the equity. AP Cable’s board had three
nominees - Reddy and two Metro nominees – but Reddy was the
Managing Director and had complete authority to run the company as
he chose. AP Cable’s accounts were fed directly to his personal desktop
computer. AP Cable’s business was located in a building he had rented
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in his personal name and then sub let to Metro. He physically

controlled the Head End equipment. He was the authorized signatory
for all Bank accounts. He alone had complete knowledge of his market
meaning the cable operators who subscribed to AP Cable’s service. He
had excellent contacts in the city with men of influence, the local
administration and the police. He collected money from Cable
Operators and omitted to pay it to AP Cable. Metro had no control over
the Cable Operators (i.e. its revenue source), the Head End (i.e. its
manufacturing facility,), the Bank (i.e. corporate funds) or the local
environment. Metro therefore had no ability to take charge of its own
business of which it was a majority owner.
As the main war objective, Metro had four targets. It needed

Operational control, i.e. control over the Board of the Company;
Financial control, i.e. access to its accounts and revenue stream;
Market control, i.e. control over Cable Operators and its revenue
stream; and Product control i.e. control over its Head End. The war
could not be won if it did not achieve success in all four of its targets.
How was it to attack these targets in order to win the war? It was
obvious that the whole plan had to be worked around the attack
timing. Clearly, each material factor impacting the battle dove tailed
into another factor, like a snake eating its tail thus:
1. Metro could not secure the Head End but this was impossible
unless Reddy could be physically removed from the premises. An
acrimonious Board Meeting was required so that Metro could get
him out of the office.
2 Reddy could not be stripped off his executive powers unless the
Board had proof that he had misappropriated money. This was
impossible unless Metro could get to his personal desktop
computer.
3. Even if Metro physically took over AP Cable’s business, the police

were bound to get into the act and Metro would lose control
pretty quickly unless they created all the necessary company
paperwork with Board Resolutions and so forth to hold on. They
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could only create the paper work if they successfully stripped

Reddy off his executive powers.
4. Control of AP Cable and its business premises had no meaning

unless Metro seized control over the revenue stream. The only
way to do this was to win over the Cable Operators.
5. The Cable Operators could not be won over unless there was
something in it for them. They could be approached only after
Metro had physical control over AP Cable so that sops could be
offered to them.
6. Even if AP Cable’s business, Head End and customers was

brought under control, a court could always interfere with this
control unless Metro was able to get Cable Operators to confirm
that Reddy had misappropriated money so that Metro was able
to close the loop on the whole defalcation story to a standard of
evidence a court would accept.
How was Metro to fix this jigsaw puzzle of interconnected

pieces? This is the timing and order of the action that Metro decided to
roll out after a lot of debate:
(a) Get Reddy of the office by calling him to a Board meeting at a local
hotel;
(b) Take control of the office and get into his desktop computer;
(c) Transmit the Tally account statements to the Board members to

prove how he had misappropriated AP Cable’s money;
(d) Use the Tally account statements to strip Reddy of his executive
powers, co-opt another director, confer executive power upon this
new director and take control of essential corporate assets and
funds;
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(e) Install this new Executive Director at AP Cable’s office and call the
Cable Operators;
(f) Threaten the Cable Operators with recovery of past dues unless
they were willing to acknowledge that they had already paid off
Reddy;
(g) On the basis of the Board minute extracts, change all Bank
operation authorizations; and
(h) Then prepare for litigation by having lawyers stand by at the local
courts to prevent ex parte injunction orders.
This order rolling out the strategy was followed to the letter and
we have examined these events in Chapter B2. That success was
achieved was a result of immaculate timing.
The Metro Cable case reveals to us a fundamental feature of timing. While

you may have many weaknesses, not all weaknesses are relevant at all times.
You don’t have to address all weakness immediately or comprehensively on a
global basis or try and plug all of them permanently. Weaknesses matter only
when being weak helps the enemy and that is the point in time when you have
to make sure you are not weak. If you want to win your legal war, you don’t
have to be strong everywhere all the time. Even if you are weak, you can take
steps that immediately make you very strong at the time when it matters. It’s all
a matter of timing, and timing itself can be the single most key factor in a legal
war.
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Chapter C5
Rule 5 - Planning for Stalemates
How risk averse are you? Will you swim the Chambal knowing there are
crocodiles in there because there is a pot of gold waiting for you on the other
side? Will you stake your fortune on a single stock market punt in the hope of
earning enough to retire on? Will you risk COVID and walk into Bombay in the
middle of its 2021 lockdown if you could make a big business deal?
I would assume that different people will provide different answers. That’s
not true of this book. There is only one answer: nothing is worth losing
everything for. If you do not gain this “everything”, life will still go on. But if you
lose everything, life as you know it will disappear. This is a basic rule of legal
wars. It doesn’t matter if you gain a big victory or not: you must first make sure
that you do no lose spectacularly. The good news is that this is usually possible.
You have the power to plan your strategy in a way where whatever else
happens, you do not lose the war.
This brings us to the essence of this rule. You can make sure that you do
not lose the war but this does not mean that you can ever guarantee your
enemy will lose it! Losing the war depends on you, winning it depends on the
failings of your enemy! Between these two extremes lies the stalemate, the
situation where neither party wins or loses. To appreciate the nature of
stalemates, let us look at this issue in the context of a game of chess.
On a chessboard, before the first move is made, parties are at complete

equilibrium. They are in all respects equal. Assume that you have the white
pieces and you are to make the first move. On a quick look, it is possible to
assume that because both parties are equal and you have the first mover
advantage, you would start the match. But this is not true according to the rules
prescribed in this book. In my view, you should not move unless you have
something greater than a first mover advantage. I would advise you to do
nothing. Now, let us look at the game during play. As it proceeds, fortunes may
shift back and forth a number of times. More likely, between two equal players,
no one will ever gain a significant advantage. Eventually, the game will get to a
point where most intelligent chess players can see that the game will very likely
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end in a draw. That happens a lot in legal wars too. What should a litigating
party do then?
The answer to this question also comes from chess. Where stalemate
seems inevitable, chess players immediately shift to a low risk holding strategy.
Players jockey for position but they make no speculative and dangerous moves.
They don’t fight to win any longer: they fight to make sure they continue to hold
their stalemated position. There are two morals to this story then.
First, every chess player knows this: if it looks like you are headed for
stalemate, you should support it, even encourage it. It is a new equilibrium and
other things remaining the same, an equilibrium is better than instability. In a
sense, this is obvious, and completely consistent with everything else this book
says. As we examined issues around the decision to fight or not (Section A,
Chapters A1 to A5), we reminded ourselves constantly that we shouldn’t fight
unless we know we will win. The same thinking applies when you face a
stalemate. It is now obvious that you have miscalculated. Thank God your
miscalculation was not more even more drastic. You should be grateful you
haven’t ended up losing, or dead. Now that the writing is on the wall, it makes
perfect sense to immediately change tack and actively pursue a continuation of
the stalemate.
Second, the moment you know you are headed for a stalemate, you must
immediately switch to a low-risk strategy. This means that you take no great
exposure, and focus instead on putting together the most defensive game you
are capable of it. You need to appreciate that stalemates are not best preserved
only by not being aggressive. You can choose to not be aggressive, but if your
opponent gets aggressive, he may yet overwhelm your defenses and win the
war. When you think about preserving the stalemate, it is by doing it, not by
doing nothing. You have to aggressively pursue a strategy that keep everything
in stalemate. You have to think about what you will do that will ensure that no
matter what your opponent does, you will still have a stalemate. You have to
anticipate all possible attacks and protect yourself against them. In short, a
stalemate is your active strategy, not your inactivity.
Let us go back to the Metro Cable case and see how Metro dealt with
what looked like a stalemate.
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We have looked at how Metro Cable secured its joint venture AP

Cable, seized AP Cable’s finances and unearthed its partners
defalcation of funds, stabilized its customer base and gained full
operational control over the company.
At that point it was clear that theoretically, Reddy had an almost

infinite capacity for court action. He could go on pushing Metro
indefinitely, filing case after case, for so long as he could prevent Metro
from effectively exercising its initial control over AP Cable. This is a
feature of litigation in India. A determined litigant has an almost
infinite capacity to keep suing his enemy in court after court. Indian
courts do not give penal damages to a defendant against a mischievous
plaintiff. Litigation is cheaply fought in India is you don’t care about
winning the case any time soon. In this kind of environment, Metro
had to ask itself this question: What were Metro’s objectives now that
it had AP Cable under control?
Metro’s answer was consistent with our principles. Metro wished

to stonewall Reddy, retain the status quo and all gains made so far and
keep control of AP Cable. Okay, this was clear enough but it still
begged the further question: how was the status quo to be preserved?
To answer this question, Metro examined its perception of

Reddy’s priorities. Reddy would fight for the business by fighting for
the control of AP Cable. In his mind, AP Cable was the business. What if
it wasn’t? AP Cable was a business vehicle, but the business was AP
Cable’s customers. If AP Cable’s customers were separated from AP
Cable, did Metro care whether Reddy grabbed AP Cable back or not?
Better still, Metro could keep Reddy engaged in an aggressive battle
for control of AP Cable. While Reddy’s attention focused on this prize,
Metro could maneuver to migrate all of AP Cable’s customers to
another company. Reddy would then engage in shadow play over an
empty vessel while the cheese moved out of his grasp. This is how
events played out.
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On seizing physical and corporate control of AP Cable, Metro

appointed lawyers at all local courts and waited for the inevitable flood
of litigation to come. Reddy’s lawyers took two days to file a case. He
asked the local court to injunct Metro in a variety of ways. Reddy asked
for management control, he asked for executive powers, he asked for
the power to operate banks, and he asked that all company assets be
delivered into his custody. Metro’s lawyers warned Metro against too
much optimism. Given local loyalties and Metro’s ‘highhandedness’, the
local court could will give Reddy what he wanted.
Legally speaking, Metro had a good case. It had done everything

by the book and besides, it had proof to show that Reddy was a crook.
Who would put a thief back in charge of the jail? Still Metro was
unwilling to take a chance. It decided to strip all assets away from AP
Cable, leaving a shell. This was easy to do. Metro picked a paper
company from the friendly neighborhood chartered accountant,
terminated all Cable Operator contracts, signed up fresh contracts with
this new paper company, terminated the AP Cable Head End lease with
Metro, executed a new Head End lease with this new paper company,
and started work on moving the Head End to a new location. By the
time the case came up for hearing, three days had passed since the
takeover drama. Already, Reddy was fighting for nothing.
Metro’s lawyers picked up on Reddy’s new filing within minutes

of it reaching the court registry. When Reddy’s lawyers appeared in
court to argue for urgent interim orders, Metro’s lawyers were there to
resist. The court adjourned the case for three days to give Metro time
to file its reply. The extra time didn’t help. As predicted, local loyalties
won out. The judge didn’t want to hear about the law: he didn’t like
Metro’s corporate coup. He put Reddy back in control with immediate
effect.
Metro immediately filed an appeal, but that didn’t help either.

The appeal court was unsympathetic. Obviously, emotional factors
were at play. While all this was playing out in court, Metro physically
moved the Head End to its new location. Reddy heard about this, but
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then didn’t know what to do about it. He assumed – wrongly – that this
was no problem as it was only a matter of moving the entire Head End
out of the new premises and back to the old.
From a tactical perspective, Metro had a different problem. Metro

was allowing Reddy to take the initiative. If nothing new were done,
Reddy would continue to fight from the front foot, progressively
leaning on Metro as it yielded ground. It was time to redefine the
playing field once again.
AP Cable’s Board of Directors now issued a notice for an

Extraordinary General Meeting of its shareholders. The Agenda of this
EGM included an item to confirm the reconstitution of the Board. It
asked for the new MD’s appointment to be ratified by shareholders. It
wanted Reddy to be removed as director. If these agenda items were
approved, Reddy’s entire litigation would be redundant. What is a court
to say if the owners of a company decide they want a different
management?
This move put Reddy in a difficult situation. He needed to stop

this EGM from being held. He filed another case and as you would
expect, the local court obliged him again with blanket orders. It was
clear that local sensibilities could not be matched: no matter what
Metro did or didn’t do, local courts would interfere. Metro had to find a
way to get this dispute out of the jurisdiction of the local courts.
As it turned out, this was not hard to do. Metro filed a case
before the Company Law Board (what is now NCLT) claiming
mismanagement and defalcation of funds. It asked CLB to appoint its
own nominee to AP Cable’s Board of Directors. CLB heard Metro out but
decided to take it slow. It passed on immediate order but it asked
Reddy to file his reply. This changed the game again. Reddy now
stopped worrying about the asset stripping of AP Cable. Instead, he
focused on holding on to management control of AP Cable. But AP
Cable was already a hollow shell. As the weeks wore by in hearing after
court hearing, the battle degenerated into an endless squabble on
highly technical points of legal interpretation. The commercial issue
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was lost in all this legalese and while this charade played out, Metro
meanwhile consolidated the business in the new Company. In six
months, all of AP Cable’s old business had been secured in this new
entity, the revenue base was stable, the business was back on its feet,
By then, Reddy had run out of steam.
It is a common experience in court to find oneself on the side of a good

case and yet find itself in an unwinnable litigation. AP Cable was just such a
case. Metro took control of AP Cable but successive courts were inclined to
interfere with this control. What was Metro to do? Metro had doubtless gained an
initial advantage. Its real strategic choice was to secure this initial gain and then
secure a stalemate. To do this, it moved the cheese out of AP Cable and then
allowed Reddy to keep his attention firmly focused on the hollow shell it left
behind. It used an active inventive strategy to create a stalemate situation and
then did everything in its power to secure that stalemate. This takes great
foresight and very mature planning. That is what every one fighting a legal war
needs to do.
-x-
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Chapter C6
Part B Conclusion:
Plan Honestly
As we come to the end of this part B, let us pause and ponder the lessons
we have learnt.
We have examined five key rules on planning litigation. Here is a very

quick recap:
One, legal wars are not fought for glory. There is by definition no glory in
any kind of war. You fight a legal war because there is benefit in fighting it and
you believe it can be won easily. This is why you must always plan the war
without being unduly hampered by moral considerations. The law gives us tools
with which to fight. If it is legal to use a particular tool, you use it. Your fight
must be amoral.
Second, wars are dangerous. Even if you believe you can win, you may
end up losing for totally unforeseen reasons. Winning is nice to have, but not
losing is a must have. You must first plan your defense to a standard that will
give you confidence that you will not lose. Once you are confident that you will
not lose, you may then go on to make a plan on how to win.
Third, you don’t always have the luxury of choosing whether you will fight.
Much too often, people have wars thrust on them. You may face other situations
where the war was worth fighting to begin with but has now become
unprofitable. In such cases, you must plan a defensive war.
Four, not all legal wars can be won in all circumstances and at all times.
Very often, you can win a legal war at one time but not another, using one
attack sequence but not another. Wars are frequently a matter of timing and roll-
out. When you plan a winning strategy, you must plan not just your attack, but
also the timing of your attack, the nature of your attack, and the order in which
you will attack various targets. Remember, it’s always a case of when, where and
how.
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Finally, you may start a legal war confident that you will win. But in the
end, you can only have the ability to win but you can never have the ability to
force your enemy to lose. It’s your enemy who controls its ability to lose. If you
enemy is good enough, he will rob you of your victory by being unbeatable. You
need to plan for this. If you have not planned for it, you must always look for
early signs of a war that cannot be won. When it becomes clear that you are in
an unwinnable war, you must immediately create and actively implement a plan
that will create and sustain a stalemate.
Beyond these five simple rules lies a fundamental truth: it is always

possible to plan contingencies. While the world is uncertain, you can always
devise plans which will be able to deal with the most statistically likely scenarios.
Realistically, most situations have only so many highly likely outcomes. These
can be predicted. It’s a matter of optimizing the planning process. It is also a
matter of being realistic.
This idea lies at the heart of the planning process. In all that you do, and
all that you imagine will happen, your total focus must always be on cold rational
planning. Above all else, you must never allow extraneous considerations to
override cold rationality. I cannot stress this enough. Plans fail because they are
not ‘honest’, meaning that they are not coldly rational but allow themselves to be
guided by other considerations.
-x-
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Part D
Fighting Strategies
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Chapter DO
Configuring Litigation: Seven Strategy Tools
Let us pause now and quickly recap what we have learnt so far.
Before you pick a fight, you must decide if you are capable of fighting a
legal war. In Chapter A1 to A5, you have seen how five rules help you take this
decision. Once you have made this assessment, you will perhaps find it possible
to decide one way or the other. In taking this decision, you must also determine
if you are capable of litigating to win. You have examined this question in
Chapter A6.
At the end of this process, let us take it that you have decided you are
capable of fighting a winnable war. What do you do next? In Part B of this book,
you have seen the planning process unfold. Yet again, there are five rules to this
process. When you successfully conclude your planning process, you are
hopefully ready to fight a winnable war.
Does this mean that you should now go and pick a fight with your enemy?
Good heavens, no! Just because you have made your preparations does not
mean that you have finished making your plans. There is still a lot to be done
before you start your war. You need a war strategy. What do I mean by
strategy? Strategy is your overall plan designed to get you to your objectives.
What use is a gun if you don’t know when and how to use it and for what
purpose? Its strategy that makes a war machine effective. If you don’t have a
strategy, your battle tanks are best used only to make a grand display of
pageantry and pomp on republic day type parades! The art of successful
litigation is ultimately, the art of developing a successful litigation strategy.
The rules to determine a Litigation Strategy can be summarized into seven

basic rules as follows:
(1) Match Magnitude of engagement to resources.

(2) Quick battles.
(3) Optimize logistics.
(4) Avoid costly annihilation.
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(5) Priority of targets.

(6) Factor Force levels.
(7) Avoid entanglement.
Let us look at each of them.

-x-
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Chapter D1
Rule 1 - Match magnitude of engagement to resources
Imagine that you are a very angry individual setting out to pick a fight
with your brother. It may be about who gets the better part of your jointly
inherited family home. It may be about who gets the roof rights. It may even be
about one brother wanting to sell out his portion of the house to a stranger
rather than sell it to his brother. Whatever it is, you can be sure that a lot of
unpleasant words have been exchanged before either of you thought about
going to court. When you start to think about going to court, you drivers are
very probably a boiling cauldron of emotional excess. Your decision to go or not
go to court then is driven by considerations other than those that will determine
the outcome of this kind of drastic action. Does that really make sense? How is
your behavior different from the guy who cuts off his leg because his ankle really
hurts?
The truth is that there is no room for emotional baggage in the decision to
go to court. In the end, this is about the value of the property or roof rights,
maybe today, maybe in ten years’ time. It’s really about money. Once you start
to accept that, you realize that you should stop thinking about all the emotional
trauma you have experienced during your disagreement with your brother and
think about this problem in the same way that (let’s say) a faceless corporation
does. In the commercial world, legal wars are ultimately a game of economics: a
simple matter of cost and benefit. There is no conflicts of culture or philosophies
here: legal wars are a tool to achieve commercial ends.
Consider the typical high stakes litigation in the corporate world, be it a

simple Joint Venture Agreement or a complex infrastructure project. Such typical
contracts provide for arbitration. Although the legislature has worked hard to
make arbitration as painless as possible, the justice machine still offers a variety
of opportunities for delay and sloth. To avoid these problems, many companies
have opted out of the Indian arbitration law and agreed to use various
international arbitration solutions such as ICC and SIAC. There exist in India
today literally hundreds of thousands of international contracts which are being
performed in India, are governed by Indian laws, but still, should a dispute arise,
parties have agreed to settle their disagreements by arbitration under foreign
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rules in London, New York, Zurich, Singapore, Hong Kong, et al. Is this a solution
to the problems of the Justice Machine?
Let me tell you about my latest experience. I invoked arbitration under

Singapore rules in 2018 for a client. I was asked to deposit about Rs. 2 Crores
immediately. I did so. SIAC then asked the opposite party to do the same. The
opposing party refused on the ground that the arbitration was premature. SIAC
now asked me to deposit the other party’s share of costs as well. I deposited
that money as well. It looked like the machine would now crank up into action.
Instead, the opposite party invoked a separate arbitration and deposited their
fees. SIAC now asked me to deposit an equivalent sum of money in this second
arbitration even though both arbitrations came out of the same Joint Venture
Agreement and were substantially about the same subject!
My client was in a rage and I struggled to absorb the tsunami. Is SIAC in

the business of resolving business disputes or is it in the business of promoting
multiple arbitrations on the same subject to maximize its own profitability? I bore
the brunt of the outrage, patiently explaining the legal issues even as I
sympathized with the client. In the back of my mind was another thought: its all
very well to want a private island in the north Atlantic off the coast of Africa, but
can you afford it?
It isn’t only about fees payable to SIAC or LCIA etc. Suppose you agree to
conduct your arbitration in London using arbitrators from neutral countries. We
had one of those in 2018 too. This was an arbitration between an Indian and a
Tanzanian entity. The arbitrators were from Germany, Australia and Russia. The
hearings were held in London. What would such an arbitration typically require?
Let me talk now of optimal solutions. Because it was subject to Tanzanian

laws, we needed Tanzanian legal experts. Its true Tanzanian law is a cut copy
paste job of the Indian contract law but who wants to take a chance? Since the
hearings were to be held in London, local procedural law applied and we needed
that very expensive Sterling denominated expertise too! That’s three sets of
lawyers! Since single lawyers do not conduct major International litigation, we
are really talking about three law firms in three countries! All these people
needed to read the same papers, research in the areas specific to them, travel
up and down to the venue of arbitration, communicate with each other, travel to
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confer, and so forth. That is serious money. If you don’t have the money for that
kind of thing, wouldn’t you do well not to start a legal fight?
Does this mean then that if you haven’t the money and manpower, you
can never fight a legal war? The answer has to be a resounding no. Not
everyone fighting a legal war has a bottomless war chest. Cases are won by
empty pockets too. Entire infrastructure projects in the Himalayas have been
stopped dead in their tracks by a well-conceived Public Interest Litigation. Many
small companies take on international giants and win. How do they do it?
Its possible to give several answers to that question. For a start, you can’t
make an assessment of resource depth in a vacuum. Lack of resources is not a
major problem if your enemy is no better off! Even if the enemy is stronger than
you, you have strategic options where you are able to optimize the use of your
resources while the enemy is not. Better still, you could find a strategy where
substantial resources are unnecessary. It comes down to managing the
magnitude of engagement to match your resources. For instance, a smart
company can go for a quick kill followed by a settlement. As a general principle,
the aim here would be to pre-empt the opponent by quickly getting some sort of
status quo order. You would look for a way to freeze the status in a way where
the enemy has no ability or desire to continue the fight. If you don’t get that
result, you can also freeze the status in a way where the enemy is not able to
shake the status quo. As he bleeds, his motivation to settle with you rises.
Here is a great example of this strategy in the Ecological Solutions case.

Arrayed on one side was a Government sponsored charitable institution. It was
ruled by bureaucrats so it had great clout in the corridors of power but that came
with great inertia and a lack of personal stakes. If the charity lost money, who
really cared? On the otherside of the battlefield stood an enterprising
businessman from the hospitality industry, a charming man called Khanna. It
was an unequal battle between entities with widely different skill sets.
The Ecological Solutions case
Back in the 1970, ecology and environmental preservation

became quite the flavor of the month. Everyone understood that a
good environment is many things: air, water, soil, amongst others. It
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was also understood that what we put into the earth, and what we
take out, determines our fate as well. A variety of players destroyed
the environment, even as a variety of other players had an embedded
interest in preserving it. When environmental degradation in India
crossed into the red zone in the 1990s, a group of intellectuals sat
down to brain storm together.
Eventually, they concluded that the Government could never

hope to effectively address ecological issues without a cross
disciplinary advisory think-tank. The Government needed to put
together such a think tank and populate it with institutions who were
already addressing environmental issues. These specialists needed to
be relocated into a single institutional area, under the administrative
control of a Government sponsored registered society. This proximity,
they hoped, would increase synergy and bring better focus.
In due course, a not-for-profit society was registered and the

Government allotted prime land in the heart of town to it. To no one’s
surprise, a Board of Governors was created, and then packed with
bureaucrats. Fortunately, an enterprising bureaucrat was appointed as
the secretary of the society and given the freedom he required to make
the Ecological Solutions Center (or ESC) happen. It was a promising
start.
This Secretary was something of a visionary. He believed that

think tanks do not work well suffocated in musty government offices or
paying through their nose for exclusive conference halls at extortionist
dollar pegged prices. It was illogical for societies seeking holistic
solutions to environmental issues to work from ugly aesthetically
demeaning building. He wanted ESC, and all its ‘participating
institutions’, to be located in pristine surroundings, with its own
residential and conference facility. As his ideas grew and developed, he
had a whole hospitality facility in contemplation.
Clearly, he was the right man in the right place for the right job.
In no time, he had cajoled, persuaded, pushed, and hustled scores of
environmental and sustainable development groups, institutions and
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companies to join as ‘participating members’, come up with the money

and finance the ESC. A leading architect of the day designed a beautiful
building and its construction proceeded quickly.
However, the hospitality facility left him with a problem he could

not himself tackle. Since he was a bureaucrat, not a hotelier, he did not
know how to manage the hospitality facility and had to find someone
to do it for him. ESC issued a Notice Inviting Tender asking for help and
a variety of experienced players, including some hotel chains,
responded enthusiastically. Should he award the contract to these
high-end players? They had the domain expertise, but did they have
the right attitude? High-end hotel chains have a certain perspective on
their brands. If he gave the contract to one of them, he could end up
with a 5-star hotel, too expensive for most people who solve ecological
problems through voluntary action often financed by donated funds.
Enter Khanna, a fiery young man with dollops of inspiration and

zeal. He ran a small hotel in the city but he had a head full of wonderful
ideas. Eventually, they struck a deal. In sum, ESC would bear the
capital cost of the hospitality facility to Khanna’s design and
specification. In turn, Khanna would operate the facility and share the
upside with ESC. Parties signed a contract and Khanna went into
overdrive.
Everyone now waited with baited breath for the inauguration of

this upwardly mobile and very fashionable facility with a sexy social
mission offering a good time at a realistic price. Then it fell apart. One
year into the construction phase, the honeymoon ended. Someone in
ESC tooth combed the fine print in the contract and found it was
heavily loaded in Khanna’s favor. The Muck hit the fan.
To explain it in a nutshell, contracts are ultimately not about

rights and liabilities alone: they are also about who carries
unquantifiable future risk. This is an important point, and one not
always well understood even by lawyers. Every major construction
contract provides for events of Force Majeure (Acts of God) such as
earthquakes and floods and pandemics which destroy a party’s ability
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to perform its obligations). These contracts provide for potential

liabilities such as accidental injuries to third parties during
construction. Such contracts provide for changes in law that alter the
essential commercial deal between parties such as changes in tax laws.
They also provide for changes in the economic environment such as
deterioration in foreign exchange rates which destroy profits. They
provide for changes in the internal political environment which impact
the performance of the contract, such as a ‘swadeshi’ brigade
destroying burger joints. Then there are changes in the external
political environment which impact performance of the contract, like a
crazy neighbor encroaching on Indian land in the middle of nowhere
leading to a customs logjam for imported goods. These are risks every
contract runs, but they impact parties disproportionately. If I have to
supply you silk sarees, and I depend on Chinese silk, who takes the loss
when Silk imports from China are banned? ESC found that it carried the
entire burden of unquantifiable risk while Khanna had himself a risk-
free lunch.
More significantly, the contract was so structured that Khanna

could in theory pay nothing to the Center. This is easy to do in a
contract. In any profit-sharing arrangement in a company, there is
going to be no profit if the contract allows the company to send all its
personal for a year-long holiday to Switzerland on an unlimited
expense account. Similarly, there is going to be no profit if the
company can choose how much of the revenue will be ploughed back
into the business by buying new IT stuff or changing the hotel decor
every six months). Khanna could choose if there was going to be a
profit.
This discovery triggered a blame game charade and the

crucifixion of the usual fall guys. All sorts of allegations of kickback and
payoffs were made. The Secretary was shunted out and a new one
appointed with the single point agenda of making the contract
disappear. The new Secretary consulted his lawyers, they discovered a
set of contractual violations by Khanna and before Khanna knew it, he
had a termination notice in his hands.
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Khanna was livid. It was possible to sympathize with him. He had

joined the project before it had become fashionable and he had put
two years into it. He saw the termination notice as ugly politics dressed
to look like legal issues. He suspected the legal action was intended
only to shake him down. How was he going to fight the Government on
his limited resources?
The traditional legal solution facing Khanna was not going to

help him. In law, any party is free to terminate any contract of service.
The law does not compel parties to perform contracts of service they
do not wish to perform. As a principle of law, this makes perfect sense.
In practice, it has grave implications. To compensate Khanna, the court
would have to order a long trial. Khanna would have to prove what
damage he has suffered. Obviously, Khanna had neither the time, nor
the will, or even the patience to struggle through this type of long
battle. He had to find a way to stop ESC from kicking him out of the
deal. H needed a ‘stay order’.
Khanna now unveiled a tried and tested technology to get a ‘stay

order’ also known as ‘a conspiracy theory’. The construction of the
Center had been delayed. If the inauguration of the hospitality facility
was delayed indefinitely, there would be no way to avoid a public
humiliation. Participating institutions had paid for the hospitality
facilities, and would want it to function when they moved into the
Center. If he stalled everything, the participating institutions would be
livid, would pressure ESC and he will have his settlement.
Khanna filed a case, almost poetic in its simplicity. He said he had

a deal and he was doing his job well. In doing this job, he had spent a
lot of time, energy and money. All along, no one complained about his
work. Now, suddenly, a group of destructive elements in the Center
had implemented a ‘palace coup’ and wanted to throw him out for
dishonest reasons. He repeated his allegation of ‘collateral motivation’
throughout his pleadings. Everyone understood he was saying this was
blackmail. He asked the court to hold that the termination notice was
void.
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In all fairness, the ESC had a case. The deal was grossly unfair.
The problem was ESC was a Government sponsored heavy weight
while Khanna was a weakly positioned individual. How do you convince
a court that the contract was one-sided, burdensome and grossly
unfair to the strong party! That apart, in a litigation about a contract, a
court is not concerned with the fairness of the contract. At least in
theory, a court job is to discover the true ‘intent of parties’ and to
make sure parties do what they said they would, or pay compensation
for not doing it.
Naturally, when the case came up for hearing, the court’s first
instinct was to pass order requiring the parties to maintain status quo.
It seemed only fair.
The Center filed a long and complex defense on meaty issues. It

was good stuff. It showed the absurdity of the contract as written. It
showed that legally speaking, a contract of service could not be
specifically enforced. It argued that Khanna could be compensated
with money if he was right, but a stay order? All these were good
points, but they were points to be proved at a trial. At that stage, the
court was concerned with interim protection while all these complex
questions were being considered. After a protracted hearing continuing
for months, the court confirmed the status quo order and the Center
experienced its first crushing blow.
This turned the tables for Khanna. The Center came under
increasing pressure from the people who had paid for the hospitality
facility. They wanted to see food and beverage, not litigation. Pressure
also mounted from the bureaucrats who had conceptualized the
Center. They argued that it was embarrassing that two years after
signing the deal, the Center now discovered that it had been
hoodwinked. Khanna’s claim of blackmail had its effect: civil servants
started to wonder if there was not more to it than met the eye.
The new Secretary found his position untenable. He sued for

peace. He asked for a face saver. Khanna was magnanimous in victory.
The parties renegotiated the contract, and wrote a lot of new words
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that didn’t change the meaning too much. Most of these changes
moved the unquantifiable risk to a loss sharing formula. The new
contract was signed and it was back to business for the both of them.
Twenty-five years after this war ended, the parties continue to cohabit
happily ever after.
Thus, on a shoestring budget, Khanna won his battle.
The Ecological Solutions Center illustrates several fundamental rules of

effective litigation. It is an excellent illustration of occupying the field. It is a
good illustration of mastering and using the governing environment. But above
all this, it is a classic illustration of how to implement a war strategy that
matches the magnitude of resources to the proposed litigation. Khanna could
have taken the case to its final conclusion and collected a lot of compensating
without doing a day of work. That would have taken years to get and a lot of
money too. Instead, he chose the limited engagement path, of keeping his
contract and making small money as profit year on year. He gambled that the
Center would succumb to the pressure generated by the delay in inaugurating
the hospitality facility, and it did. He kept the litigation at low key, and he won.
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Chapter D2
Rule2– Redeploy Captured Resources
Any commercial venture, not just war, is limited by the resources you
have to feed its appetite. It is not possible to run a big business with little
funding. There are of course ways around it. I call these Resource Multipliers.
In the last chapter, we examined strategy as a resource multiplier. We

found that you can fashion a strategy that takes few resources and yet has a
high probability of getting you the win. Naturally, you do not need to be resource
poor to be qualified to look for a resource multiplier strategy! No one wants to
spend money for nothing. In all that we do in the commercial world, we ask
ourselves what we are buying for the money we blow. The real magic of a
resource multiplier strategy truly reaches its pinnacle though when you are able
to find a way to capture your enemy’s direct and indirect resources and use them
against your enemy.
What do we mean by the expression “direct and indirect resources”?
When we speak of “direct resources”, we mean capturing resources

directly owned by the opponent. Simply put, you shoot your enemy with his own
gun. This is not difficult to do. When a tenant refused to pay rent or hand back
possession of a commercial property, he uses income generated from that
property to finance litigation against his own landlord. Doubtless, judgment day
will come but litigation is fraught with uncertainty. The system moves slowly but
equally, the landlord may not have the money to sustain a long fight and may
give up the rent and perhaps grant a grace period before the tenant has to
vacate. In fighting such litigation, the tenant has used few if any of his own
resources and has instead directly used resources belonging to the landlord.
The case of the Ecological Solutions Center is a unique, unorthodox and

very good example of using the enemy’s resources to defeat the enemy in a non-
corporate context.
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Ecological Solutions Case
Recall that the Ecological Solutions Center (‘ESC’) was financed

by ‘Participating Institutions’ and built over several years. Once they
had paid, these institutions didn’t want to wait for possession and pay
rent elsewhere for years. It made sense for ESC planners to build the
offices first and hand over possession as quickly as possible with the
conferencing and hospitality facilities to follow later. The plan made
sense but in the meantime, how were the basic F&B needs of the office
goers to be met?
Soon after Khanna signed up to run the hospitality facilities, he

offered to run a small canteen for the 500 or so office goers who
worked there. It was a win-win for everyone because there wasn’t a
market within a mile of the ESC. Khanna hired the staff, purchased the
equipment and started to run a slick if modest café serving snacks and
lunch at an amazing price point.
When the dispute erupted, Khanna immediately obtained a stay

order restraining ESC from terminating his contract. His was a great
achievement, so far as it went but it meant that he now had high
litigation costs to finance and no source of income to fund it. Clearly,
he needed to cut his losses, perhaps even find a way to convert his
losses into an opportunity. Could Khanna find a way to use ESC’s
resources to fund his litigation against the Centre?
He could! Khanna soon asked the court to let him run his canteen
till the dispute was decided. He made a great case of it. What was the
point of shutting down a facility that was good for everyone? Five
hundred people worked at ESC. They needed meals, hot and cold
beverages, light snacks? Why should they be denied basic amenities
only because he had a disagreement with ESC? Especially, why should
they be denied these facilities when he had already set up the
infrastructure and logistics to provide the service? The balance of
convenience lay in letting him run the canteen. He was paying large
amounts in staff salaries. He was bearing operation costs, even brand
and marketing costs. Why should all these people lose their livelihood
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only because he disagreed with ESC? He argued that if he was unable

to cover his costs, everything he had created would collapse. If that
happened, even if he won the case, between the accumulated losses
and the mobilization costs of starting afresh, he would never be able to
get the Hospitality Facility off the ground. He would have won the legal
case but would still lose the business case. He asked the court to
protect his future while it decided his case.
It was truly powerful stuff, ingenuous, inventive and emotionally

appealing. It sounded so completely reasonable. Not that there wasn’t
another viewpoint. If Khanna had been stopped dead in his tracks, the
Society could easily get another contractor to come in very quickly and
start supplying the samosa, chicken burger, egg sandwiches and chole
bhatura type lunches Khanna was slapping together and serving in his
canteen. As for his losses, what kind of high-tech labor do you need to
make and sell samosas? It was artfully presented rubbish but its
appeal was undeniable.
The Court saw his point and gave him his order. Curiously, the
Court did not simultaneously direct him to share his revenues with ESC
or pay his running costs. Think about it. ESC provides the space, the
electricity, the water, the tables, the chairs, the gas burners, the
refrigerators, the cups, the saucers and the plates but he gets to keep
all the income he receives! In the result, ESC loses money every day he
runs his canteen and he has an income. As argued in court, it is
projected as a ‘stay alive’ measure. In truth, it was an ingenuous
scheme by which ESC’s money transferred slowly to Khanna and
Khanna took that money and used it to finance litigation against ESC.
Brutally put, ESC paid for Khanna’s litigation.
The larger implication of this order was Khanna’s continuing

presence at ESC. Presence brought visibility, acceptance, and then
approval. It was the perfect public relations ramp. People pay fortunes
to have a flag ship store on high street. Such stores never bring in
enough income but they do bring high-profile visibility: the ultimate
brand building force multiplier. Brands don’t care if you still go to the
local Walmart in the end to buy the products you saw in the high street
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store. They need their products to be talked about. Khanna had other
restaurants and hotels. Nothing stopped him from putting pamphlets
touting the virtues of his other businesses on the counters of his
canteen. It was cheaper than buying advertising space in the local city
newspaper. In truth, it was free.
Finally, the canteen became for Khanna what social media has
become for politicians now. It became a place to build narratives. As
suave eco-habitat types drifted in looking for a bite, Khanna hung
about flashing his inimitable smile, throwing out his hands expansively,
looking benign and weaving a tale of victimization. He befriended
everyone of any consequence from every institution, molding public
opinion, creating prejudice. He sowed dissension in the enemy’s camp
by reminding them endlessly of the inconvenience of not having proper
hospitality facilities at ESC. He tugged at their emotional cords, made
himself into the ultimate victim and created an environment of
sympathy which he ultimately used to pressure ESC to settle with him.
In just a few weeks, everyone agreed that ESC was run by a dodgy
character who was probably shaking down Khanna for a payoff.
This is a classical case of employing the enemy’s direct resources to attack

the enemy. You actually take something that belongs to the enemy and use it
against the enemy. Not every case gives you that opportunity. Most frequently,
you can’t get hold of what your enemy has. The story changes when you extend
your strategy to indirect resources.
Indirect resources come in two categories. First there are resources over
which you have some amount of indirect ownership even though there are other
co-owners, including perhaps your enemy. If you own a controlling equity block
of shares in a joint venture company, you are able to control that company even
if your enemy is also its part owner. In many cases, even a controlling block is
not necessary. A promoter of a listed company usually has ‘indirect control’ over
his company even though the banks, the public, and his enemy together own the
majority of the shares of the company. If such a promoter engages in a legal
war, the resources of the company become his exclusive resource even if he
doesn’t exclusively own the company.
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But ‘indirect resources’ come in another avatar as well. These are the
resources that neither you nor your enemy own or control but your enemy
depends on them to make his living. No one is an island. In getting through life,
or running a business, we rely on networks of people, communities of interests
and the benefits of a variety of indirect resources. If you can get your enemy’s
indirect resources to start working against him, your strategy would have
reached a superlative. Again, this is not as difficult as you may think.
For instance, every products company works through a dealer network. If

you can persuade the company’s dealers to work against the company, you can
bring the promoter under great pressure. Other typical examples of such indirect
resources are financiers, suppliers, marketers, allies, business partners, even a
sympathetic bureaucracy or press. If you capture and persuade these resources
to work against your enemy, you can quickly undermine both his business
confidence and his ability to wage war. How many businessmen have managed
to fight their enemies by fostering labor unrest in the factories of their
competitors? How many have used social media to destabilize their competitors’
loyal supporters and make them rethink their priorities so to speak? How many
have managed to rattle movie star brand ambassadors and made them refuse to
lend their names to the products of competitors?
Let us look at a case where the enemy’s indirect resources were captured
and used against the enemy.
The Metro Cable Case
Recall once again the case of Metro Cable. This pan national
company operated in partnership with local cable signal distributing
companies. Metro owned 51% of one such local company A.P Cable.
For a partner, they picked Sai Reddy, a local strongman. Reddy was AP
Cable’s MD, ran the company and controlled its bank accounts. For its
office, AP Cable rented a building from Reddy, who in turn had rented
it from its owner. As far as the local cable operators were concerned,
Reddy was Mr. AP Cable and Mr. Metro Cable combined!
When the saga began, Reddy had for some time been collecting
monthly subscriptions from local Cable operators but hadn’t deposited
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these moneys in AP Cable’s bank accounts. As a result, AP Cable ran up

losses even as Reddy got richer. Metro tried to talk to Reddy about this
but Reddy threatened to move these local cable operators to a
competitor if he wasn’t allowed to operate freely. Metro didn’t know
these local cable operators and didn’t know what it could do about it.
From a purely business standpoint, these local cable operators were
the customers: that’s where the money came from. Taking control of
AP Cable really meant taking control of these customers, and then
using them against Reddy.
It used strategy to achieve this objective.
As soon as Metro took physical control of AP Cable’s office, its

new MD immediately called a meeting of local cable operators. The MD
introduced himself, informed them of this change of control and read
out the list of outstanding dues owed by each of them. The cable
operators protested. They had paid Reddy most of this money. The MD
pretended to be shocked. Then his tone softened as he put on his most
benign kindly face. He made a generous commercial offer. If these
local cable operators could furnish documents to show they had paid
Reddy, he would write off those sums. Would the cable operators help
him retrieve the money from Reddy by signing affidavits swearing they
had paid Reddy? If they swore these affidavits, he added, he would
also defer payment of any remaining outstanding for six months. He
added almost as an after thought that if they did not cooperate, AP
Cable would file criminal cases against Reddy with these cable
operators as co-conspirators!
It was an offer they could not refuse. The choice between being
loyal to Reddy and ending up accused in a criminal court and signing a
piece of paper and getting a credit extension was no choice at all.
Practically all cable operators accepted this offer! In no time, AP Cable
had masses of paper work to prove Reddy’s defalcation. There was no
way Reddy was going to find his way out of this any time soon. Metro
cemented its control over AP Cable, leaving Reddy no room to come
back in. In this way, Metro killed three birds in one shot. It robbed
Reddy of a mission critical business resource, collected documentary
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proof enough to keep Reddy out of the business, and secured its
customer base for the foreseeable future.
Capturing the enemy’s key indirect resources and using them against the
enemy is a key element of litigation strategy. This strategy is used to weaken the
enemy but equally, it is used to expand your own resource base and materially
tip the balance of power in litigation. Such a strategy helps win legal wars.
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Chapter D3
Rule 3 - Seek Quick Results
There is no such thing as a cheap war. There are any number of reasons
why. For a start it needs money, lots of money. It needs people, equipment,
consumables, logistic support and lots of time. Worse, all these resources are not
used to create something: they are used to engage in destruction. It doesn’t
matter that ‘enemy’ assets are destroyed. In any war, the destruction occurs on
both sides for at least three reasons. First, if you hit somebody, he is going to hit
you back. Both of you may end up with broken jaws. You may win in the end but
you will come out busted and bruised. Second, you would have spent a lot of
time brawling, time you could have spend earning money and getting richer (or
doing more social work and uplifting the Gross National Happiness). That’s also
true of the employees you use to run your brawls. Third, brawls are bad for
business. If you spend your time beating up people on the pavement, no one will
come to your shop. You will have the reputation of an ‘avoidable type’. People
will lose confidence in you and they won’t deal with you. That’s probably true of
your shareholders too. Who wants to invest in a business which is neglected
because the managers are always too busy brawling on the street to run the
business?
Then there is the unpredictability of it all. You may think you will beat up
someone on the pavement but will that be the end of it? For all you know, your
victim’s cousins will show up with weapons of targeted destruction and you will
dive back into the shop and down the shutters to avoid a hammering. Your
remaining customers will now disappear. You will then call your cousins and they
will come with weapons too. Soon you will have a full-blown riot in the street.
This is when the cops get involved. For a start, they will arrest everyone
concerned and stick them into the slammer. That’s a dozen people in jail who
should be at work. It never ends there though. Someone would have been
injured so both groups will end up defending criminal cases. These cases will
then go on for a decade, or three. You will spend a hundred days hanging about
the criminal courts instead of running your shop. When tempers have finally
cooled a very long time later, you will find that no one came out any better off
but what remains of your life is much shorter than it was. At that point, would
you remember what it was you started the brawl about?
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Here is the thing to remember: you can start a war, but you do not decide
when it ends. In some societies, you may have a reasonable ability to predict its
end date, and it is likely to be some years. In India, this kind of calculation is
impossible. I have fought plenty of cases that have run for longer than 30 years.
In most cases, I was hired after they had run for 20 or more. In many cases,
both the original litigator and the original lawyer had died of old age. At its heart,
the Justice Machine is very litigation friendly. Because litigation can be started
cheaply, your anger management issues will drive you to file more and more
cases and your enemy will pay you back in kind. It’s not just the ease of litigation
though: the incentives of the Justice Machine promote the proliferation of
litigation. It’s a hierarchal structure, which means that any issue any level of the
hierarchy decides can be agitated again at the next higher level.
As young lawyers, I recall all of us coming into the profession with zeal, a
belief that we were there to provide expeditious solutions to defined problems to
a budget that made business sense. Then we got Justice Machined! The system
was ponderously slow, and largely unconcerned with the interest of the fee-
paying customer. In time, most of us resigned ourselves to walking in rhythm
with the environment in which we operated. I see many litigating parties
experience a similar transformation. Litigants come into the courts as newbies
with a high degree of energy focused on their goals. The system fails to respond
to their zeal. They suffer what I suppose is the Five Stages of Litigation Grief:
first Denial, then Anger, then Bargains, then Sorrow and then Acceptance!
If you plan to fight a case, it may help to understand these Five Stages of
Litigation Grief a bit better. Shortly after entering the wheels of the Justice
Machine, most litigants find themselves shocked. ‘What’s this’? ‘Dates of hearing
six months apart’? ‘Hearing after hearing in which nothing happens’? ‘How can
this be’? There is complete Denial. ‘This can’t be happening to me’. ‘Its not true’.
As they start to get ground down, this Denial turns to Anger. ‘I have a stupid
lawyer’. ‘He is slothful and obviously clue less’. ‘I need a better lawyer’. The
litigant loses his temper and screams at the lawyer. The lawyer simply shrugs, or
worse, laughs. The litigant can change his lawyer, but how does he know the
next one would get it done any faster? Sometimes, this anger focuses on the
judge. ‘The judge is corrupt’. ‘This is rank incompetence’. I have seen litigants
stand in court and shout at judges. It’s not pretty. Nine times out of ten, the
judge is gentle about it. He understands the frustration. He does not run the
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Justice Machine alone. There is not that much he can do. Occasionally, he loses
his temper. He issues a contempt notice but in time, his sense of humanity
overcomes his anger. In the end, nothing much happens. There is no escape
from the system. You can run with it, or you can destroy yourself.
Enter now the ‘Bargain’. The litigant starts making extraordinary offers to
his lawyer. ‘If you get this done faster, I will give you so much more money as
an incentive’. ‘Can we bribe the Court Reader to give shorter adjournments?’.
Better still, ‘can we please fix the judge and make him do something quickly?’.
He might even get his lawyer to try some of these tactics. In the long run
though, none of it works much. The Justice Machine is a juggernaut. Its
movements are very determined, and very slow. It crushes everything in its
path, including the ambitions of its fee-paying customers. Inexorably, the litigant
reaches stage four. He is engulfed in Sorrow. ‘This is so sad’. ‘We should all be
ashamed’. ‘This is my karma and my destiny’. The litigant sinks into a kind of
debilitating sulking despondence. It helps him to eventually achieve some mental
balance, but it does nothing for the litigation he is fighting. While this process
goes on, the litigation often goes into a limbo. He has lost the energy to keep
going.
Eventually, he comes round. The ship has been launched and he must
now sail it. The litigant adapts to the reality. He finds acceptance. It is what it is
and he has to get on with it. Now that he knows how it goes with the Justice
Machine, he adapts his thinking and starts thinking of adapted solutions. Thus, it
comes to be that after this long and exhausting process, a litigant comes to a
point where he should have been before he started his little war. If he had
known, would he have done it differently? Maybe he would have done it
differently, or maybe he would have not, but either ways, he would have saved
himself much angst and he would have been more efficient in his decision
making.
The message we take home from all this comes in two parts. Both are
simple and self-evident. First, if you want to partake of the joys of the Justice
Machine, you should make an attempt to understand its true nature before you
jump into it. This will prevent some nasty surprises but more importantly, will
help you make smarter decisions. Second, once you know that the system is
slow and ponderous, you would find ways to make it quicker and more solution
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oriented. We have seen many examples in this book where litigants have worked
around the sloth in the system and found speedy resolution to their legal
problems. Here is a little Aide Memoir to remind us how it was done in three
different cases.
Metro Cable case
Let us recall the essential facts of the Metro Cable case. This pan-
national cable TV company had controlling equity in every JV company
it operated across the country. In all cases, management control was
handed over to the local partner. Metro also owned all Head-End
Satellite reception center in each of these territories. Metro then leased
this equipment out to each local JV Company. In turn, these JV
Companies connected the Head-End to each local cable operator
through its network of city-wide cable system.
In this particular case, Reddy, AP Cable’s MD became a law unto

himself and Metro Cable was unable to persuade him to work for the
common good of both partners. He continually ran up losses in the JV
while lining his own pockets. When Metro confronted him, he
threatened to move out with all cable operators.
Did Metro Cable want a dog fight with a partner who controlled
the business, the Head-End, the customers and the cash flow? And if
Metro Cable did want a dog fight, what was the correct way to go
about it? On the simple principle of it, Metro could adopt the text book
straight-line approach. Metro could call for a board meeting, seek
Reddy’s explanation, remove him from his MD’s post (without proof of
misappropriation), and then try and terminate his directorship at an
expeditiously convened general meeting of shareholders. This seems
simple enough, but surely, Reddy would have his own storyline. He
would deny misappropriation and claim helplessness. What could be do
if customers didn’t pay AP Cable? Metro couldn’t prove defalcation. He
was the nominee director of a 49% shareholders: Metro couldn’t
simply throw him out on a whim.
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The pragmatic truth is that this kind of straight forward tactic

rarely works. If Metro Cable issued a Board Meeting notice, Reddy
could go to the local court and get a status quo order. He could then
quickly move customers out of AP Cable and to another company.
Given the opportunity, he could also remove key bits of the Head-End
equipment and empty out whatever remained in the Bank accounts,
leaving Metro holding the bath water with no baby in sight.
Metro Cable needed a blood less coup. It chose to divert Reddy in

a Board Meeting, seize control of the JV Company’s offices, ferret out
proof of defalcation, transmit the information to a tardy Board
proceeding, use that information, not to remove him as director, but to
merely strip him of executive powers, appoint a committee to further
inquire into the allegations, appoint a new Managing Director, change
all bank signing authority and turn the cable operators against Reddy.
We have studied how Metro implemented such a plan. Thus, in one fell
swoop, Metro Cable took complete control of the JV Company, and then
sat back, waiting for Reddy to hit them with court cases.
Metro succeeded because it planned for rapid action. It

succeeded because it quickly moved to achieve substantially all
corporate objectives in a single stroke. At the end of the day, Metro
probably succeeded because it planned a war where most all major
battles had been won even before the first battle started.
Metro Cables is a good illustration of high-speed action, immaculately

planned, flawlessly executed and quickly won. Its greatest strength lies in a plan
that won the war before the war began.
Regrettably, it is not always possible to implement such a strategy. There

are cases where the action must begin with a court case, not with a pre-emptive
strike. These are the cases where the pre-emptive strike, as it were, is the court
order. The war begins by getting a stay order, and the litigant then hangs on to
that order at all costs forcing a settlement of the dispute. The trick is to structure
the case in a way that the court thinks it makes total sense to grant such an
interim order, and yet, in truth, the order is so damaging that no defending party
can suffer it for too long. Such an order must seriously threaten the defending
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party’s designs. If possible, it must cause the defendant daily losses. This is the
key thing: the order has to be such that it makes more commercial sense to
settle the case than absorb the damage while being at the mercy of the Justice
Machine. The Ecological Solutions Case, discussed in the previous chapter, is just
such an illustration.
Ecological Solutions case
The Ecological Solutions blew up because a group of relaxed

bureaucrats failed to protect the Society’s interest in a commercial
contract, which they had signed with Khanna for the operation of its
hospitality facility. When they did finally figure it out, they hastily
terminated the contract without considering its implications. Khanna
had already invested substantial resources in time, money and market
reputation into the project. He was already ‘in the deal’. It wasn’t a
matter of not letting him in: it was about kicking him out. That is a very
different animal.
But termination did occur. What were Khanna’s options? For one,
he could sue for breach of contract in which he could claim substantial
damages. If he had been allowed to perform the contract to its full
term, he would have made a lot of money. His second option was to
find a way to force the Society to take back the termination, to cancel
the cancellation so to speak. If he somehow obtained an interim status
quo order, he could then sit on the order till the war of attrition
compelled the Society to review its decision to terminate.
His first option was correct in law. If someone breaks a deal with
you, he has to pay for the losses he causes you. You can’t force him to
remain in the deal. Strictly speaking, there is no commercial marriage
that cannot be terminated: one just has to be ready to pay the bill! In
practice, this works poorly because the Justice Machine delivers results
very slowly, if at all. Khanna had neither the resources, nor the
patience to suffer that process. The good news is that the Judiciary
knows this too. All to often, they ignore the law and help aggrieved
parties get round the failures of the Justice Machine. On this belief,
Khanna planned a quick war. He managed to get his interim status quo
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order. In time, the pressure from those who had paid for the hospitality
facility became unbearable. The Society was forced to sue for peace
and Khanna won.
Just to be clear, calling a battle quick does not make it literally quick: its
quick because it lets you get to where you want to very quickly. Then time
comes to a near standstill! This is of course in your interest. The law says every
interim ex parte stay order (passed without hearing both sides at an initial stage)
should be decided after hearing both sides within thirty days. That’s not how it
turns out most of the time. The court has to wait for your enemy to appear in
court, then file his reply, the for you to then file your rejoinder, and only then
can it decide if the initial order should survive or be withdrawn. Once you have a
stay order in your hands, it is in your interest to make very elaborate ‘arguments’
over many days before the Court gets to decide what to do with the initial order.
You also have other weapons in your arsenal. Whatever happens to the initial
order, you can appeal the decision, as the other side can. Meanwhile, the main
case is stalled, awaiting decision in just that one application. More often than
not, that one application and that initial order will decide what happens to the
whole case because long before the parties get to a second application, they are
driven to a settlement. The sloth in the Justice Machine then becomes the
foundation of a great part of litigation strategy.
Let us turn to another case to examine how a litigant’s compulsion to

quickly finish the war impacted the litigation strategy in practice.
The Weizmann case
We have already discussed the Weizmann case, a war for

corporate control between a foreign majority shareholder and Gupta,
the minority Indian Promoters. When the deal was made, Weizmann
included an ‘indemnity clause’ in the JVenture Agreement by which
Gupta would have to compensate Weizmann for any false
representation it made to Weizmann about the company. This
indemnity clause stated that if Weizmann discovered after the
acquisition that the agreed accounts of the company were incorrect
because of a willful misstatement of a fact, or a willful omission to
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state a material fact, Gupta and his associates would compensate the
Indian company for the losses so caused to the Indian company.
Once it became clear that Gupta had engaged in an accounting

fraud, the simple and straight forward legal solution was to sue Gupta
and enforce the indemnity. Weizmann looked at this option and
decided against it. For one, there were substantial court fees to be paid
up front. Secondly, there was no room for some sort of interim order
which would seriously encourage Gupta to settle the case. The case
could go on forever. Even if Weizmann did ultimately win, would Gupta
have the money to pay the bill ten years down the road?
Here is a little tip for you to tuck into your gun belt. In life
generally, your ability to get a useful answer to any issue frequently
depends upon your ability to ask the right question.
Weizmann at this point asked itself the right question. It did not
ask: how do we get Gupta to compensate the Company. Instead, it
asked: how do we get Gupta to stop fighting and get out of there. The
answer then became simple. It was only about money. Weizmann had
to undermine his financial credibility. The simple way to do that was to
cut off Gupta’s revenue streams. Gupta received a hefty salary and
perks from the Company. All his money was invested in the Company.
The Company was sick and would not declare dividends for many
years. Given its financial track record, he could not sell his shares in
the stock market either. Most significantly, Weizmann controlled the
company and therefore in effect controlled the share valuation. Gupta
seemed to have no other income. He could not start another business
without seed capital.
If squeezed for cash even as his litigation costs spiraled, what

could Gupta do but find a way to cash out the shares he held in the
Company? Pushed to a corner, Gupta to cash this asset at a discount
after compensating the Company for its losses. This would give
Weizmann 100% control over the Company. This would also allow
Weizmann to recapitalize the company, buy out public shareholders
and get out of the whole sick company conundrum. Weizmann decided
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to go down this road. It was a resounding success. After the last of the
litigation went into limbo, Gupta sued for peace. Although the entire
indemnity amount was never recovered, part of it was set off against
the acquisition share price and Gupta sold out cheaply. Within a year,
the whole matter had been settled.
We can synopsize this entire chapter in a simple message. Every litigation

must be short, focused, self limiting, and decisive. A slow litigation is the same
as losing a litigation. In the attrition of a slow litigation, both sides lose.
-x-
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Chapter D4
Rule 4: Avoiding costly annihilations
There are essentially only two ways to look at any war, even if it’s a legal
war. The first view sees war as a bipolar win-lose fight to the finish, leaving in
the end a victor on one side and the vanquished on the other. For much of
human history, this has been the story sold to those about to die at least when
the war starts. I suppose every king determined to fight a war needed to take an
extreme polarized position just so he could whip up enough emotion to create
the momentum needed to get him a win. You can argue that the more inflexible
the polarization, the easier it is to sell the idea that no compromise is possible.
When the only choice is to win or die, almost everyone will fight truly to their
fullest potential. Perhaps this is why till the arrival of the modern era, these
polarized positions focused on either religion, or race or just personality.
The modern era brought a new polarizing position: the concept of pure
political ideology as a driver for war. Nations have doggedly sold to their citizens
the idea that there is no solving the essential ideological dispute between
warring parties till one or the other is vanquished. In selling this story, the public
has been led to believe that political conflicts are really about ideological clashes
(a.k.a clashes of civilizations!). This idea is of course severely flawed. It is
possible to demonstrate, even in the European twentieth century context, that
this is untrue. Besides, we are interested in war theory because we are
interested in legal wars, and legal wars are not ideological in origin. There are
serious practical difficulties too. One of the main problems with the bipolar view
is that to get an absolute victor at the end of the war, the parties have to be
pretty unequal to begin with. Other things being equal, two near equal parties
slanging it out will end up with two equally damaged parties but no spectacular
result. So, what’s the fighting all about? And how does it make commercial sense
for any businessman to engage in such a war?
The other view of war, the kind we explore here, is also in a sense a
product of another historic experience. This view emerges from the practical
reality on the ground. In the modern world of business, a number of nearly equal
players (nations) fight in the market (battlefield) for positions of primacy
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(political dominance), trying to find a way to be business (wealth) away from

their competitors (enemies). With so many people fighting for the same turf, it is
dangerous for any player to spend too many resources in warring against any
one other player. Wars extract a heavy price. You suffer damage, your resources
are spent and you become weaker. If you allow yourself to become weaker,
another competitor, who has been a bystander so far, will drive in and destroy
you. In a world of ‘dynamic’ political instability, it is more important to remain
strong than it is to defeat the weak. Holding on to what you have is far more
important than grabbing what you can.
Now, if holding on to what you have is more important than what you can
grab, wouldn’t you limit the quantity of resources you would invest in attacking
your enemies? Why do I say this? First, there is the absolute cost of war. Fights
to the finish demand that you commit far greater resources to the business of
killing your enemy than you do to the fundamental business of running your
business, securing its stability, prosperity and progress. If you key managers are
collecting material for your court cases, sitting in lawyer’s offices, or attending
court hearings, who is focused on production, marketing, sales, profits and
enhancement of shareholders value? In the long run, a business that focuses too
much on legal wars will always experience some drop in busines performance.
In short, wars extract a price and not only in direct terms. There is too the
indirect price of lost opportunity to be paid and that is a much higher price. It
makes no sense to do it, except to achieve some very defined goals that only a
war will bring. These goals have to be limited, not something as all-consuming as
destroying you enemy.
Perhaps the most compelling reason to fight wars only with limited goals
is the effect your behavior, your attitude and your goals has on your enemy. A
fight to the finish forces your enemy to fight for its survival, rather than just
avoid losing ground, part of its market, etc. The greater the threat of destruction
you take to your enemy, the harder your enemy fights to avoid being run over.
As your murderous intent becomes more apparent to your enemy, the more its
resistance rises. When this happens, you will find that as the war plays out, you
need to expend more and more resources and energy to achieve progressively
smaller and smaller victories. Soon, the costs become unacceptably high, and
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you have to either call a truce or yourself become bankrupt. The art of litigation
is the art of making appropriate cost-benefit analysis and in ensuring that the
cost of war is not greater than the benefit.
To put it in a nutshell, the true goal of a legal war is to subjugate your

enemy till he gives in to your reasonable short to medium term commercial
goals: it is never to destroy your enemy. The best warrior is not the one who
fights and wins all the time but the one who wins all the time without (or with
very little) fighting. This is not difficult to do. Many of the cases we have
discussed so far have shown how smart litigants limit their goals and try to
achieve them as cheaply and quickly as possible. Let us now look at another case
where these same considerations came into focus, and how a strategy was found
keeping these central principles in mind. This case found place in my third book
‘Legal Confidential’ so let me approach it from a more legalistic viewpoint.
The E&D Case
Back in the 1980’s, a large Indian company put out a global

Tender requesting bids to construct a hydro power project in a remote
Himalayan valley. The project’s owner planned to generate electricity
from the gushing waters of a large river flowing around a large
plateau, losing height rapidly. If the owner could build a weir across
the river at the north end of the valley and reroute its waters into a
tunnel across and under the plateau, it would emerge dramatically
higher than the river on the southern end of the valley. At this point,
steeply inclined head race water bearing tubes could power a series of
turbines and generate electricity.
The owner had studied the feasibility of this project for many
years. It knew the ground. To shorten the time it took to get the
project off the ground, the Tender went ahead and disclosed that sub
surface soil conditions beneath the plateau were stable. Relying on
these representations, a global consortium consisting of some six
companies, who called themselves E&D, bid for and won the tender.
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Work proceeded quickly after the award of the tender. To deliver

the project in record time, the contractor imported a state-of-the-art
tunnel-boring machine, commonly called a ‘TBM’. TBM’s are large
custom-built machines, the length of three or more railway coaches,
built to very quickly bore through rock and earth to project
specifications. They are generally shipped by sea in knocked down
condition and assembled at site. The cost of the TBM is generally built
into the project cost because there is no practical way to dismantle it
after use and sell it elsewhere at a realistic cost.
Tunneling work now proceeded quickly but just four kilometers

into the boring process, the TBM struck a fossil valley. Fossil valleys are
areas beneath the earth that were at some point in time surface
valleys. Over eons, the valleys been filled up with mud and had then
been buried under rock and rubble. Fossil valley enclosed in a
periphery of rock and stone are commonly found at great depths in
young mountains such as the Himalayas. Now, if the owner had told
E&D that there may be a fossil valley under that plateau, E&D would
have ordering a TBM capable of boring through mud and automatically
lining the tunnel with steel plates. E&D relied on soil tests claimed by
the owner and assumed that there was no need to buy a TBM with
tunnel cladding capability. This proved fatal to E&D’s plans for the
construction of the tunnel.
As soon as the TBM struck the fossil valley, a sea of mud filled
the tunnel, burying the TBM and killing several workmen. Within hours,
this sea of oozing mud had filled a kilometer of tunnel. Work came to a
grinding halt. What was to be done? Who was to say how wide and
deep the fossil valley was? There was no practical way to remove the
millions of tons of mud. Even if they could remove the mud, they would
have to drag out their TBM, order a new one with cladding capability
and deploy it quickly in order to deliver the project on time. No TBM
manufacturer could deliver a machine in less than half a year and then
there would be transportation and erection time to contend with. The
costs would be prohibitive and the losses would pile up.
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E&D now started to read the fine print in the contract. The owner
had said the sub surface soil was stable: wouldn’t it have to pay E&D
for all this extra work? Is it ever that simple? The tender said the
owner had tested the soil. Conversely, the Letter of Intent ultimately
issued to E&D said all risks associated with sub-surface conditions
would be borne by E&D. In legal terms, this meant no one could be
certain if E&D would be able to collect the extra construction cost or
get extra time to finish the job. Mulling over the problem, E&D decided
there were only two options open to it.
Its first option was to complete the project. To do this, it needed

two extra years to deliver the job. Would the owner give them this
extra time? Who could say? There were legal ways to do it. E&D could
declare Force Major, claim extra time and go to arbitration if this
demand was resisted. But the real problem was not extension of time,
it was money. E&D was looking at a project cost overrun of 50% or
more. Could such a humungous claim be made? Indian law did have
the law to make it possible – the principle is called Quantum Meruit,
meaning reasonable payment for extra work done – but how could
anyone get any owner to shell out the cash without a long and
expensive arbitration. This kind of legal activity takes years, and still
all the energy, resources and money spent on the task never comes
back.
E&D’s second option was to get out. It could institute arbitration,

raise an endless procession of legal issues, stall the work and basically
hold the owner to ransom. Eventually, the owner would have to choose
between winning the case while stalling the project indefinitely or
letting E&D walk away at minimal loss and find someone else to build
the project. It was a simple choice. Businesses exist to make money.
Both options available to E&D meant some losses. For sure it could
prove a point and cost the Owner dear for its negligence in testing sub
surface conditions. Was that its priority? Did E&D really want the
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owner to pay hundreds of crores in damages and suffer a devastating

annihilation? A quick exit was really the only choice.
Fortunes of course favor the wise. E&D was fortuitous.

Insurgency flared up in the area soon after the tunneling disaster. A
spate of violent incidents created an environment of fear and neurosis.
Insurgents successively blew up facilities around the project. Sniper
fire was directed at E&D’s camp and several villagers were killed. It
was a godsend opportunity.
Since E&D had already decided to get out as quickly as possible,

it immediately declared “Political Force Major”. How could it build a
project in near warlike conditions? Performance of contractual
obligations was now truly impossible. This master stroke radically
rewrote the story. Did the owner want to give E&D successive
extensions till the insurgency was repressed? Most insurgencies in
India have lasted 30 years or more: how long would this one run? The
game and changed. The owner quickly re-thought its strategy. It was a
choice between letting E&D off the hook and having a project in
reasonable time or, holding E&D’s feet to the fire and having no project
for 30 years. Did the owner want to quickly make and sell electricity, or
publicly beat up foreigners? What made better commercial sense?
The owner made the sensible choice. It asked E&D to cut its
losses and leave with no strings attached. There would be no claims on
either side and no arbitration. E&D took the offer and parties signed on
it. Thus, E&D extracted itself from the situation without engaging in
costly annihilation.
Before I close discussion on this case, a few points are in order.

You could argue E&D’s exit was a stroke of luck, not good strategy. I
would beg to differ. In my repeated experience, most warring parties
get similar opportunities from time to time but they don’t take them.
They don’t take them because they think their objective is to beat their
enemy into total submission. In this case, it was all too easy for E&D to
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ask the arbitrators to decide if an owner can claim the sub soil
conditions were good and yet make a contractor pay for its own
stupidity? When two documents both created by the Owner contradict
each other, who should get the benefit of doubt: the Owner or the
contractor? As a lawyer, I would have loved to help interpret the law
on the issue but what would that have done for my client?
Bear in mind also that even if the insurgents had never become
active in this area, E&D would have had other opportunities to win
without engaging in costly annihilation. For instance, India’s Quantum
Meruit law provides that if the contractor believed that extra work
needs to be done for the project to be successful, the owner must
either pay for this work or assume the risk of a failed project because it
won’t allow this work to be done. Since the owner was not a
bottomless pit of cash, making demands of ‘extra work’ could have put
pressure on the owner and led to a settlement anyway.
The point here perhaps is that it is always possible to develop strategies

to avoid costly annihilation but it takes a wise litigant to look for them. To find
the right strategic solution, the astute litigant never forgets that the greatest
victory is the one that is achieved without fighting.
-x-
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Chapter D5
Rule 5 - Priority of targets
Nature understands that when two silver back gorillas disagree, they are
both too strong to be allowed to fight it out. Unless things get really hairy, the
argument is decided by engaging in chest beating contests. At the very least,
this minimizes damage and resolve conflicts quickly. Nature encourages this
because it understands that all other alternatives are worse. After all, what
would be the purpose of a violent confrontation between two super strong apes?
To decide which gorilla will survive the contest? Or to decide which gorilla will
dominate the other? If the answer to our question is the first one, then its all
very simple. The gorillas must keep fighting till one of them dies. What this
murderous contest does to the health or long-term longevity of the other gorilla
is a whole different question. Why should nature promote a form of mutually
assured destruction? If the only aim is merely to establish domination, wouldn’t
no-contact demonstrations of strength be enough? Unfortunately, we humans
don’t seem to have developed the same natural instinct. We could say that
gorillas are apes but people are only cousins to monkeys!
This doesn’t mean that we humans have even begun to answer the big
question the gorillas ask of us. How much dominance is dominance enough to
resolve human disagreement? Do you want your opponent to eat humble pie and
submit to you? Or do you just want him to give you all that you want, leaving
him nothing except what you don’t want? As you can see, it’s a question of
proportionality. How much do you want to take, and how much are you willing to
let go? Every additional bit you want to take is going to take incremental effort.
When it comes down to dust, would you settle for a lot less if it came to that?
These priorities set up the objectives you are willing to shoot for, and the targets
you are willing to attack.
Bear in mind that a lot of our discussions throughout this book has been
about proportionality. Think about the other strategic considerations we have
discussed: matching the magnitude of engagement to resources, optimizing
logistics, avoiding costly annihilation, and so forth. A lot of these discussions
were about what goals you achieve and at what cost. This chapter is about the
same basic issue: what price are you willing to pay for what you want to get?
Because if you are not willing to pay an infinite price, you should not look at total
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victory as an objective. That brings up the most fundamental question of

litigation strategy: if you are not looking for total victory, what must be the
priority of targets that you would attack so you can win your value-for money
goals?
Allow me to cut to the chase. In my view, unless special circumstances

justify paying a higher price for getting to greater objectives, here is the pecking
order in which enemy targets must be attacked:
1. First, and this you must do in any case, your first job is always to stop
your enemy’s plans dead in its tracks. It’s obvious. If your enemy achieves
his plans, you have lost the legal war. It’s over. Whatever else you may
do; you have to stop him and bring him to a grinding halt. This is Level
One activity and we can call it ‘Thwart Enemy Plans’.
2. Once you have stopped the enemy dead, your next job is to ‘Isolate the
Enemy’. Your enemy is only as good as the supporters he moves with.
Everyone in a legal dogfight moves on the strength of a set of allies:
customers, suppliers, distributors or even government. If you can deny
your enemy all this support, you will face a weak enemy and your job will
become that much easier. This then is Level Two activity.
3. You are now ready to jump to Level Three. With you enemy’s plans
stopped in their tracks and his allies cut off, it’s time for you to beat him
up. It is time to launch a direct attack on the enemy. But what does direct
attack mean? In a legal war, you don’t cut off heads! Your enemy runs on
material resources. In the business world, this means money and
manpower and markets. If you damage these resources, you enemy will
be unable to fight you. It is these resources you must attack.
4. Finally, after you have defeated his plans, isolated him and destroyed his
resources, it is only your enemy’s strong holds that remains before you.
You are at Level Four, the core of what your enemy has left. It is now, and
as the lowest priority, that you will allow yourself the luxury of directly
attacking your enemy’s citadel, his very home and hearth.
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Let us look at the logic of these propositions in a little more detail with
cases we have studied already.
(a) Level One - Thwart enemy plans
It’s near impossible to argue that you can ever afford to let the enemy
successfully implement his plans. It is completely obvious. At the very least,
doing this ensures that you are not much worse off than when you started the
fight. Even if getting this done does not itself secure the conditions of victory, it
frustrates the enemy and creates self-doubt as he stops his mobilization to think
about what he is going to do next.
How do you stop the enemy’s plans unless you know what they are? This
requires both long experience and good instinct. You would try and read the
signs. You would put yourself in your enemy’s shoes and think about what you
would do if you were him. Unless you are very emotionally invested in this war,
this is scenario analysis at its most fascinating best. You would start out by
identifying your enemy’s objectives. Given those objectives, you would then
make a classic best-case war plan your enemy could use to attack you. Very
likely, such a plan would be more or less obvious and predictable. Since you
cannot stop with a plan that is obvious, you would add a list of possible
unorthodox actions which your enemy could implement.
Once you know what is possible, you would test these options for
feasibility and effectiveness. You would eliminate options that take too much to
do, but yield too little, or yield it with insufficient certainty. In this way, you could
reduce the options open to your enemy to one of only a few courses of action. It
is now time to test these available courses of action to what you know about
your enemy. You need information. What is his character? How does he think?
What is he up to these days? What are his allies up to? What is he capable of
doing and what is a bridge too far? With this information, you would eliminate
options you think the enemy may not be thinking about or able to roll out if he
wanted to.
Naturally, there is a limit to this elimination process. I say that for two
different reasons. One, you may never have enough information to eliminate all
but a few options you enemy may have. More significantly, even when you think
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you have enough information, your enemy could have deliberately fooled you.
You may think your enemy is not thinking of something, he may be deliberately
feeding you with disinformation while he secrets plans to do exactly what you
have predicted as a course of action open to him. This means that even if you
think your enemy is unlikely to do something, you still have to have a plan to
stop him if he does.
Finally, keep in mind the unknown unknowns. Every litigation always

generates elements of surprise and uncertainty: it is always possible that
something unforeseen happens. In such situations, you would need to have
some sort of contingency plan to combat even unlikely things the enemy may do.
While you will doubtless have your defense plan in some sort of order of priority,
you would still need to develop a strategy to successfully combat nearly
everything your enemy can reasonably do to hurt you.
Let us look at the Weizmann case once again and see what Gupta could
possibly have done to hurt Weizmann.
The Weizmann case
In this case, Weizmann, a global automotive major, and Gupta,

an Indian promoter, fought for control of their commonly owned JV
Company. The company was financially sick and protected under the
then current bankruptcy law under the supervision of a body called
BIFR. When Weizmann discovered that Gupta had falsified accounts,
Weizmann chose to strip Gupta of his executive powers, remove his
nominee directors from executive roles and took over complete control
of the JV Company. It was inevitable that once he got over his initial
shock, Gupta would react.
On an assessment of the circumstances attending the case,

Weizmann decided that Gupta’s plans could encompass all of the
following:
(a) Gupta could stonewall the Company at the board level. He had
two ways to do it. He could do this by gaining the sympathy of
external directors nominated by BIFR and lenders. He had built
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up warm relationships with these professional directors and they

would have their apprehensions about an incoming foreign
investor wreaking havoc in the JV Company. If he managed to
get these external directors to side with him, persuading BIFR to
intervene and reverse what Weizmann had done was entirely
possible. Even if BIFR didn’t intervene, based on this support, he
could invite a court to restore him to ‘power’ through stay orders
and so forth.
(b) Gupta could stall the functioning of shareholders meetings,

prevent key resolutions from being passed and otherwise
interfere with the company’s attempt to improve its financial
situation. He could do this by collecting proxies from public
shareholders, or approaching courts through public shareholders
and asking for stay orders etc.
(c) Gupta could destabilize the Company’s employees by spreading

rumors about Weizmann’s future plans. He could undermine
employee confidence and hamper the smooth functioning of the
Company. Every drop in performance of the Company would set
the alarm bells ringing within BIFR putting pressure on
Weizmann.
Once these possible potential enemy plans were identified,

Weizmann went about neutralizing all of them. The Board of Directors
had to be stabilized. Weizmann appointed two senior lawyers as
directors. That prevented Board proceedings from stalling because of
legal objections. In truth, lawyers took over most of the functioning of
the Board! Every agenda, resolution, minutes of meetings, notice and
compliance process was vetted by lawyers at all times to ensure that
nothing illegal went unnoticed. In this way, Weizmann made sure
Gupta could find no way to approach a court of law and improve his
position.
Next, the Shareholders meeting problem had to be addressed.

This is generally a difficult area because publicly listed companies are
widely held and any marginal shareholder can always stir up some
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legal trouble. It’s not physically possible to tie down all shareholders or
be present everywhere to stop stay orders. As it turned out, this
remained Weizmann’s weak point and we have studied events around
that aborted shareholder’s meeting already. Barring the early fiasco,
Weizmann’s strategy to position ever ready lawyers in every court was
stunningly successful and helped it to eventually resolve this dispute to
its satisfaction.
Next there was the threat of BIFR interference in company

affairs. Weizmann faced a threat of interference because BIFR had
approved a ‘Revival Scheme’ which allowed Weizmann to buy shares in
the JV Company. The Scheme projected that Gupta and his associates
would continue to participate in the day-to-day management of the
Company. How could the Board strip Gupta of his executive power
without first asking BIFR if they could? Weizmann instituted a two-fold
plan. For a start, Weizmann obtained several legal opinions from
eminent jurists and circulated these opinions to Board members. These
opinions were also circulated to BIFR and lenders. It helped that Gupta
and his associates were stripped of their executive power because of
an accounting fraud.
In addition, Weizmann systematically send out weekly reports to

BIFR reporting on everything Gupta did to be a nuisance and put
pressure on Weizmann. Weizmann reported every case at every
hearing, every rumor at the factory and every attempt to interfere with
Company business. Weizmann created a huge record of transgressions,
destroying Gupta’s credibility with BIFR. By the time Gupta actually
approached BIFR arguing that its Revival Scheme had been violated,
BIFR had already concluded that Gupta was a mischief making crook.
Finally, on the issue of labor mischief, Weizmann greatly

upended engagement with the union, calling frequent meetings,
talking about their medium to long term India plans, demonstrating
how they expected to get the Company to profitability again. That
apart, key employees were identified, targeted for special briefing
sessions and their opinions influenced till they began to see events
from the Weizmann viewpoint.
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In this way Weizmann thwarted Gupta’s offensive plans and

denied him victory.
(b) Level Two - Isolate the Enemy
It is self-evident that no man is an island, complete in himself. A warrior is

only as good as his allies. Many would argue that the strength of every warrior
flows from his allies. In a corporate context, every warring party has many
alliances it draws strength from. Every company has business associates, other
corporations with identical interests, political clout, sympathizers in government,
sympathizers in the legal world and so forth. If you can find a way to take away
your enemy’s allies, you will weaken him a great deal. If you can isolate him, he
will find it difficult to fight you.
For this reason, after you have thwarted your enemy’s plans, your
enemy’s allies become your second focus of attack. There are two ways in which
alliances are attacked. At its simplest, you hurt your enemy by directly attacking
his ally. You can do this to good effect when the ally is weak and cannot resist
you very much. It helps if the ally is a fence sitter, meaning he supports your
enemy but giving this support is not critical to him. If you attack this fence sitter,
and let him know that his alliance irritates you, you can encourage him to
distance himself from your enemy. Attacking such an ally can even encourage
other allies to rethink their relationship with your enemy.
To give you typical examples, if you have business dealings with a third
party that also deals with your enemy, you can let them know that they should
either stop dealing with your enemy or you won’t deal with them. If you have an
employee who is also loyal to your enemy, you can terminate his services. This
will also let other employees know that you won’t tolerate them dealing with
your enemy. In a more heavy-handed approach, you can file cases against your
enemy’s allies. You could attack the business interests of the enemy’s ally. It
depends on the facts of each case. Besides, you have some judgment to make
here. You have to look at the cost benefit. You have to look at the ultimate
impact these actions will have on your enemy. Let’s face facts. Sometimes, this
kind of heavy-handed approach is counter-productive. You can hurt yourself
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more than you hurt your enemy’s allies. Worse, all your enemy’s allies can gang
up and start to attack you back. You can take damage if you are seen as too
much of a bully.
Subversion is a far better way to attack your enemy’s allies. It takes a

kind of cynical sophistication to execute this well. You have to engage in hard-
nosed politicking. You must try and influence your enemy’s allies through
powerful intermediaries and make vague promises of future riches in return for
present support. You can ask these allies to abandon your enemy, or worse,
undermine your enemy. You can pay your enemy’s allies to subvert them. This is
more common with dealer networks than you would think. It is even more
common with shelf spaces in supermarkets between warring consumer goods
companies.
This could be demonstrated from the Weizmann case.
The Weizmann case
Gupta was a guerilla warrior in the truest sense. He was mobile,

his decisions were quick and he could execute his plan without
bureaucratic delay or bungling. He had long standing stable
relationships and he didn’t need to constantly massage them to keep
them working. His professional life was uncomplicated. Still, even a
rolling stone relies upon gravity and so it was with Gupta. He had his
favorite employees to protect, some of whom he was obliged to
support when the battle lines became clear. To take one example, a
middle level manager in the finance department had managed all his
money siphoning over the years. This same manager asked a court to
issue a stay on the JV Company to stop it from holding a shareholders
meeting when the fight started. He was Gupta’s mole in the JV
company and Weizmann had to do something about him. To begin
with, Weizmann tried to induce him to switch sides. It didn’t work.
Weizmann now had no choice but to attack him instead.
Weizmann dug into company records. It found that the JV

Company had given unsecured loans to this employee several times.
The company had also issued bearer cheques to many unknown
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persons under his signature. Weizmann decided to put this manager in

an impossible position. It accused him of embezzling money and
threatened to go to the police.
The employee was frightened out of his wits. He explained that

he had transferred equivalent amounts into Gupta’s bank accounts in
every case. He protested his innocence, which in a sense was true. A
middle rung employee in India had little choice when his MD asks him
to switch some cheques for cash or rotate funds back to the MD.
Weizmann now offered him amnesty if he could prove what he was
saying. Would be produce his Bank’s statement of accounts to show
that he had made these payments to Gupta? What could this employee
do? He provided Weizmann with copies of these statements of account
and his story checked out. Weizmann now asked him to have these
payments certified by the Bank. At this point, anything could have
happened. He could have provided this certification and in effect
signed his own confession. Or he could have gone to Gupta to seek
protection. He chose to resign instead.
Weizmann found this result unacceptable. It did not want to get

rid of Gupta’s ally, or sue him, it wanted to turn him against Gupta.
Weizmann rejected this resignation on the ground that he had to settle
unpaid debts first. ‘Pay up or face a case’, they told him. Finding
himself in an impossible position, this employee vacated his residence
and disappeared. In truth, Weizmann had tried for too much. It already
had the evidence of company money finding its way to this employee
and then onto Gupta’s bank account. It had also managed to remove a
Gupta sympathizer from the critical finance function in the Company.
Gupta’s nominee directors were his other allies that mattered.

Removing a director in India is difficult unless you make allegations. In
turn, allegations are difficult to make because they expose the
company to official investigations with unpredictable results.
Weizmann thought about allegations it could make. Given all that went
on with the money syphoning, it could probably nail the finance
director but in the other two cases, it didn’t think it had enough
material to remove these loyalists.
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Did Weizmann have to remove these two directors? They weren’t

active enough in management to be a real threat. They had a vote each
in the board room but they could be outvoted every time. Why get into
more litigation? Weizmann was dealing with a listed company with
public shareholders. There is a huge difference between a man fighting
to keep his position on the Board of a private Company and a man
fighting to save his money, his reputation, his image and so forth in
public. Removing a director in a listed company is always a very public
affair. Making these directors fight for their image, their position in
society, indeed their very survival as men of substance was a big ask.
Did Weizmann need the drama? Fights to the finish are expensive, sub-
optimal, inefficient, and sometimes self-defeating. Weizmann decided
to let it go.
Finally, the BIFR nominee director was a major irritant. He was

Gupta’s biggest ally in the board room. Weizmann did its homework. It
found his attitude did not come from collateral motivation. He was a
retired civil servant who felt loyalty to an old colleague who had
treated him well in the past. With each passing board meeting, he
became progressively harder to deal with. He converted every Board
meeting into a battle over procedure. Attacking him made great sense.
Weizmann pondered the problem, and then decided against it. It didn’t
like the political equation. BIFR would not sympathize with a foreign
investor who attacked its nominee director. Here was an ally who was
too strong to attack. Weizmann let it go.
(c) Level Three - Destroy Enemy Resources
So far, you would have noticed that you have not thought of directly
attacking your enemy. This makes sense because every direct attack brings a
direct response. If you hit your enemy, he will hit you back. That is going to hurt
in a very different way. In the ideal world, you would do very well if you run your
legal war without ever directly attacking your enemy. This is because you
recognize that wars are not won when the attacker bleeds, they are won when
the enemy surrenders without bloodshed. This same principle was applied to the
Weizmann strategy.
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The Weizmann case
Gupta main strength flowed from the people he had hired when
he ran the JV Company. These employees were not allies: they were
people who took orders from Gupta and did what he asked. They were
expected to do this for so long as he was MD. Even after he was
removed, they continued to take their orders from him. They helped
achieve the company’s objectives if he said they should and
undermined the company if he asked them to. This extended to the
Company’s marketing network. On more than one occasion, they told
dealers in so many words that so and so batch of goods was
substandard and the dealers should not place orders for those items.
Gupta did this to keep the company off balance and these loyalists
executed his “nuisance measures” to perfection. Something had to be
done to cut these resources down to size,
It would have been a simple matter to attack each of these

resources individually. Weizmann could have filed cases against them
making all kinds of real and imaginary allegations. These people kept
Gupta fed with information about company affairs and this information
then helped Gupta improve his court case against Weizmann. They also
undermined Weizmann’s attempts to persuade workmen that their
future lay with Weizmann. They kept spreading rumors that Weizmann
was not committed to the business. Weizmann thought about sacking
these people but faced two tricky problems. For one, Weizmann was
still new to the Company and did not have enough control of day-to-
day operations. Some of these people did important jobs and
understood company records well. Second, some of these employees
were technically very qualified. It would not be easy to replace them.
Finally, in legal terms, these people were mainly workmen. Back in the
day, an industrialist could not sack workmen without creating a bunch
of legal problems.
Weizmann did a due diligence on all its workmen. Who was a

Gupta loyalist resource? How much of a threat was he? Who was an
uncommitted Gupta resource? Could this fence sitter be turned? In the
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end, it was really about which resource is to be attacked and who is to

be let off the hook. Bear in mind that an attack on enemy resources is
only third in the priority list of targets: you don’t want to go that far
unless you really need to. Weizmann pondered this question: do with
live with these irritants or do we have to throw the key resources out
of their jobs?
Ultimately, Weizmann found the Buddhist middle path. Hostile

employees who performed key roles were transferred to the Company’s
branches in distant cities. Transfer letters were issued and while some
employees chose to shift to their new jobs far away, a few resigned. In
this way, Weizmann greatly reduced Gupta’s strength in the Company.
The entire problem could not be dealt with in this way. Some key
workmen were pure factory workers: there was nowhere to transfer
them. Others were rabble-rousers and bullies. Gupta was not alone in
keep such people on the rolls: it is standard practice to nurture trouble
makers and use them to control the rest of the workforce. This works
for both parties. The business owner uses these trouble makers to
control other workmen and in turn, the business owner doesn’t assign
them major work duties.
Weizmann hit on a novel plan to squeeze these trouble makers.

They were used to shirking work. Weizmann assigned them the most
inconvenient and hardest of jobs. All of them protested but Weizmann
were immoveable. Disobedience followed protest and while some
eventually succumbed and fell in line, others pushed back with threats
of industrial action and violence. It was time to play politics. For every
worker that an owner indulges, there are others who resent the free
lunches he gets. Weizmann started to confer special favors to those
who hated the Gupta loyalists. As the industrial unrest simmered,
Weizmann suspended these Gupta loyalists. Indian labor law now
kicked in. Domestic Inquiries were now started on the conduct of these
workers. While their behavior was inquired into (as slowly as
possible!), they were not allowed to enter the factory. After the usual
storm of protest lasting two weeks, the whole matter went into back
burner simmer mode and was all but forgotten.
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Although direct attacks on enemy resources are usually to be

avoided, Weizmann did selectively attack Gupta’s resources, and it
worked. Left with no ability to create trouble at the factory, Gupta lost
leverage and was reduced to just fighting a bunch of civil cases.
The smart litigant only attacks the opponent’s resources when this offers
substantial benefit over cost. In an ideal situation, you should never attack your
enemy’s resources if it’s possible to achieve your aims without directly fighting
your enemy.
(d) Level 4 – Annihilate Enemy Citadels:
If you have attacked every plan, ally and resource that your enemy has,
all that remains for you to attack is his main citadel, his fort, his city, or whatever
is his last bastion. If it is at all possible, this is the last place you should even
consider attacking. I say so for many reasons.
First, it is at its citadel that the enemy is at its strongest. This is his last
defendable post, the final sources of his strength, his home and hearth, the
place he most closely identifies with his very existence. Unless he is truly
reckless, this would be his strongest point of defense. If you want to take it, you
will have to fight a very bloody battle. In a philosophy where we try and win our
wars without fighting, you cannot make an argument fighting a bloody and
expensive war and losing a lot of your own resources in the bargain. For sure,
there are situations where there is no choice, but this must remain by far your
absolutely last resort choice.
This philosophy is the opposite of the strategy commonly used in India

where litigants are quick to attack things are most valuable to their enemies.
Litigants try and get their enemies’ factory licenses revoked, their premises
raided by tax authorities, their businesses interrupted by various authorities.
These are all legitimate strategic moves, and there is no absolute prohibition to
using them. But if you are going to do this, you must bear in mind that the more
you threaten a target at the heart of your enemy’s zone of security, the bloodier
the fight will get. When fights get truly bloody, then bloody reprisals follow and
everyone loses in the end.
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There is a second reason why you must not attack your enemy’s citadel.
By definition, the citadel is the last tenable point of defense for your enemy. If
you enemy loses his citadel, he is utterly defeated. He is obliged to defend this
citadel as best he can, to the very bitter end. How hard will you fight to save
your children, your home, your life from destruction? It’s the same with business.
A fight to the finish can easily finish both parties. The experienced litigant does
not even attempt to finish his enemy for fear of finishing himself.
This fundamental principle was also applied in the Weizmann case.
The Weizmann case
Once Gupta was thrown out of management, he started to put

together his war plan. It was in Weizmann’s interest to continually
carry the attack into Gupta’s camp and keep him off balance. What was
to be attacked and what was not? Weizmann decided that everything
but Gupta’s citadels were fair game.
Every man needs the same things to stay alive: a home, some
capital, some revenue and personal physical security. These were his
citadels. Gupta lived in a house rented by the Company. His only capital
were his shares in the JV Company. His only income was his MD’s
salary. As to physical security, he had been sacked for financial crimes
and jail was a real threat to him. Should Weizmann focus any of its
attacks on these four citadels?
Weizmann obviously didn’t want to pay rent for Gupta’s house.

They spoke to the landlord. He didn’t want to rent the house to an
Individual: it was company lease or nothing. It would have been easy
to terminate the tenancy and let the landlord chuck out Gupta.
Weizmann decided not to do it. It’s one thing to make a man fight for
management control, quite another to make him fight to stay in his
home and off the footpath. For so long as Gupta was fighting for
management control, rather than his survival, there was only so much
energy he would bring to the table. Besides, Weizmann had to consider
Gupta’s incentives and motivations. If Weizmann turned around the
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company and it became profitable, the value of Gupta’s shares in the

Company would rise even though he had lost management control. On
the other hand, if his family landed up on a footpath, he would be an
injured tiger looking for something to wound.
Gupta’s second citadel was his shareholding in the Company.

Gupta had given a lot of warranties when he signed the JV Agreement.
Many of the financial ones were false because the accounts were
dressed up and false. The agreement required Gupta to compensate
Weizmann if these financial warranties were found to be false. Should
Weizmann demand that it be compensated? Gupta didn’t have much
money but his shares in the Company had value. Should Weizmann try
and attach these shares to compensate itself for the losses it suffered
because of the falsified accounts? And while that war was going on,
should Weizmann try and stop Gupta from voting on his shares in
company meetings? Weizmann debated this point a long time. It would
be an expensive bloodletting kind of battle. Gupta’s shareholding was
his hearth and home, his ultimate life’s achievement. It made sense to
just leave it untouched.
Gupta’s salary came next. He had lost the job. How could
Weizmann keep paying him his MD’s salary? Weizmann stopped these
payments not because it made great strategic sense, but because in a
public company, it just wasn’t possible to keep paying a sacked MD.
Gupta could see the problem and did not react. He soon started a small
distribution business to keep the home fires burning. That business
gave him some small cash flows, enough to run his kitchen and pay his
legal bills. Should Weizmann attack that business too? There was a
case for it. If he couldn’t pay his lawyers, he couldn’t fight for long.
Weizmann debated this very hard and long, but in the end, spending
lots of money to choke off a small business didn’t make commercial
sense. Weizmann let it go.
Finally, Weizmann had the opportunity to file criminal cases

against Gupta for defalcation of funds. Perhaps they had enough
evidence to nail him or perhaps they didn’t. But whatever be the truth
of that, they would have to invite the police to look at all the books of
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the company. One body of opinion argued that Weizmann was duty
bound to report a crime by a Managing Director of a widely held listed
company entrusted with public funds. The other body of opinion said
that opening an investigation into one’s owns accounts is a strange
way to protect the best interest of the Company. In the end, Weizmann
decided that it would not threaten Gupta’s life and physical liberty. It
feared he would come out like a raging bull, not caring what he
destroyed. Who knows what other can of worms would open as a
result?
In this manner, Gupta’s citadels were never attacked.
The secret of a good war strategy is to make continuing war expensive for
your enemy but it is not good strategy to make him fight for his survival. You
must convince your enemy that he has no business case to keep on fighting. If
you make him fight for his survival, that is not the result you will achieve.
-x-
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Chapter D6
Rule 6 - Factor Force Levels
In the beginning, there were only humanoid apes with jaws and claws.
When they disagreed, they screamed a lot and bit each other occasionally. Then
they discovered clubs. This is captured with great poignancy in the opening
sequence of Stanley Kubrick’s 1968 epic “2001 A Space Odyssey” when the first
humanoid discovers how to swing the thigh bone of a dead animal to attack his
rivals. Cinematographically at least, this was the inflection point from where the
journey from humanoid to human began. That may be simplifying things a bit
but inflection point or not, this moment certainly changed the history of human
warfare!
At the dawn of human history, a band of brother humanoids were only as

strong as the numbers of warriors they could muster. When they discovered
clubs, they acquired a force multiplier. Now, the force level they brought to the
battle was the sum of their numbers multiplied by the number of clubs they had.
In an instant, some apes became more equal than others. In the history of force
multipliers, this was only the beginning. Next, they invented bows and arrows.
This made distant, no-contact war possible. Inevitably, they commenced dividing
their warriors into those who shot arrows and those who swung clubs. The
results were dramatic. Even where both groups were of equal numbers, those
with archers scored over those bearing only clubs. I think the point is clear.
When we talk about force levels in legal wars, we conceive of the real deliverable
‘force’ you are able to bring to the battle ground. It is the absolute sum of your
power, your deliverable power. Now, let’s stop and ask ourselves this question:
what is your deliverable power in the context of a legal war?
One good way to view this force level is to refer back to the ‘Five
Conditions to decide if you want to fight’ (Section A). In practice, these
conditions are a great judge of your ability to fight a legal war. Recall that these
conditions are pretty bipolar: either they favor you or they don’t. You can put
them down in terms in plus and minus terms using a scale of minus ten to plus
ten depending on how wide the disparity is. In crude terms, it follows that the
arithmetic sum of these conditions tell you if you will win or lose your legal fight.
Just so I am clear, your:
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Effective force level = internal power + advantages flowing from the

governing environment + the occupation of the field + leadership +
organization and its management.
All you need to do now is assign positive or negative values to these

items. Once you have done this simple arithmetic exercise, you know what force
level you and enemy will project onto a battlefield. In the ideal world, if you are
on the minus side of the equation, you would do your best to avoid a legal war.
Unfortunately, the world doesn’t work that way. You may not want to fight but
you may be forced to. What then?
There is an even larger issue. Assume that you have a great force level
advantage. Should you go and pick a fight only because you can fight and win
easily? The one thing Monika Lewinski taught Bill Clinton is that you should not
do something only because you can. Let me put it another way: should you
behave the same way regardless of whether you are twice as strong as your
enemy, or ten times as strong? Imagine that you are a mega multinational
corporation? Is your strategy the same whether you fight a smaller national
organization or the local pizza delivery shop? Mere gut instinct will tell you that in
these two cases, your strategy cannot be inflexibly the same. Clearly, your
strategy will change depending on how disproportionate the force levels are
between you and your enemy.
This is key. Your litigation strategy cannot be to inflexibly attack when you
are strong enough to attack and defend when you are too weak to attack. In
practice, the opposite is arguably the better way. Obviously, complex
considerations go into your strategic decision making and there can be no
absolute rules of strategy. All we can do is be clear about generic first principles,
principles that are good to begin with, which you can use as a starting point as
you think through the issues. To understand these first principles, allow me to
break down the rival force levels into one of five possible alternatives:
(a) Overwhelming strength: when you grossly outnumber your enemy and
are much much stronger;
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(b) Substantial strength: when you are clearly stronger than your enemy
but not overwhelmingly so;
(c) Marginal strength: when you are ‘somewhat’ stronger than your enemy
but you really don’t have the kind of advantage that will give you the win;
(d) Standoff: when both you and your enemy are evenly matched; and
(e) Weak: when you are much weaker than you enemy.
Now let us see how each of these force level scenarios impact the kind of
strategy you would want to develop.
Overwhelming strength
If you are in the mood for a brawl and you are overwhelmingly stronger
than your enemy, you could easily take the attitude of a school yard bully. You
can carry the fight to him and simply crush him with your power. You could
justify this by arguing that if it can be done, it should be done. After all, isn’t the
world a better place for you if you have destroyed your enemies? The problem
with this attitude is that you may not recognize that even though your enemy is
weak, you will take some damage before you finish the job. The bigger problem
is that everyone in the school yard is now mortally afraid of you and wouldn’t
want to deal with you. You may have destroyed your enemy but you probably
destroyed your credibility too. Who wants to do business with a violent bully? In
the world of business, reasonableness, the ability to compromise, to find
accommodation, and the ability to make win-win deals are key attributes
counterparts look at before they partner with you.
Why not look at it the other way? If you are so much stronger than that
defiant pip squeak who so offends you, why do you feel the need to attack him?
Surely, even he knows you are way out of his league: he may heckle you but
does he have the stomach to attack you? If he is not going to attack you, how is
he a threat to you? Sure, he may do things to bruise your ego but in the world of
business, you follow the money, not your emotional insecurities! You could laugh
at his puny provocations, and then it would be one big joke. Why do you need to
waste energy on a fight you don’t need? You could disagree with me. I accept
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this little guy is an irritant but then why would you not treat him as an irritant?
This is the key to understanding your strategic path when you are
overwhelmingly stronger.
Your solution comes down to this: treat the irritation but not the irritator.
It’s not about the guy, it’s about what he is doing. How would this work on a
battlefield? If a small army is heckling you, your most obvious response would be
to surround the enemy and hem them in but not attack them. It’s no different in
the market. He has a small piece of the market and heckles you constantly? Take
the market around him and let him waste his energy in his tiny slum. Don’t
waste your time trying to take him down, or out. More likely than not, your
enemy is likely to capitulate without battle if you surround him. Even if he does
not capitulate, how much is he hurting you anyway? You can afford to leave the
little change out there for the tiny players.
How does this play out in the context of a family business? Let’s say you
inherited 75% of a family business and your cousin has 10%. Inevitably, you will
have a lot of directors from your side of the family on the board while he would
probably have only himself. In the eyes of the law, this cousin is nobody, or at
least that is how Indian law works. In this kind of situation, this cousin will
probably try to leverage himself up by being a permanent pest. He probably
questions everything you do, or fail to do, writes aggressive letters raising
exaggerated fears, and talks too much at board and shareholders meetings. He
tries to create shareholder value by raising his nuisance value. You know he is
only trying to be relevant. What should you be doing? Should you make his life
impossible till he goes to court, creates a legal crisis and forces you to buy his
shares? Since you already have 75% of the company, you don’t need to buy
those shares. If you do pick a fight with him, when the dust finally settles, you
are going to end up buying shares you don’t need. Your anger will in time cost
you a very great deal of money, to say nothing of the legal bills! Can you afford
to be angry?
It makes better to sense to tolerate the odd pinpricks and carry on as if

there is no problem. In the perfect world, you would treat him like you do a
cranky maternal uncle: you know, the overleveraged family clown! If you cannot
tolerate the pinpricks, your next best option is to contain the clown. How would
you do that? If he is doing his dance in a shareholders meeting, you smile as he
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insults you, ask the Company Secretary to note his objection and move on to the
next item. If he is interfering in management, you simply ask your managers to
keep saying ‘yes sir, three bags full sir’ and keep doing what they are doing. You
are a man with nothing to gain, and much to lose. Try to be philosophical about
the travails of being powerful!
This is consistent with classical war theory. When a large army lays siege
but does not attack, it confines the small army. The small army is secure behind
its stronghold but its room for maneuver is minimal. The small army still has its
freedom, but there is not a lot it can do with its freedom. Then their freedom is
of no interest to you. You only have to manage the nuisance. The art of winning
legal wars is never to machine-gun every spider that bothers you: it is
maintaining paramount dominance at minimal cost.
This principle plays out in a diverse variety of life’s challenges. HR is

usually an irritant. Unions will come up with ridiculous demands, many petty and
silly. Treat an employee well and he will assume you can’t do without him. Minor
state functionaries, the babus and the inspectors, routinely irritate companies.
The mature management does not react to such provocations with
disproportionate responses. In all hostile situations, the overwhelming purpose
must always remain to preserve within reason. Litigation is always destructive:
you must not engage in it without being very aware that one way or another,
you will pay a heavy price.
Substantial strength
Substantial strength in relation to your opponent no doubt is a matter of

some comfort but it is an uneasy kind of comfort. The proper way to look at such
a situation is to focus on the fact that your enemy does have some strengths
too. At the very least, he cannot be contained. If he cannot be contained,
anything you do will mean that you must overcome him and that is going to cost
you time, money and resources. This is a situation you would do well to worry.
Actually, you biggest worry is not that your enemy has some strengths: you
should worry that your enemy may not understand that while he has strengths,
he isn’t all that strong. Strong enemies with no understanding of the limits of
their strength are the most dangerous of all enemies because win or lose, they
cause a lot of destruction. You may prevail in the end, but both of you would
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have filled some body bags, and that is never a good thing. You have yet
another reason to worry. Strategy is the ultimate force multiplier. If your enemy
is truly gifted, he will use strategy to beat you into submission. Basically, what I
am saying is this: no matter what the outcome, the risk of war is too high for
you not to seize and keep the initiative at all times. You need to attack your
enemy and the sooner the better. This makes perfect sense because all things
considered, you are a lot stronger, have substantial advantage in the field, your
enemy is armed and dangers and a war is a great way to resolve this looming
menace.
Let’s translate this into our joint family business. A listed company would
be a good example. Let’s take it that your enemy has less than negative control
on the equity, meaning he has less than 25% of the shares. Conversely, you
have let’s say 51% of the company so you do actually control the company. As
for the balance 25+%, it’s held in small lots by public shareholders who can be
troublesome only if they all act in unison. We know it is difficult to make small
public shareholders pull together. As a 51% owner, Indian law allows you to
drive the fortunes of the company. Still, there are limits to your freedom because
many things you want to do need you to pass a ‘special resolution’, meaning
75% of the shareholders must vote in favor of the resolution. On the flip side of
the coin, your enemy does not have the voting power to reject a special
resolution but he can influence just a few of the external public shareholders to
achieve that result. Net, net, your enemy cannot drive the company’s fortunes
but he can obstruct decision making and mar its functioning. You can’t run a
company if your ability to run it depends on the goodwill and support of your
worst enemy. What choice do you have but to attack your enemy?
Having no choice is not the same as being unaware of the risks you run.
In a listed company, you can never treat a 24% shareholder with disdain. Let’s
not forget: Tata Sons had more than the majority in the major Tata group
companies while the Shahpurjee group had only 18.4%! By attacking the minor
shareholder, Tata Sons took its fate out of its own hands and put it into the
hands of the judiciary. That was risky choice to make: a potential self-inflicted
wound waiting to happen! Still, the real question is: did Tata Sons really have a
choice? It all came down to timing, seizing opportunity and acting decisively.
Tata’s took that risk, and it worked.
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To sum it up, in my view, this is the only scenario in which it makes any
sense for you to attack your enemy. Your substantial strength is your enemy’s
comparative lack of it. If you don’t take advantage of the situation now, when
will you take advantage of it? Of course, you may be led into litigation in other
scenarios when you have less than substantial comparative strength but
hopefully it wouldn’t be out of choice.
Marginal strength
Marginal strength is the worst of all legal situations to deal with simply
because it propels the worst kind of neurosis! Think about this. You are stronger
than your enemy but not that much stronger: you constantly fear his attack. He
is a bit weaker than you so he fears you in turn. In the joint family business, you
can’t hire a professional manager without him thinking this new guy is meant to
hurt him. Then he starts seducing that manager. Then the manger gets over
leveraged because both sides are currying favor. The professional manager
starts to strut about insolently and you get upset. The atmosphere becomes
weird and rife with conspiracy theories. The insecurities become public jokes and
everybody with no stakes in the business get to do what they want.
It’s a very unstable situation. In your mind, there is little you can do
because you fear one or more of them switching camps. Worst of all, you never
know when your enemy will do something aggressive just because he feels like
‘trying his luck’. A little surplus of power is always more intoxicating than a lot of
power. Your enemy has the same fears. To insecurities, you can now add
paranoid hostility. It does not help that your side of the family is pushing you to
‘do something’ about your cousin. In the other camp, your enemy’s family is
telling him you are becoming ‘too big for your boots’ and if something is not
done about it, it will be soon too late. You know this reaction comes from frailty,
not judgment, human fallibility, not wisdom, and yet, you remain vulnerable to
the pressure. You truly don’t know what to do, any more than your enemy does.
Very likely, sooner or later, either you or your enemy will do something stupid. I
have rarely seen anything good come out of such situations.
This is how I see the situation. The problem is not that you are potentially
attacking your enemy, or that he will soon do the same. The real problem is the
insecurity and neurosis. If you want to peacefully resolve the problem, you have
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to remove the forces that are provoking the situation. In these circumstances, if
your slight advantage is causing the problem, your best bet is to reduce your
strength. If it is a face-off between two armies, you should reduce your force
level till you have equal power. Make your enemy comfortable. Make him believe
you cannot successfully attack him. This serves three purposes. First, it prevents
you from acquiring too much hubris: you don’t let your small advantage go to
your head. Second, it prevents your family from putting pressure on you to ‘do
something’. If they do, you only have to remind them that you are powerless to
do so. Third, it quietens down your enemy. With your added strength gone, his
fears stop playing out and he enters a comfort zone and both of you become
stable in your positions. That’s perfect.
In terms of our joint family business, this is a lot like a company started
by two brothers and now well into the third generation of children with a 51-49
split between them. In this kind of simplified example, Indian law will give you
the illusion of majority control but we know that control does not flows from
shareholding alone. Doubtless, different family members have operational control
over different segments of the business, or different group companies. Its always
a messy situation, and everyone has paranoid fears. From a strategic viewpoint,
it is sagacious for you to ignore your marginal strength and run the business as if
the partners are exactly equal. You must consult constantly, and defer as often
as you assert. Your main aim cannot be to maximize shareholder value: it must
be to maximize Gross Universal Shareholder Happiness!
Stand Off
On the principle of it, a Stand Off is a good place to be, not least because
it is the most stable place to be. When neither party has any advantage, this
‘dynamic equilibrium’ rarely if allows either side to become strong enough to
have ego problems. Its uncomfortable, and both parties feel unsafe, but the
index of shareholder unhappiness is about equal on both sides. No one takes
chances. In this situation, both parties have the same aim: forget about victory,
just survive. No one commits substantial resources to fighting a legal war
knowing that there is little chance of winning it. In a joint family business, you
are looking at a 50-50 partnership between two related family groups. Cousins
will skirmish all the time, but no one will commit to a serious fight. This makes
perfect sense. You can jockey for position, but if you go too far, you could
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theoretically convert a stable world into a terrifying humiliation and loss of

wealth. Why bother? If this stable situation is intolerable to you, while you may
fret and fume, you know that the only chance of have of fixing it is if some
external event changes this equilibrium giving you the opportunity to strike.
One variant to a 50-50 partnership is its opposite: a 26-26 partnership

between two related families with the balance held by the public. This looks like
potential chaos but it’s actually pretty stable. Both parties are equally capable of
gathering up the balance by proxy. Your effort to collect proxies will be cancelled
by your enemy’s similar effort. You would want to preserve the status quo. Your
paramount aim would be preservation, because if you start a legal war, you are
as likely to lose as win. This will not prevent you from your little soul satisfying
skirmishes and small ticket conspiracies in concert with public shareholders. You
will sniff around for opportunities. After all, the world is never stable for long and
you never quite know when circumstances offer you a great gift. That said, in
the meantime, you will never want to seriously rock the boat.
Weak
Finally, there will be times when you will be forced into a battle you do
not want: when you know that you are too weak to make a fight of it. Not only
can’t you win, perhaps you can’t even last long if you are forced to fight. That
doesn’t make the threat to you less real. What would you do in such
circumstances?
Inescapably, your first objective is to avoid battle and maintain the current
status quo. To avoid battle, you may well have to avoid all engagement. You are
in a gorilla’s cage at the local zoo. If you make yourself small enough, maybe the
gorilla won’t notice you. You can hide behind the rock, or in the bushes. Whether
it works or not doesn’t depend on you: it depends on the gorilla! But you can try.
If he does threaten you, you could keep dodging him, till he gets tired, or just
bored.
But then again, there is a limit to how much you can circumvent the
gorilla. You do indeed have two potential doors that may open for you. The first
is the door of fortune. Maybe, the situation in the cage will change. Maybe the
gorilla will fall ill changing the power equation between the two of you. If that
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happens, you will then be able to come to some sort of accommodation with the
gorilla. The best you can hope for here is a change in circumstances which may
make you equal enough to be able to make a bargain. He may agree to a deal
because he would be worried about having his head beaten to a pulp with a rock
while he is incapacitated. Yet again, this doesn’t depend on you: it’s the wheel of
fortune. The point if any is that no matter how weak you are, nothing lasts
forever and you must never give up. You must also never give up hoping for
change. If you watch and await your chances, good things may yet happen.
Your other door is the improvisation option. Minority freedom fighters do

not seek to win a conventional ground war because they know they can’t. They
engage in guerilla warfare (which makes our illustration very apt!). They seek to
inflict injury without ever having their own strength tested. They seek to win the
war by attrition, by continual disruption, but ultimately, they wait for the tides to
turn in their favor, they wait for external events to change the equation.
In terms of our joint family business, you could be a sub 10%

shareholder. As a marginal shareholder, you have practically no legal rights in
Indian law. You can’t prevent a shareholder’s resolution from being passed and
you can’t go to the National Company Law Tribunal to agitate your grievances.
this envisages a situation where the litigant holds somewhat less than 10% of a
company. At best, you are a pesky loudmouth at a shareholders meeting. That
does not make you powerless! You are a magnet for the flotsam, the jetsam and
the disgruntled in the ranks of minor shareholders. Given an appropriate
provocation, these disgruntled people can gather around you and given you a
power you do not otherwise possess. If your joint family business has public
shareholding, you can gather proxies, influence independent directors and
embarrass the board with exuberant aggression. This helps you gain some
leverage, but it’s not as if you forget that unless the force level changes
materially in your favor, you will not be capable of outright war and victory.
Within the envelope of your minority shareholding, you are free to devise your
strategy, using some of the rules we have discussed here, knowing that your
aims are limited.
-x-
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Chapter D7
Rule 7 - Avoiding Entanglements
This is a book about winning legal wars. You would expect that it would focus
on how to beat up your opponent. In all this time, we have focused on victory but, we
have failed to ask ourselves how to snatch defeat out of the very jaws of victory! I am
not kidding. In my long career, I have seen many highly winnable cases transform
into a disastrous defeat. Every time this happened, I have asked myself: why? Bear in
mind that in itself, defeat is not that big a deal. It all comes down to objectives. By
the time you have completed your “Five Rules to Decide if you want to Fight” survey,
you already know what is going to become of your case. You may still decide to go to
war. It may be that you have other ‘non-military’ objectives to pursue. It may be that
you don’t care about losing just so long as you can beat your enemy up a bit. It may
even be that you had no choice. The main thing is that if you use the rules in this
book, it would be rare for you to not be able to predict the reasonable result of your
war. Yes, there are always unquantifiable risks. It is always possible that you are done
in by the unknown unknowns! But that is the exception. The results of most legal wars
are decided before the war starts. Indeed, that is the central conceit of this book:
Because the result of a war is known before it starts, you know which wars you should
start, and which not!
So how does one go about snatching defeat from the jaws of victory? In my
experience, for the most part, the root cause is excessive enthusiasm. Court cases
always create complications, triggering new realities and unforeseen situations. In the
heat of the moment, many situations seem like great opportunities but they are not.
It is very easy to get ‘sucked into’ a situation which then becomes uncontrollable. This
last strategic rule is about such situations. It’s about entanglement. It’s about how to
ensure that you do not get entangled in a web you cannot extricate yourself from, or
end up in a fight you cannot disengage from.
In a sense, this last strategic rule is a kind of stress test. Whatever strategy
you may create, you have to subject it to a scenario analysis. Is there a real possibility
that you may get entangled? If such a possibility does exist, you have only a simple
choice to make: you can either modify the strategy to avoid the entanglement, or you
can abandon the strategy. There is no other option.
In my experience, there are three ways in which a litigation strategy leads to

entanglement:
(a) Acting when you should be inactive;
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(b) Acting without understanding the terrain you are on; and
(c) Acting without sufficient information.
Let us understand each of them.
(a) Acting when inaction is advised
We live in a world where hyperactivity is by definition its own justification. You

can’t be on a vacation without all your friends asking you what you ‘did’. It’s the same
in daily life. When you are at home, what do you ‘do’ on the weekend? If you haven’t
had sensory overload, have you even lived? In the corporate word, the most overused
word is ‘proactive’. Have you ever had an occasion to be attacked for being too
proactive or had to explain why you were like that? When you stop to think about it,
as a concept, idea that being pro-active is great by default is misconceived.
Think of the recent pandemic. Through 2020, most people were asymptomatic
while testing Covid positive. If one person in a family came down with sickness, most
others were either asymptomatic or tested negative or both. A great deal of neurosis
was created around a disease that didn’t sicken most people and when it did, most
did no worse than they would have if had a bad case of flu. Yes, there were tragedies
in our amidst but if you think about it, death rates have not exceeded 10% of those
who die annually of diabetes. Indeed, they are still lower than Indian’s annual road-
kill rates. I am diabetic and drive a car. But the sweet shop next door is selling the
laddus in wild abandon and the car dealer keeps trying to sell me cars I have nowhere
to drive because no friend wants to see me and risk infection. Why do I need to be
proactive about Covid? I have much bigger problems.
Okay, not many will agree with my views on this phantom menace called Covid!
Fear has a way of bending judgment. Let me give you a more typical example of legal
wars situation where being ‘pro-passive’ is probably the smartest thing you can do.
These are situations where ‘action’ is not a solution: it is a big part of the problem. A
very good place not to be pro-active is appeals against unfair tax assessments. I will
give you an example.
I can’t think of a time when the Government’s first response to an economic

turndown is anything but to instruct the tax department to terrorize the very few
people who do pay taxes in India. There has been a repetitive pattern to it throughout
my 42 years of law practice. Desperate for money to fund its developmental projects,
tax departments become aggressive, almost predatory, raiding and reopening tax
settlements to coerce companies to pay more. This is hardly new. The Indian
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Government is very good at failing to tax most people and making sure that those
who do choose to pay taxes never sleep peacefully. If our tax tribunals were quick
and efficient, this would not be a problem. But life gets in the way. Indian businessmen
have learnt that the best way to deal with the tax authorities is to never start a legal
war. Instead, most make a deal with the department at the level of the tax assessing
officer. The idea that you should start a legal war because you have a good legal
defense is pretty bizarre! A client of mine found out the hard way.
This one was American, and Americans have very assertive legal departments.
They also have compliance laws that extend jurisdiction of things done in India to
American regulators and courts. This means that if the Indian subsidiary of an
American company violates some laws in India, the American in-house lawyer takes
liability. About this time, this client received a large tax demand based on a very
fanciful interpretation of the law. It was a transparent case of officially sanctioned
extortion. The client would have done well to ‘compound’ the case at the departmental
level, but that is not what Indian tax lawyers advised. They had several layers of
defense. First, the department had reopened an assessment already made without
any ‘reason to believe’ that taxes had been evaded. Second, the demand was made
on the basis of a change in the calculation of taxes but the change in law was not
retrospective in operation. Third, the demand was made on the basis of an
interpretation of this change of law which interpretation did severe violence to simple
English. The client thought it had the fire power to pick a fight with the tax authorities.
In truth, it did, but where was the level playing field?
The practical reality was and remains that courts that hear appeals against tax
laws don’t exist to help tax payers; they exist to validate the predation of tax
authorities. Since a lot of them are manned by decent people, the law compensates
for the human factor by legislating that you don’t get a hearing till you have deposited
part of the disputed claim as security in case you lose. It is understood that it’s the
appellate authority’s job to ensure that you lose again. When you do inevitably lose,
you need to go to the High Court and the charade plays out again. The High Court
does not hear you till you deposit another percentage of the disputed tax amount. I
haven’t said a word yet about the delays. By now. you have deposited 50% of the
claim already and you still have to wait a decade before your case is heard. When you
finally reach that point, very likely, the High Court doesn’t want to interfere. Not that
it matters. Even if the High Court does help you, the department will appeal and you
will find yourself before the Supreme Court facing a battle that could last another
decade. I would not want to be the one to remind you of the lawyers bills you would
have paid already. When you get to the Supreme Court, now you are going to pay
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really serious money. Since twenty years have gone by and inflation has taken its toll,
is the disputed amount big enough to fight for any more?
This is not the worst of it. The Americans found that the High Court looked at
the Department’s documentary evidence, gave the benefit of doubt to the Department
and then directed the Americans to disclose more documents! It said it needed a
clearer picture. These additional documents now became grist for the Department’s
extortion mill and it led to new demands for additional back taxes. It was the worst of
all self-goals. The Americans were truly entangled. Eventually, they ate humble pie,
made their peace with the Department and paid whatever was demanded. Still, it was
a great salvage job it could have gone downhill from there too.
I part with this subject by recalling the ITC case. ITC tried to save taxes on
their cigarettes by part manufacturing them in a tax haven. The Department taxed
that part of the value-add too. ITC won all the way to the Supreme Court. Faced with
a humiliating defeat, the Government now retrospectively amended the law. This was
bad law but to fight it meant more legal bills than were worth the fight. ITC caved in
and made a deal. The Government kept the deposits already made and the
Government gave up the rest of the claim. What was saved after ITC’s legal bills were
added up is a question I did not ask!
Too often, you think you may have started a winnable legal war but you end
up entangled and unable to exit the brawl. More often than not, this happens because
you thought you needed to ‘do something’ when truly doing nothing or very little
would have been the better choice. If you are compelled to act in all circumstances,
you are inviting a disaster. Not all problems are soluble through action: some are
soluble through inaction and some are insoluble. Sometimes, it is through inaction
that we achieve optimal action.
(b) Acting on an incorrect appreciation of the ‘Turf’
There is a common joke in our law firm that you do not go into a full contact
martial art by preparing to be a good batsman. When you enter the world of legal
wars, your first duty is to understand the ‘turf’ on which you play, the rules by which
you play and the end game towards which you play. This in essence is the Doctrine
of Turf. Know the game before you play it.
Let me give you a very simple example. Civil cases are played on an entirely
different ‘turf’ than Criminal cases. Civil cases are a contest between two parties. Think
of it as a game of football in which you win by keeping the ball in your enemy’s half
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the majority of the time. Let’s assume there are six ‘issues’ in the case. To win your
case, you have to win six games where each ‘issue’ is taken up one at a time and you
must keep the ball in the other guy’s court on each issue more than 50% of the time.
In legal terms, this is called the “burden of proof”. If you keep the ball in the
opponent’s half, you have ‘discharged’ the burden of proof. In a civil case, the burden
of proof shifts all the time between the two teams just as the balls moves from side
to side in a football game. You don’t need to score a goal. Since the judge has to
decide one way or the other, all you have to do is persuade him that your case is more
believable than his. You have to do it for each of the six issues, which really means
six short games where you dominate the play. Civil cases therefore make for very
pro-active games, where both warriors try strategize to keep the ball out of their half
at all times, jockeying and fighting, always planning. It’s a sapping battle and the
winner is not merely the guy who has the better team to play with (meaning has the
better case to fight) but also the guy who is positioning better, strategizes better,
fights better (meaning does a better job of fighting the case).
Criminal law on the other hand is a whole different kettle of fish. Every man in
Indian criminal law is innocent till proven guilty. On first principles, no accused has
anything to prove. It’s for the prosecution - be it the police or the revenue department
or anti evasion wing - to show that the accused has something to defend. The
prosecution brings evidence to convince the judge that the accused is guilty of a crime.
If the evidence is inconclusive (meaning it can be interpreted in more ways than one),
the interpretation most beneficial to the accused will be taken. This is called the
‘benefit of doubt’. This why in a criminal case, guilt has to established ‘beyond
reasonable doubt’.
In gaming terms, this would be a football game with only one pair of goal posts.
It’s the prosecution’s job to score a goal and it’s the other side’s job to stop a goal
from being scored. If a goal is scored, the scoring side wins. If no goal is scored and
defending team wins. The defending side doesn’t care where the ball goes just so long
as it doesn’t go through the goal posts. This difference in philosophy means that civil
lawyers and criminal lawyers have very different mindsets. Civil law is about shifting
the burden of proof to the other side: criminal law is about stopping the prosecution
from establishing guilt beyond reasonable doubt. Civil lawyers jockey for positional
advantage: criminal lawyers fend off attacks and try to slip through the gaps in the
wall that the prosecution creates. These are two entirely different skills – civil and
criminal laws - and while I wouldn’t say a lawyer can’t be both, it is rare of a lawyer
to be equally good at both.
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We can multiply such examples easily. Lawyers who practice civil law cases
have very different skills from lawyers who mainly handle writs in the High Court. Writ
practice is very narrow in scope. It is mainly about enforcing well-established
constitutional rights. The court has wide discretion to give or deny giving favorable
orders. Writ lawyers seek to invoke the sympathy of the court. The want its ‘conscience
pricked’. The judge has to believe the Government has wronged the petitioner before
it will bail him out. Writ lawyers understand human nature better than most people
and play to these fine human instincts a lot. Civil lawyers on the other hand, need
more technical skills. They understand how to put together ‘the facts’ in a way that
proves a case. They know which ‘evidence’ (mainly documents) will effectively prove
the case and what wouldn’t work. They know how to get a witness to make the right
statement in court. They know how to cross examine the other side’s witnesses. They
also know how to finally put together the case in a grand ‘final argument’ and convince
the judge that their client needs the court’s orders. Civil Lawyers have a lot of
procedural rules to deal with and a lot of technical rules of evidence to master. As you
can tell, I do believe that you aren’t a complete lawyer till you understand how to win
a civil law case!
There are so many other circumstances where you would apply the same
principle of turf. You don’t argue a case the same way or tug at the same heart strings
in the Supreme Court of India as you would when you argue a case in the court of the
District Judge at Korba in Madhya Pradesh. You have to be focus on the sensibility
you are appealing to, the cultural context of your audience, the precise cord of the
judge’s heart you are trying to tug. There is a time and place for technical legal
exposition, and there is a time and place for appeals to a judge’s sense of humanity,
charity and sentiment. To be a successful warrior, you have to know what are the
applicable rules on that playing field, what will work and what will not. You have to
know how to manage the narrative within the overall world view of the judge.
This then is the key message: when you set out to fight your war, you must
first understand the turf on which you play, pretty much as a tennis or hockey player
does. A grass court is not the same as a clay court, and a traditional hockey field is
not the same as astro-turf. Once you understand how that turf works for you or against
you, you must play ‘with the turf’. If you don’t do that, you are fighting not just your
enemy but also fighting the turf. You have made your job harder and the turf will
entangle you even if the enemy doesn’t.
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(c) Acting without sufficient information
In the world of full contact warfare, a world replete with violence and
bloodshed, there is no sin quite as great a cowardice. In the world of legal wars, a
world replete with knowledge and intellectual excellence, there is no sin quite as great
as ignorance. It is impossible to develop a strategy if you do not understand the world
in which you operate. Your understanding of this world is constructed using mainly
two building blocks: one, raw data and two, the assimilation of this data in an
intellectually coherently framework of knowledge. To be deficient in either is to be
ignorant of the reality you face. In the face of such ignorance, not only is victory
impossible, it is also practically impossible to carry the confidence of the people you
must rely on – and that includes the judge – to bring you down on the winning side
of your legal war.
Little purpose will be served by making speeches about the risks you take when
you let your life ride on ignorance. We all know that to manage any business, we need
to understand the business; in playing any game, we need to understand the subtle
nuances of that game; and indeed, to live a good life, we need to understand the art
of effective living! Knowledge is a key ingredient in the menu of a good life and
effective action is the key ingredient in the menu of success! When fighting a legal
war, our strength flows from our awareness of the legal game.
-x-
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Chapter D8
Part C conclusion
The myriad hues of strategic choices
As we come to the end of our examination of the Seven Strategy Tools,

we can pause to reflect on our learning. Are we to believe that if we apply these
seven rules without making a mistake, we will win our legal war? Does this mean
that all it takes to win a legal war is to apply one or more of seven strategic
tools? The answer to both questions is no.
You do not win a legal war only because you have a good strategy. A
strategy is only as effective as the tactics you use to project your power on the
actual theatre of battle. We deal with tactics in the next section of the book and
I need not say more here. Then again, you have an enemy on the other side also
capable of making a good strategy. You can only under estimate him at your
peril. This means that any strategy you make needs constant adjustment and
adaptation as the war progresses. Every time your enemy adjusts to combat
your strategy, you must shift your strategy yet.
The larger issue is that while there are seven rules for strategy, it is not
that there are only seven strategic paths available to you in any and every legal
war. Its simple arithmetic. If you recall your Permutation and Combination
lessons from school, you will remember that the combination of seven rules
taken seven at a time is a product of 7 x 6 x 5 x 4 x 3 x 2 x 1 = 5040. If you add
the complex additional sub options emerging from the seven main rules, your
strategic choices are truly limitless. In the face of this myriad vibgyor of choice,
how are you to proceed?
I wouldn’t know how to answer this question. You can spend a lifetime
studying litigation strategy and success would still be an elusive goddess. I tried
to compensate for my continuing struggle by setting up a priority list. Other
things being equal, which strategy rule takes precedence over which, and so on
till I have a proper pecking order of rules. In my own limited experience, I came
up with the following order of priority.
Force levels is the place to start. Which broad brushstroke strategy you
evolve really depends on the Force Levels arrayed on the battlefield. Do you
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encircle, attack, divide your forces, stand still or merely circumvent? The choice
you make sets up the agenda for both armies. It also pretty much dictates what
happens next in the wide theatre of events. To that substantial extent, available
force levels also limit everyone’s choices.
Once agendas have been set, you must decide what you are to attack if
you are to attack at all. What is your Priority of Targets? Battles are won or lost
on what is attacked. That said, its not enough to decide what to attack: you
must also decide how intensely you will attack your chosen targets. In turn, that
does not depend on your whim: it depends on your capacity to attack. In that
sense, your third consideration is not a strategic choice, it’s a strategic limitation.
In all cases, you must now match the Magnitude of Engagement to your
available resources.
This takes you to the fourth rule of war strategy. When you know your
Magnitude of Engagement, you must now proceed to Optimize Logistics. Wars
are won and lost on logistics. You should not attack till your logistics plan is
frozen. Next, you must decide how far you will push your attack. Here, you
encounter your next strategic limitation. You must never plan Costly Annihilation.
Annihilations are expensive and a successful strategy will try and find Quick
Results and then disengage. Other things being equal, the strategy that brings
quicker results is the way to go. The problem of course is that if speed is too
high on the priority list, you may never get your result. This is why I put speed
at only the second lowest priority. Finally, the remaining rule on managing
downside risk now appears. It is time to evaluate the downside risk of possible
Entanglement. You must now deploy your strategy to fix the problem, never to
get bogged down.
Let us see how this priority list of seven strategic rules was applied in a
case we have studied so intensely in these pages already:
The Weizmann case
The Weizmann case is by now too familiar for me to repeat the

essential facts again. Let us very quickly examine the manner in which
Weizmann set up its strategy to dealing with Gupta and his promoter
band.
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Weizmann’s first strategic priority was to evaluate Force Levels.

With fifteen percent of the equity in his hands, a sympathetic BIFR,
and public shareholders capable of being manipulated, Gupta was
certainly not overwhelmingly weaker than Weizmann. At the same
time, Weizmann was substantially stronger because it was the majority
shareholder, had deep pockets, a strong legal case and great
motivation to fight. It was a perfect case for attcking and Weizmann
chose to attack.
Next, Weizmann needed to determine its priority of targets. We

have already discussed this matter in Chapter C5. To quickly
recapitulate, Weizmann attacked Gupta’s plans and pre-empted him, it
attacked his allies and isolated him, it attacked his loyalists within the
company and eroded his resource base but it never attacked his
citadel. In each element of this strategy, it acted impeccably.
This brought on the issue of Magnitude of Engagement. Since

Weizmann was committed to India and had deep pockets, it placed no
limits on the Magnitude of Engagement. That did not mean it wanted to
throw away resources. Weizmann dealt with the strategic issue on
Optimizing Logistics. We have looked at this matter in Chapter A5
when we discussed the Five Conditions Precedent. In essence,
Weizmann mobilized a large war machine and this was one of the
central reasons why it won.
Next, Weizmann dealt with the ever-looming problem of Costly

Annihilation. In this case, the answer was simple. If you do not
threaten annihilation, you are unlikely to risk it either. Weizmann did
not attack Gupta’s shareholding in the company, it did not launch any
criminal cases against him and it did not try and rob him of his basic
livelihood when he started a small side business to help pay the bills.
Weizmann also took a view on seeking Quick Results. When the

war began, it moved very quickly take control of the company, which is
about as quick as any result can be achieved. When Weismann
successfully managed to control the company much of the battle was
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won, even before it had started. It was now a matter of digging one’s
heels in and stemming the tide of counter attack. Since it had what it
wanted, it decided to down grade the Magnitude of Engagement to
what was needed to preserve its gains. In this way, it also avoided
Entanglement.
In this way, Weizmann correctly applied the Seven Strategies

and achieved its objectives.
The difficulty with strategic rules is that they are never immutable. The
problem with priority lists is that there is always something else that queers the
pitch. The secret is to know when a rule is immutable and when it is not.
-x-
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Part E
Fighting Tactics
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Chapter E0
Fighting Litigation: Seven Tactics
The quarters of the way into this book, with only seven chapters left to
read, it is my duty to confess that whatever you have read so far is all in the
nature of homework! Whatever you have thought, decided, planned and
determined has occurred before you reached the battlefield. That ‘theory’ stage
has now passed. The battle is set to start. You may have evaluated your ability
to fight, you may have made your five mandatory preparations, and you may
have used the seven tools to finalize your optimal strategy: yet, only now are
you confronted with the practical side of your theoretical construct. How do you
project your strategic power?
Let me explain this. Your preparations were all about getting set for war.
Your strategic debates were all about deciding what to do. Now that the war is
about the start, you need to roll out your strategy so that is has the planned
impact on the field. To put it in a rudimentary way, you must now decide how to
‘conduct’ your legal war. This projection of strategic power is what battle tactics
are about. To state the obvious, it is not enough to have the right war strategy:
it is also necessary to use the correct battle tactics so that you are able to
project your chosen war strategy.
Tactics become especially important also because of the dynamic fluid

nature of war. Battle conditions change all the time, events never occur as
planned, new realities emerge even as the war progresses and you will have to
constantly assess and reassess where you are and what you need to do next.
Events can occur which may force you to change your whole strategy. That is
relatively rare but you will inevitably use different tactics depending on how
events unfold as you go along. It is tactics that allow you to move seamlessly
towards your goals.
For my purpose, I have reduced tactics to seven basic rules by which

strategic power may be optimally projected:
(1) The orthodox and the unorthodox.

(2) Seize and control Initiative.
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(3) Control the enemy’s response.

(4) Exploit the momentum.
(5) The blitz.
(6) Be Unpredictable.
(7) The rule of Deception.
Let’s take a look at them in this last section of this book.
-x-
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Chapter E1
Rule 1 - The orthodox and the unorthodox
Thousands of cases are filed across the country every day. The best legal
minds bring their experience and wisdom to the fight, day after day. Both sides
have a strategy, and both sides understand what tactics can be used to win the
war. In this face-off between two highly skilled warriors, who is likely to win? Given
the strategy that the two contenders have, what kind of tactics should they use to
project their strategic power onto the theatre of battle? As you can well imagine,
you cannot have a comprehensive list of available tactics, and if you do, it would
take more than one volume of a book to list them out. Some are orthodox and
predictable while others are unorthodox and unpredictable. Which ones should you
use in your legal wars?
To apply this rule, let us first understand what we mean by these terms.
Wars, and litigation, have been fought since time immemorial. This wealth of
human experience has created an orthodoxy, which prescribes the rules by which
litigation is fought. Orthodoxy encompasses all that is conventional, accepted,
traditional, mainstream, conformist, standard, established… in effect, what is
known to the domain experts, if not to all. These tactics are in themselves of wide
applicability. There is no quarrelling with the value of these rules but the greatest
weakness of these rules is that everyone knows everything about them.
As opposed to this orthodoxy, it is possible to conceive of a wide variety of

tactics that are little known and even more rarely used. Yet, when they are properly
applied in the right circumstances, they devastate the enemy and bring spectacular
results. These tactics are unconventional, non-conformist, unusual, revolutionary.
even counter intuitive… Their value lines in the difficulty of predicting them, which
really means if you can’t predict then, you can’t pre-empt them. Deploying them
on the field brings surprise, and by the time your enemy has fashioned a response,
it is too late. Bear in mind that unorthodox tactics do not come out of a secret
magic box, nor are they some special gift of the gods given to only the few.
Unorthodox tactics emerge from orthodox situations: they are an unfamiliar way
of perceiving the familiar, an alternative interpretation of what seems obvious.
The question is, what tactics should you ordinarily use?
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If you are an agile, inventive mind, you may find it tempting to conclude
that you should always use unorthodox tactics. If you make the same stock market
purchases everyone else does at the same time everyone else does, wouldn’t you
be the golden mean in a zero-sum game. Similarly, if you use the same tactics
everyone else does, where will you end up except in the same place as everyone
else. How would you be any better off? What would be the point? But is it really
true for instance that only those who operate in an unorthodox way end up making
money on the stock market?
I would think not. I broadly divide people into the Percentage Guys and the
Windfall Guys. The Percentage Guys are the value investors, conservative people
with a limited risk appetite who do orthodox things most of the time. Windfall Guys
on the other hand are always taking wild punts and looking for the next big kill. In
the end, what you do frequently comes down to who you are, but that’s not the
same thing as saying that who you are is the only way to be! There is an optimal
way to fight legal wars.
In legal battles, there is room for both kinds of tactics. Orthodox tactics are
tried and tested and their very value lies in their proven quality. You know it works
much of the time and only fools try to reinvent the wheel or fix things that aren’t
broken. The great thing about orthodox tactics is that they usually offer very few
downside risks, and the risks they do offer don’t carry large damage bills. When
you step out of orthodoxy and try wild and weird stuff, the risk profile changes
completely. Unorthodox tactics may destabilize your enemy and bring you victory
but at the same time, you can end up on the wrong end of a crushing defeat
because you gave up on basic common sense! It takes courage, and a certain risk
appetite, to go where no one has been before.
The proper thing to do in a legal war is to employ a mixture of orthodox

and unorthodox tactics. While the proportion of the orthodox and the unorthodox
may vary in any given tactical situation, it is important that you use at least a lot
of the orthodox and a bit of the unorthodox. That said, how are you to decide on
what to use where? In my experience, this is not a difficult decision. You use
mainly orthodox tactics to deal with orthodox situations and you use selective
unorthodox tactics to deal with unorthodox situations or to achieve spectacular
results where the risk is manageable.
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It is clear why this is so. When I joined law practice 40 years back, my
senior at the time added to my growing list of mind-numbing cliché by telling me
that ‘advocacy was 10% inspiration and 90% perspiration’. That about sums it up.
Orthodox tactics are valid and necessary when you array for battle, when you
engage your enemy, when you deploy your forces, when you set up supporting
logistics and when you roll out your defense. When you are doing the same old
things, everyone knows that the same old ways are the best way to do the same
old things. This is the perspiration side of law practice and the less creative you
get, the more energy you will save and the more efficient your labors will be. In
the bargain, you will have a proven and more or less failsafe defensive stance
which will also give you opportunity to go on the offensive should circumstances
arise. What orthodoxy doesn’t give you is the ability to win. Orthodox defenses are
established based on orthodox offensives because those are the attacks that are
known so it’s possible to plan a defense against them. How can anyone possible
set up a well know defense to stop an unknown form of attack?
This is the key to a brilliant legal war! You use orthodox tactics to establish
and hold your defensive line and manage your risk. Conversely, you use
unorthodox tactics to flummox your enemy and surprise him enough to have a
chance of decimating his defense. It is possible that he may yet be nimble on his
feet and is able to quickly come up with a quick counter. More likely, he will
collapse in confusion and you will carry the day. The trick of course is to manage
your risk. When you use unorthodox tactics, you potentially open yourself out to
a counter attack. To be overwhelmingly strong in one place is to be vulnerable
somewhere else. If you do not manage this vulnerability very well, you may well
snatch defeat from the very jaws of victory!
Here is an interesting example of a case where one party was able to win
spectacularly only because it was able and willing to use unorthodox tactics as a
key part of its offense.
The Rolland Case
Although India had changed by the time we got to Y2K, some

foreigners still feel uncomfortable operating in it without a local
partnership. This was true of Rolland, a leading global engineering
major. When they decided to enter the Indian market at the dawn of the
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new century, they approached a number of large Indian business houses

looking for a joint venture. It was much too late. Indian engineering
businesses did not believe they needed either technology or money to
compete in the market and did not see any value in joint venturing in
this business segment. Rolland was not to be deterred. They scaled
down their ambitions, searched for smaller business houses and in time
found Kamath, a dynamic new entrepreneur. Kamath’s company was a
bit player in the engineering business and was looking to expand. He
could do with some capital and technology support.
The problem was that neither side wanted to be the junior partner.
In time, they agreed to a 50-50 joint venture but with Kamath holding
nomination rights to the majority of the Directors on the Board. Rolland
thought that ultimate power flowed from shareholding, not the Board of
Directors, and this was a matter of little consequence. With that decided,
the parties set to the task.
Allow me a short digression here. The JV Agreement between

parties was long and very legalistic. As events turned out, one of those
standard indemnity clauses (which no one but lawyers understand)
came to hold center stage as the story unfolded. It provided that should
the JV company suffer any losses because of a willful default of the
Kamath group, the Kamath group shall indemnify Rolland. It was indeed
a strange clause. How do you actually collect cash from a co-promoter if
a business suffers a loss? Rolland extracted a clause by which Rolland
could force Kamath to sell his entire shareholding to Rolland if its claim
remained unpaid. To add to the confusion, the JV Agreement did not
allow arbitration on the question whether a loss had occurred, how
much loss had occurred and who was responsible for this loss. This
entire decision was entrusted to an agreed expert from one of the “Big
Five Accounting Firms” (as the expression was then understood). Once
the expert had finished calculating both the amount of the loss and the
value of the Company’s shares, the Board would transfer shares
according to the expert’s calculation.
Let us now take a quick peak at the structure of the Board. Rolland
was entitled to nominate two out of five directors while Kamath
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nominated the rest. Kamath’s shareholding was substantially held by his

immediate family: wife, son and an inexperienced younger brother.
Since the business plan proposed the induction of substantial debt, not
to speak of a hazily discussed IPO at some uncertain date, Kamath said
he didn’t want his family to be members of the Board. Instead, he
nominated two highly networked and credible professional directors to
the Board, the theory being that the Company needed the contacts.
Rolland in turn nominated two senior managers from its Head Office.
In practice, Rolland’s directors were very busy people and India

was very far away. Rolland’s nominee directors turned up for at most a
day for a Board meeting, or not at all. Most Board Meetings were held
with four or fewer directors of which one was usually a resident Indian
alternate to a Rolland nominee director. In turn, the CEO was an external
professional, but he did not have a Board seat, so Kamath more or less
told him what to do. This was consistent with Rolland’s general attitude
to India. They didn’t buy into the ‘India opportunity’ story and had taken
a position in India on the long-term view that when India’s time case,
they would step up their game too. As business rolled out, Rolland pretty
much handing over all operating responsibility to Kamath, far beyond
what had been agreed.
By 2004, it was clear that Kamath was not up to the task. The
company had lost money, its market share was negligible, most products
had not been launched and Rolland was getting increasingly frustrated.
The CEO claimed he was not allowed any autonomy. He declared that
the only reason he had not quit was because he believed Rolland would,
at some point, wake up and take ownership of its company. If Kamath
was indeed the driver of the bus, he said, someone in Rolland had to talk
to Kamath.
Rolland saw his point. Eventually, Rolland’s India head opened a

dialogue with Kamath. Kamath didn’t like the ensuing conversation. He
was in complete denial, probably obstructive too. He offered no solution
and didn’t want to either step down or sell out. He seemed to believe he
owned the Company and Rolland was some kind of passive investor,
which in a way was true. Rolland went looking for a lawyer.
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To being with, Rolland needed to find out exactly what was wrong
with the JV Company. Kamath wasn’t going to tell them. What ruse
should Rolland use to get inside the accounts of the Company? Rolland
persuaded Kamath to appoint a consulting firm to investigate the
underperformance and come up with a plan to turn the company around.
Kamath had no problem with the idea, but he did keep a very watchful
eye on what data was shared with the Consultants. As time went on, he
was lulled into complacence. After grandstanding for almost two weeks,
once Kamath’s back was turned, Rolland sent in its forensic due
diligence team pretending to be consultants. What they found was a
shock.
Investigations into the accounts of the JV Company revealed

several clear cases of defalcation of funds. They also found evidence of
collaterally motivated capex decisions. On more than one occasion,
Kamath had instructed the CEO to grant extraordinarily beneficial
contracts to Kamath’s family members. It turned out that one of
Kamath’s own surrogate companies was the biggest beneficiary of such
contracts. Neither employees nor the Board were aware of the
relationships between Kamath and this surrogate. In time, the forensic
due diligence team submitted its report. It read like a fraudster’s
handbook of practical advice. It showed that the JV company was now
practically bankrupt. What was to be done?
Kamath owned half the company, had a majority on the Board and
controlled the day-to-day management of the Company too. Rolland had
the other half the company, but they were a minority on the Board and
barely knew their own managers. It was clear that Rolland needed
control over the CEO and by implication the Company Secretarial
function. Rolland approached the CEO. They were taking over
management control, they told him, and wanted his cooperation. The
CEO was delighted. Getting the Company Secretary to cooperate would
be no problem.
Rolland now found itself at a fork in the road. Its straight-line

option was to call a Board Meeting and confront Kamath. Could they
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embarrass Kamath into resigning? No one thought so. As long as Kamath

had equal shareholding and a Board majority, he would laugh in their
face. Should they perhaps file criminal cases immediately and then take
over management? Rolland was very fixated on the idea of retribution,
of crime and consequence. It was true that Kamath should not be
allowed to get away with fraud but Rolland’s corporate aim was to take
over the business, not hang Kamath on main square at high noon. It
would be useful not to ignore public perception. India had been
‘liberalized’ less than a decade ago. Rolland could not be seen to be a
colonial bully trying to pulverize the native victim. Finally, what about
the cost? Did Rolland have the budget to achieve ultimate justice? It
needed an unorthodox strategy.
The strategy that emerged was obvious, yet singular. In India a

director vacates his office if he “fails to disclose his interest in any
contract or arrangement in which he is directly or indirectly interested”.
”fails to disclose his interest in a company that has contractual relations
Rolland could treat Kamath has having vacated his office of director.
Simultaneously, Kamath’s nominee directors could be threatened with
complicity and their loyalties shifted.
As events unfolded, Rolland declared war by contacting Kamath’s

nominee directors. The audit report was placed before them and they
were asked if they knew about it. Both stampeded. Instead of switching
loyalties, they resigned and asked that they not be sued. Rolland
accepted this, provided they signed undated resignation letters and
went incommunicado till after the next Board Meeting.
Rolland now moved to exploit this opportunity. The Company

Secretary sent out a notice of a Board Meeting. The agenda had an item
on losses in the company. When the Board met, Kamath was surprised
that two directors did not show up. Curiously, Kamath had not contacted
his own nominee directors before this Board Meeting. Kamath asked the
Company Secretary if he had news of them and was told his nominees
had resigned. He then placed their resignation letters before the Board.
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Kamath lost it at that point. Why had the agenda not specified that
the resignation of two directors was to be considered? He demanding
that the meeting be adjourned. The Company Secretary maintained that
these resignation letters had been received after the agenda had been
circulated. Since the quorum was complete, the Board carried the
resolution accepting these resignations by a majority of 2 to 1. Kamath
was livid but helpless. The Board now proceeded to discuss the losses in
the Company. The Company Secretary placed the substance of the Audit
Report before the Board. In the ensuing storm, the Board Meeting was
adjourned for three days, it being agreed that the impact of Kamath’s
defalcation would be up for debate at this upcoming adjourned meeting.
Kamath was with his lawyers almost immediately. Rolland in turn

instructed its lawyers to hold a watching brief in all courts where
Kamath could possibly apply for protective orders. Predictably, Kamath’s
lawyers managed to file a hurriedly patched up injunction suit on the
morning of the adjourned Board Meeting. The court was not impressed
but reluctantly stopped the Board from removing Kamath as a director.
Meanwhile, almost simultaneously, Rolland unleashed its unorthodox
masterstroke. Invoking the provisions of their shareholders contract,
Rolland exercised its call option and advised the Board in writing of its
decision.
A copy of the court order were delivered to the Board minutes

before the meeting began. Kamath was there. The Board took up the
agenda of the adjourned meeting, discussed the financial issues and
then took up the issue around the implication of the fraud on the JV
Agreement. The Company Secretary now tabled Rolland’s call option
letter together with the Audit Report. After a short fiery debate, the
Board resolved to “respect the JV agreement”. It passed a resolution
authorizing the transfer of shares and directed Kamath to execute the
necessary share transfer forms.
Kamath was back in court the following day. He wanted the

transfer of shares stayed. The Court was sympathetic but reluctant. It
issued notice of the case to Rolland. Rolland now finally appeared in
court and filed the Due Diligence report. The Court got the storyline
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immediately. It dragged its feet on protecting Kamath any further.

Meanwhile, Rolland argued that this was now a Company Law Board
case (now NCLT), not a civil court case.
Kamath could see the legal validity of the point on jurisdiction. He

filed a petition in the Company Law Board and asked for the same
protection. Rolland was ready with its defense. It appealed to the
judge’s sensibilities, arguing that where partners could not live
together, divorce was the best option. The parties had already agreed
that an expert from one of the Big Five would make a valuation. This had
been done. Parties should now give effect to their agreement. Kamath
resisted this. A surreptitious valuation was meaningless: he needed to
participate in the process. The strategic point here is that in this short
period of a few days of conflict, no one was talking about Kamath’s
majority on the Board any longer. Already, within a few days, Kamath
had gone from being a very dominant shareholder in operational control
to fighting to keep his shareholding!
Along another stream, Rolland argued that all questions on JV

Agreement related issues should be decided by arbitration. CLB quickly
came to realize that there was no legal solution to an irretrievably
broken-down relationship. Employing all the power at its command, and
with considerable wisdom, CLB was able to prevail on Kamath. Rolland
yielded somewhat in the share valuation but at the end of the day,
Kamath exited at a modest price which took into account his financial
jugglery.
The Rolland case is a good illustration of lateral thinking, as opposed to

vertical thinking. It’s a simple point – how to view the same old facts from a totally
new perspective – and how to implement solutions in an unorthodox manner to
achieve a spectacular victory. The point is simple. If you want to win, you need to
set the stage using orthodoxy and then, when the moment is right, it is the
unorthodox that will carry you to victory.
-x-
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Chapter E2
Rule 2 -Seize and Control Initiative
Litigation is like a game of chess where each party is permitted one move
in turn. In a game of chess, white moves first. In litigation, either party may
decide to move first. The real question is: what do we mean when we say ‘move
first’. We have seen that litigation doesn’t begin when either party goes to a
court and files something. I have already said in this book that the fate of most
litigation is decided before either party reaches the court room. Litigation begins
when one party first takes a hostile view of the other party: when it decides that
there is a conflict of self-interest. The party that sees this first, and decides to do
something about it, is the one who achieves great natural advantage.
Moving first is not necessarily the same as seizing the initiative. Mere
movement is not initiative. Let us go back to our illustration on the chessboard.
Chess rules specify that white moves first. White may, while making his first
move, actually take a defensive position. He may use his first five or more moves
merely to become impregnable. On the other hand, black doesn’t have to play
defensively only because white got to move first. Black may well choose to leave
his flank vulnerable and attack immediately. Each player unfolds his game
depending on his perception of the situation, the strategy he has in mind and his
judgment of the outcome.
It is the same with litigation. The guy that first spots an insoluble conflict
of interest will move first. Whether he moves to attack or defends depends on
his perception of his overriding strategy. If he thinks he has more to lose than
gain, he may well move defensively. If he believes his best interest lies in
attacking, he will attack. His opponent will now make a move. The opponent will
move aggressively if it believes he has the upper hand or defensively if he
believes his best interest lies in a stalemate. Parties will now jockey for position,
occupying the field as best they can, testing weaknesses, waiting for the other
guy to make a mistake, feeling each other out so to speak. At some point, one or
the other will choose direct attack. The attack may come as litigation, or the
attack may come by a decisive movement on the ground which leave the other
party no choice but to rush to court. Any which way one looks at it, the party
that makes its first move pretty much ‘drives’ what happens next. This in simple
terms is initiative.
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To be clear, not all moves add up to an initiative. Many parties waste

moves, as poor chess players do, making moves that have no visible benefit, or
taking an action, then reversing it. So many parties issue pointless lawyer’s
notices, thinking that muscle flexing is decisive action in itself. All they get at the
end of that effort is a reply from the other side’s lawyer. Clearly, the secret is not
merely in moving first, it is in using this first movement to seize the initiative and
then to make sure that at all times, this initiative remains with that party.
We need to be crystal clear about this. Initiative as a war tool runs as a

central thread through the cases we have studied so far. The Hargear case was
good illustration of how Hooda wrested the initiative from Lerion and then
pressured Lerion into a settlement. The Weizmann case is illustrative of how
Weizmann seized preemptory board control from Gupta and effectively barred
him from ever making a comeback. The Metro cable case is excellent illustration
of how initiative served to wrest back control of a JV Company that was all but
lost to the majority partner on the ground. If you control the initiative, you
control the war.
This principle applies to every class of litigation, and not merely wars of
corporate control. It applies not only to attack but also to defense. For a change
of pace, I will illustrate this principle using a case a little away from the usual
corporate battle that has been more my staple fare for some three decades now.
This one arises from revenue litigation with the Government, and that itself
makes it unique. Revenue laws are so terrifyingly biased in favor of the
Government that if you get caught up in one, you usually have no leg to stand
on leave alone apply anything like a strategy. Let us look at how the rule of
initiative has been applied in a sales tax demand matter.
The Spark Sales Tax case
Spark is a leading manufacturer of white goods with

manufacturing facilities in west UP. At the relevant time, state-of-the-
art washing machines were their leading products in India. Business
was good in the initial years but the late entrants in the market
changed the rules of the game. In time, Spark found that its
competitors were able to offer washing machine models with the same
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features at sales points up to 20% cheaper than Spark could. As a

general proposition, most white goods manufacturers source the
majority of parts from the same pool of local venders. How was this
happening?
Spark knew that the competition was taking advantage of tax

breaks in sales tax havens. Let me take a moment to explain this. Till
the introduction of GST in 2017, all States collected sales tax, as did
the Central Government. While the Central Government taxed all inter-
state sales (meaning sales originating in one state and completing in
another), State governments taxed all sales occurring within a state.
Since all of them needed to increase their tax collections, they tried to
promote industry in ‘backward areas’ by offering tax holidays. For
instance, the Central government waived off Central Sales Tax in
‘backward areas’ such as Daman, Silvassa, Pondicherry and so forth.
Industries in these areas didn’t pay any Central sales tax at all on
inter-state sales or even within these union territories.
Competition being what it was at the time, every white goods

brand set up ‘manufacturing’ units in these tax havens and offered
their customers tax-free sales from these ‘screw driver’ factories.
When Spark finally figured this out, it had no choice but to move to
Silvassa. Washing machine components were manufactured in UP,
stock transferred to Silvassa, assembled as complete machines in
Silvassa and then sold as finished goods from Silvassa to the other
States as direct inter-state sales.
If you stop to think about the legal side of it, there were two
ways in which tax-free sales could occur. First, it was possible to make
‘local’ sales in Silvassa. To do that, a purchaser could drive to Silvassa
and purchase a washing machine across the counter. He could then
load it on to the back of his SUV and drive back home. Naturally, any
purchaser sitting in (say) Bombay could make a ‘local’ purchase in
Silvassa by sending his driver in his car and buying a washing machine.
He didn’t actually have to go to Silvassa himself. When dealers figured
this out, local Silvassa sales became quite a lucrative scam.
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This is how it worked. If you visited a Bombay dealer looking for

a washing machine, he would offer to immediately give you a washing
machine from stock in Bombay with local taxes paid. Alternatively, if
you did not wish to pay local sales tax, he would take your money and
give you a tax-free washing machine in 2-3 days sold across the
counter in Silvassa. He did this by asking you to sign an authority letter
in favor of one of his agents in Silvassa. If you took this route, the
Dealer couriered the papers to his Silvassa agent who showed up at the
Silvassa shop, purchased the machine and loaded it on a Bombay
bound truck. As this practice became more sophisticated, shops gave
up on keeping agents in Silvassa: the manufacturers themselves
employed ‘shippers and handlers’ who did the job the agents used to.
The manufacturer received the couriered paperwork at their Silvassa
factory and shipped the machine to the Bombay Dealer with the
paperwork showing that it had been delivered across-the-counter to
the customer in Silvassa. Incredible India!
Now, you can see the limitation in this little scam. You can make
a counter sale in Silvassa to a Bombay purchaser because the two
places are only 170 km apart and you can convince the tax department
that determined buyers are making the trip to save on the money.
From a logistic standpoint, you can make this scheme work because a
Bombay buyer would be ready to wait 2-3 days to have his machine
delivered after he has paid for it in Bombay. What happens if the buyer
is located in Guwahati? Are you able to show that some guy drove from
Guwahati to Silvassa to buy a washing machine? Enter Inter State
sales!
To save Central Sales Tax, the Guwahati customer would have to

place an order directly on the Silvassa factory. Naturally, no one sends
a truck from Silvassa to Guwahati to deliver one washing machine. The
cost would be prohibitive. If Spark waited for enough orders to come in
from Guwahati before shipping the machine, the buyer would have to
wait weeks, maybe months. But this is India: there is always a hack!
Dealers now took to placing orders directly on Spark Silvassa from
fictitious customers. If you showed up at a Spark dealership in
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Guwahati, they sold you a machine previously ordered directly from

Silvassa on someone else’s name! This is how it worked.
If a dealer anywhere in India typically sold ten machines a

month, he placed an order for twenty machines using fictitious
customer names with fictitious addresses and kicked off his scam. He
now had an inventory of ten excess machines with no customer
associated with them. He could sell them off-the-shelf to walk-in
customers. He told his customers that if they wanted to save tax, they
can have the machines delivered against cash but would have to wait
to get the paperwork. The sale completed, the dealer now placed an
order on Silvassa using the name of this customer. When that machine
arrived in a few weeks, he added that one back to his original inventory
of ten machines. This way he always had his inventory, yet he supplied
machines immediately for spot cash.
This tax dodge became standard operating procedure across

product lines in India. Everyone was happy; except that no machine
could be matched to the customer who ordered it. The customer didn’t
care. He went to the neighborhood shop, put down the cash, received a
washing machine and went home. He wasn’t matching invoices and
machine serial numbers and what not. If some sales tax inspector
showed up at his door, he would have said “I paid my cash and I took
my machine. I received an invoice. What do I know about sales tax?”
Who was going to be able to prove what really happened?
In truth, the proof was written on the machine. Every washing

machine had a serial number and this number appeared on the invoice.
A’s invoice recorded that he was sold a machine no 1 but he received a
machine bearing another number from the original feedstock of 10
fictitious customer machines. A’s machine went to B. B’s invoice
showed that he had received machine no. 2 but he had received serial
number 1, i.e. A’s machine. B’s invoiced machine no. 2 had gone to C
but C’s invoice showed that he had machine no. 3, and so on and so
forth. Any general survey by which sales tax authorities matched serial
numbers appearing on washing machines with serial numbers
appearing on their invoices would reveal the truth. If the authorities
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discovered that locally available machines meant for someone else

were delivered to every customer, the entire country wide sale of
washing machines would be redesignated as local sales and local taxes
would become payable with interest and penalties. Spark was in deep
trouble.
The curtain went up on this tax scam when the Sales tax
authorities made a random survey of one of Spark’s retail outlet and
found a little black book which showed which machine ordered by
which customer had been delivered to whom against which order. The
sales tax department went into hyper drive. Three days later, they
raided all Spark dealers and retail outlets. A month later, they
reopened all sales tax assessment of previous years in that state.
Spark’s office in that State was a low-key affair, manned by a

lowly employee. His main job seemed to have been to tour the state
and provide competitor intelligence to the head office. He was so lowly
that he took this notice and send it to Silvassa instead of the Head
Office. Silvassa had no idea what this was and ignored it. Since no one
took any interest in this notice, on the appointed day, he took it upon
himself to visit the sales tax office. This employee later claimed that his
meeting with the sales tax officer was a pleasant affair. He said he was
asked some questions, served some tea and then told to come back in a
month. This went on month on month for some six months. He thought
he had done a great PR job!
Meanwhile, Spark’s annual sales tax assessment came up. The

Department now responded by disallowing all interstate sales. It
slapped a tax claim Rs. 60 million on Spark and issued a Show Cause
Notice why Spark should not pay penalties. One day later, the
Department issued another notice. This notice claimed that Spark had
failed to produce the entire interstate sales records of the last eight
years despite demands and it needed to show cause why all interstate
sales throughout this eight-year period should not be treated as local
sales.
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The lowly employee had smartened up by now and did send this
notice to the head office. Spark panicked and called in its lawyers. At
the initial debriefing, this local employee insisted that all his visits may
have included some general discussion on tax issues but were mainly
gossip sessions. He acknowledged that the sales tax officer routinely
asked him to sign some official looking stationary on his visits to the
department. He said he signed these documents to help the sales tax
officer show how hard he worked! In this way, unknown to this
somewhat naïve employee, all his visits to the sales tax officer were
being shown as formal legal hearings.
The lawyers rushed to meet the sales tax officer. At this meeting,
they were told that (a) all sales tax assessments had been reopened
seven months back, (b) current period assessments had been made
disallowing all inter-state sales, (c) Company had failed to produce any
evidence to show that inter-state sales for the last eight years were
indeed inter-state sales, and (d) the officer had already drafted his
order and needed to issue it within three days to meet his performance
quota. At the end of the meeting, he told the lawyers he is always
happy to meet ‘any party’ at home in a personal capacity over a cup of
tea! Spark know it was being hustled.
Still, if you are asked by a departmental official to have a cup of

tea with him, you have to go. A middling Spark employee showed up
next day. Cut to the bone, the official disclosed Spark faced a liability
of Rs. 40 crores. Since Spark would deposit a minimum 25% i.e. Rs. 10
crore to have its case heard in appeal, it would be a good idea for Spark
to consider spending a little money to avoid all the trouble. He also
added that he was always ready and willing to help everyone and
litigation was not a solution.
Spark was an ethical multinational Company. They knew about

the rules of the desi game. They were not about to play by those rules.
They gave their lawyers carte blanche to defeat the claim, whatever
the cost.
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It was a big ask. Tax claims usually go only one way. To begin
with, Spark had to beat the three-day deadline. Spark’s middling
employee visited the sales tax officer at home again. To cut through
the sleaze and to the chase, the Officer informally gave Spark an extra
week to come up with a ‘solution’!
Spark now had one week to comb through its record and get to
grips with this case. A team of lawyers fanned out to Silvassa and put
the record together in three days. They came up with mixed findings.
Although sale paperwork generally followed procedures, records did
not show that each washing machine had been delivered to the
customer whose name appeared on the invoice. Worse, a lot of
machines had been delivered to the same generic name like “Babu Lal”
and “Ram Kumar”. Each of these Babu Lals and Ram Kumars also
seemed to receive washing machine every other day on behalf of a
variety of invoiced customers located in different towns. Worst of all
the entire state seemed to use only about three ball point pens! Spark
could not produce these records before the sales tax authorities.
Spark lawyers decided to seize the initiative and fight off the
front foot. To begin with, this meant creating ‘legal hurdles’ in the
department’s path. It prepared a long submission for the department
to consider as follows:
(a) Spark argued that by law, an assessment already made could not
be reopened unless the officer had a ‘reason to believe’ that the
payment of sales tax had been evaded. Spark argued that there
was no material on the record to show that any departmental
officer acting reasonably could have such a ‘reason to believe’.
(b) Next, Spark argued that the rules of natural justice had been
violated. How could the Company defend itself when it did not
know what it was accused of? This point had a bit of a history to
it. The original notice reopening old assessments was based on
some internal 40-page departmental document called the
‘Scrutiny Report’. From the material that Spark could get hold of,
it appears this report analyzed the method by which tax was
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evaded in detail. It was therefore the foundation the case

against Spark. A Spark employee informally got hold of a copy of
this report and it showed the amazing muddle headedness of the
case. Its author was just making stuff up as he went along,
drawing conclusion unjustified by the facts, making leaps of faith
and otherwise dancing amidst logical absurdities.
The Company didn’t have to get into any of this of course.

If the Department could not show that it had handed over this
Scrutiny Report to the Company, the previous seven months
proceedings against the Company would be illegal since in all
this time, the Company could not have known what case it was
defending.
(c) Third, and as you would expect, the Company argued that all
inter-state sales were truly inter-state sales. At best, the
evidence only showed that a bunch of customers, dealers,
traders, middle men, and other street-smart sales guys had
played games with deliveries but it could not be shown that the
Company had done anything wrong. The Department could
prosecute these guys but how could the Company be held
accountable?
(d) Finally, Spark argued that the notice was conjectural and
fanciful. The notice did not cite any specific evidence to show
that the Company avoided payment of tax.
It was now time for the hearing. There was touch-and-go tension
in the air, but as the hearing unfolded, it became clear that the
government should have earned some entertainment tax on it! Spark
trooped into the sales tax office with 16 large cartons of papers and
some 40 books on the law. The lawyers filed its written submissions
and then started to argue the case. Soon, they were quoting case after
case, reading each case in great detail. In two hours, the Officer was
fighting to keep awake. He tried to end his pain by telling the lawyers
not to read each case: if they left copies, he would read them later. The
lawyers were not to be discouraged. The lawyers then started opening
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the cartons and cross referring to the Company’s paperwork. By then,

the officer was utterly exhausted. He asked the lawyers to hand over
the paperwork to his subordinate and make their main arguments.
The lawyers agreed. The 16 cartons were moved to the next

room and the review of the documents started in parallel. Spark was
delighted to find that this subordinate had a greater passion for gossip
than he did for grunt work. It would be weeks before he would run
through 16 cartons of this stuff!
Meanwhile, Spark lawyers turned to the purely legal issues,

arguing that in the absence of the Scrutiny Report, the Company could
not possibly defend itself. What were they defending? The officer didn’t
like that. He said he had made a copy available months ago. He looked
for proof in his file and failed to find it. Pushed to a corner, he fished
out another copy and handed it over to the lawyers. That was a fatal
mistake because in that moment, he wiped out seven months of
proceedings he had shown on paper the department’s record. Spark
was at a new beginning.
It was now near 4.00 PM. The Officer wanted to go home. He

said it was time to wind up. Spark seemed shocked. It had just
received the Scrutiny Report, it needed a week to study it, two weeks
to make a defense and further time to argue the case before the same
officer. The Officer protested that he was on a March 31st deadline, and
it was April 10th already. He also he had no reason to see all the papers.
The whole case depended on proof of delivery to the end customer.
Why did Spark need so much time? Spark now appeared to reluctantly
agree to this but asked for time to compile the ‘proof of delivery’. This
started a long round of haggling over the time it was to get. Ultimately,
the Officer gave the Company three further days to bring all proofs of
delivery.
To conclude on the story so far, the Company had successfully

gained time by wresting the initiative but three days was a short
respite to earn. The Officer was back on neutral ground. The Company
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could not prove delivery. It needed to pull a new rabbit out of its hat.
All it could do was stonewall. How to do that?
At the next hearing, Spark filed another application. It said it had

read the Scrutiny Report but this report was impossible to understand
because it referred to some 200 documents. The report said these were
company documents but Spark didn’t know anything about these
documents. Unless it could review this paperwork, it couldn’t
understand what case it was to defend. Could the department please
give copies of these documents to it?
The Officer was besides himself with frustration. He needed to

close the case by March 31st, but it was April 14th already. It didn’t
seem like the hearing was anywhere near conclusion. He had just
wanted to shake down the Company: it was now becoming apparent
that he was getting sucked into complicated legalese. He threatened
the Company. It should withdraw the application or ‘face the
consequences’ with heavy penalties. The Company responded with a
charm offensive. The lawyers were doing a job: what else could they
do? Another haggling session began. By when would these 200
documents be supplied? How much time would Spark then have to
study these documents and explain them to the department?
Ultimately, they all agreed that they would meet in two weeks.
Remarkably, at the next hearing, the Officer had changed his

mind. He refused to deliver the 200 documents. Instead, he read out an
order stating that the Company demanded a complete disclosure of all
documents because it wanted to customs tailor a defense. He ordered
the Company to first file all documents proving delivery to the end
customer and only then would the department hand over copies of
these 200 documents. From Spark’s point of view, it was the perfect
response.
The law was and remains pretty clear on this point. If anyone
wants you to defend yourself in any court of law, you have to know
what you are to defend. Spark had a legal right to have these
documents. Making an allegation that the Company could fabricate
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documents doesn’t take away this right. Spark now had a case to take
to court!
Spark was in court within a week and it took less than 5 minutes
for the court to issue notice of the writ to the Department. In the
meantime, it stopped the Department from proceeding further. The
Department was quite unprepared for this. It put its case very simply
and it made perfect sense. An inter-state sale is an inter-state sale if
the Silvassa factory sells directly to a customer in another state. All the
Company had to do was show that these machines had been delivered
to the end customer. Instead of doing that, the Company was avoiding
the issue and adopting delaying tactics. It could not prove deliver of
the machines and needed to manufacture evidence. The quality of the
evidence it would manufacture depended on what the Department had
against it. For this reason, it demanded that the Department disclose
its case so that it could start manufacturing records to explain the case
against. If Spark would only show delivery, the problem would be
solved.
Spark wasn’t willing to accept this as a reasonable view. For so

long as the Department was investigation tax evasion, it could ask the
Company to produce any record it wanted to see. That stage had
passed. We were in ‘adjudication’ (the process of judging the case).
Besides it was not a case of first assessment. A done deal was
reopened and was now being reassessed. It was like a criminal case. If
it lost, the Company faced penalties and censure. How could the
Department switch its hat backwards and forward, treating the
adjudication as an adjudication on one day and as an investigation on
the next. At this stage, the Company had no duty to disclose anything
except as its defense. When it was given a complete case to defend, it
would meet that case but not before. Besides, can the Government
ever rough ride over a basic legal right on the ground that a citizen
may misuse it? By that token, why should we be allowed out of our
bedrooms? Who knows, we may steal something or burn something or
rape somebody.
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The High Court took the correct legal view. The Department
could not ‘trade’ in documents during adjudication proceedings. It
ordered that the Company be given copies of all documents in a month.
To secure that the company did not then indulge in wholesale
fabrication of ‘proof of delivery’, it also gave the Company a short
period of two weeks to then file its own documents.
This was a great result for the company but from a purely tactical
viewpoint, it wasn’t nearly enough. The Company still had the initiative
for the moment, but it would go up in flames as soon as the
Department shared the 200 documents with it. The Company needed to
find another way to keep the momentum of its attack.
It took more than two months for the department to find,

compile, photocopy and deliver all 200 documents. What showed up
eventually came as no surprise. Some of these documents were copies
of internal records taken from shop owners. They showed that shop
owners had diverted washing machines working in tandem with the
trucking industry. They did not show that the company had anything to
do with it. But then again, did all this really happen because it says so
on pieces of paper maintained by a third party? Perhaps it was only a
bored shop owner entertaining himself by writing pulp fiction in his
little black book!
The rest of the documents seemed more damning. Most of them

were third and fourth carbon copies of Spark shipping documents –
Lorry Receipts, copies of invoices, copies of customer orders, and
consignment delivery receipts. The Babu Lals and Ram Kumars had
received most of these machines. Spark’s lawyers scratched their
heads about it, and decided that ultimately, it wasn’t Spark’s problem
because they hadn’t participated in any of this alleged skullduggery.
Quite the opposite actually. The Company’s contract with its
transporters specified that goods could only be delivered to the
invoiced customer. If transporters violated their contracts with the
company, how could you hang the company for it?
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That didn’t make everything okay. The court had ordered the
company to file its own ‘proof of delivery’ documentation. If it did, it
would be damned for it. If it didn’t file the documents, the Department
would use these third-party documents to hang Spark. Either way, the
Company would face a sales tax demand. Spark chose to wrest the
initiative by another means.
Lawyers brainstormed the issue and decided that Spark’s best

option was to argue that it did not need to prove delivery of the
machines to customers. Since large trucking companies transported
washing machines from Silvassa to customers, the Company need only
prove that it had delivered the washing machines to the transport
company with the correct delivery instructions. Spark now filed
thousands of transporter lorry receipts. It also filed a comprehensive
letter setting out its position. The movement of goods in an interstate
sale occurred through a transporter. As far as the Company was
concerned, the washing machines went out of its hands the moment it
placed the goods into the custody of the transporter. Clearly, handing
over possession of the machine to the transporter was the primary
‘proof of delivery’. It was now for the trucker to show that it had done
what Spark had asked it to.
Spark didn’t stop there. It said that the Tax Department had the
power to call for the transporter’s records. In truth, it should have
already done so because that was the proof of the pudding. Instead, it
wanted the company to do the Department’s job and voluntarily hang
itself.
Fate now intervened. The Officer who had spearheaded this

campaign against Spark had come to the end of his tenure. His
successor did not have the same incentives, nor did he understand the
case in quite such depth. The Department lost its momentum. Its true
that the case dragged on for some time and Spark had to file another
writ petition but the wind had basically gone out of the Department’s
sail. As months turned to years, the case went into limbo, then
disappeared from the public view, forever.
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The Spark case is a good illustration of the importance of seizing and

retaining initiative in all circumstances. Spark entered battle in a difficult
situation, when it was already on the back foot, one hand tied behind its back. It
used proactive bold moves to get back the lost ground. It was then able to
pressure the Department back through continues attack, retaining at all times,
the initiative, the pace, and the control of the war. Ultimately, through this
relentless pressure, it was able to beat the Department into inactivity.
-x-
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Chapter E3
Rule 3-Control the Enemy’s Response
If you are a fan of ball games, you already know all about controlling your
opponent’s responses. Take cricket. In any ODI format, the trick is to set the
pace of either batting or bowling. If you are batting first, your core strategy is to
score runs quickly off the early overs and if possible, control the fall of wickets. If
you successfully manage this, you can then pace yourself later in the slog overs
and control the kind of bawling that comes your way. Thus, you know that if you
manage to run up a high score and still have wickets in hand, you then control
how your opponent plays their game. The reverse is equally true if you open on
the bowling side. It is your task to get as many wickets as possible as quickly as
possible preferably giving away as few runs as possible in the bargain. If you can
do this, you decide how the other team responds to the situation. In effect, you
control your opponent’s responses.
Football is not so different, except that unlike ODI Cricket, you can visibly
see the effect of an early goal. Inevitably, the side with more goals scored will
slow down the pace of the game. You will see players on the same team pass
the ball between themselves far more often than they would if they were
determined to score a goal. You will also see them being more obstructionist in
their defense. Their main aim is to ‘clear the ball’ from their own half so they rely
more on the long loping kicks. Should the other side manage to narrow the goal
differential, you will see this side very quickly change tack and become
aggressive with their game again. It’s fascinating.
In the context of winning legal wars, what both Cricketers and Footballers
try and do is ‘control’ their opponents by taking tactical control the game. In a
way, once you accept the idea that controlling initiative as a valid priority tactic,
keeping that control becomes a self-evident tactical compulsion. Just as he who
controls the initiative to begin with dictates the initial course of the war, he who
controls the enemy’s responses controls what happens through the rest of the
war. However, beyond mere initiative, there is the whole subtle concept of
‘controlling’ the enemy.
There is perfectly good basis for this need to have control. You cannot
successfully fight a war till you can anticipate and pre-empt your enemy’s action.
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If you do not anticipate and pre-empt, you will have to fight much harder and
much longer than you would have needed to if you had pre-empted your enemy.
By way of contrast, if you seize the initiative and dictate when and how the fight
begins, you also have a head start in controlling the enemy’s responses. You
need to both acquire and then keep this control. It’s a continuous process.
Victory becomes easier if you can dictate when, how and to what extent your
enemy will fight. In military terms, if you think you have most to gain if the
enemy attacks, you will induce your enemy to attack. If you think action is not
desirable, you would find a way to stop your enemy from attacking. It does not
matter how you do this: you can intimidate, induce or just fool your enemy into
doing what you want. This same principle finds pride of place in litigation tactics.
How do you dictate to your opponent how and when he fights? Let me
give you a simple example. Assume a firm is run by two partners. One is getting
out of the partnership. He will naturally ask the surviving partner for a lot of
money to leave. If he is smart, he will ask for the money in installments. If the
surviving partner gives it to him, he will take what he gets, up his ante and ask
for more. If he gets that part too, he will then ask for something else. Why is
this? The surviving partner’s main agenda is to protect the business of the firm.
He will pay the exiting partner to buy peace. Inevitably, he will set himself up for
extortion. At this point, the exiting partner controls the actions of the surviving
partner. He holds all the cards. The tactical initiative is clearly with him.
Eventually, the surviving partner will figure out that there will be no end
to this extortion. He needs to take back the initiative and control the exit cost. To
come to a resolution, the surviving partner will have to find a way to freeze the
financial expectation at its maximum. In effect, he will have to stop further
payments even though he knows that to close the deal, he will have to pay out
something more. Whatever happens after this point, you can immediately see
that in stopping payment, the surviving partner has brought the initiative to
neutral ground. It is now for the exiting partner to decide what to do.
When the flow of money stops, the exiting partner has only two choices:
(1) scale down his expectation and settle his accounts for whatever he can get,
or (2) escalate the dispute and start a legal war. If he picks option 2, the format
he chooses – civil, criminal, winding up, political interference and so forth – will
depend on the stakes, his motivation and of course his value system. The more
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unscrupulous he is, the more effective he will be. In making this choice, the
exiting partner will also decide how far he wants to wrest back the initiative and
control the actions of the surviving partner.
From the viewpoint of the surviving partner, it is risky for him to follow
the first option unless he has a reliable ceiling on his potential liability. Let me
explain this. The exiting partner may only ask for Rs 10 to settle the matter but
unless the deal closes very quickly, the exiting partner can easily scale up this
demand during settlement negotiations. If the settlement talks break down, what
the surviving partner has counter offered will become the floor and the exiting
partner will deploy his war machine to demand even more money.
What is means is really that even though the first option is the most
sensible for both parties, the surviving partner cannot engage in settlement talks
with any confidence because he is afraid of setting a floor to the exiting partner’s
expectations. The surviving partner is then forced to maneuver in a way where
the exiting partner starts a legal process and binds himself to a maximum
expectation. If the surviving partner achieves this, he has set the agenda. The
exiting partner is substantially in control.
Once the exiting partner’s maximum expectation appears on paper, the

surviving partner now controls what happens next. The surviving partner can
make some intelligent calculation on whether it is cheaper to settle or invest
majorly in the fight. What he chooses to do depends on both his financial and his
commercial compulsions. Frequently, the surviving partner’s main compulsion is
to preserve the firm. He owns it now. Whatever preserves the business of the
firm best is his best option. Too much litigation does nothing for him. That said,
he does have to look at his financial compulsions. If the expectation is only a
little over his own calculation, and he has the money, the surviving partner
would do a perfunctory dance with this expectation for a little while, cut the
numbers and then settle.
That’s not true of the exiting partner. He is leaving the firm behind.
Enmeshing it in legal problems does not hurt him. Indeed, it may help him. His
self-interest lies in escalating the conflict. At the same time, the exiting partner
doesn’t want to do such a spectacular job that the firm he is trying to get money
out of collapses! He knows the exiting partner will trade the firm’s continuing
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good health for his cash out. In the result, the exiting partner seriously threatens
a firm but doesn’t allow it to be irretrievably damaged. It’s a tightrope walk.
Now comes the aggressive negotiation. The Justice Machine has been set
into motion but how far should the surviving partner invest in it? Everyone knows
that commercial good sense lies in settling the matter, sooner rather than later.
Meanwhile, the surviving partner is using money he could have used to buy
peace to instead escalate the fight. This means that the kitty he has to settle the
demand is being eroded even while the expectation remains the same. He has a
choice to make. In truth, it’s a simple calculation to make: how long does he
needs to fight to progressively reduce the exiting partner’s expectation even as
he spends money doing it. Remember, spending money on the Justice Machine
may cost more than the discount he will get on the final exit price. If the
surviving partner is not smart, he will spend too much to save too little.
Fortunately, he now controls what happens next and he can always make the
financially commonsensical choice.
And that is the essential dynamic of ‘control’ driving this tactical rule. You
can see how control flows backwards and forwards between parties in a legal
war. If you want to dominate the tactical game, you have to keep your eye
focused on seizing and keeping this control for most, if not all of, the time. In
practice, it comes down to you controlling both what happens next in your legal
war and the frame in which it happens. In the example we are discussing, what
is simple enough: these former partners either fight or they settle.
That can’t be said of the frame in which it happens. To control the frame
in which things happen, you have to control what your enemy does. You do this
through managing your provocations. You have to file cases (or applications in
cases) one after the other in such a way that your enemy has no choice but to
respond in a predictable way. You can never be sure that he will react in a
predictable way, but if you are smart about the legal action you take, the options
he has to counter you will always be limited. In this way, you more or less
control what he does. Indeed, in some cases, it is possible to corner the
opponent till you have him checkmated and this tactic is enough to win the war.
Let me try and illustrated this generically.
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Let us assume that your litigation is big enough to justify filing multiple
cases in different court on related issues. You can carefully frame a case in a
very precise way to extract a standard form defense from your enemy. This
defense would be good advocacy in that particular case but damages you
enemy’s defense in a second case you are planning to file. Since your enemy
doesn’t know what you have planned to do next, he files his defense and
compromises himself by admitting to something or accepting some status or
acknowledging some fact etc. If all goes to plan, you can now unveil your nuke
and blow him to smithereens with your final case. Just so I am not
misunderstood, this same principle applies to filing applications in a single case
as well.
There is an alternative way to achieve the same result. Parties are not at
standstill as cases progress. Hearings in court cases stretch over long periods of
time. Lulls are followed by frenzied actions and then there is another lull. That
doesn’t mean that life stops moving in the meantime. There is stuff happening
on the street, in your business and in your home. The things you and your
enemy do during the lulls give you ammunition to trigger more legal actions. This
often has the result of progressively compromising one party or the other.
Consider this: a party may posture whatever its lawyer’s advice in a court of law
but out there on the street, it has to do what its commercial compulsions
demand. As this party acts on its commercial compulsion, it creates a
contradiction between its action and its legal postures in court. This creates an
opportunity for check mate.
To summarize, cases are often filed to compel the enemy to ‘reveal its
hand’, clarify its position on some issue, or even opt for one type of defense as
opposed to another. Indeed, sometimes, cases are filed not because the guy
filing them expects to win but because he wants to force the opponent to take a
specific position on the facts. Cases get filed in order only to force the enemy to
reveal its strategy, or disclose some facts. This is the heart of the rule on
controlling the enemy’s response.
The permutations and combinations of the manner in which this rule may
be applied are countless. This is why we see multiple cases being filed in large
complex litigations. You could argue that this rule applies only to complex large
budget litigation, but that is not true. Even within the limits of small litigation,
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this principle is good. Let us look at a small case in which this was done, in a
simple way, in a simple case, fought by a weak litigant against a very strong
defendant.
The Manglik case
Manglik was a senior manager at ITT, one of India’s top business

houses. He had a great twenty-year long track record with ITT. He had
a thick file of papers to prove it too: certificates, confidential reports,
increment letters, and so on. ITT was originally a trading powerhouse
but life in the license-permit Raj changed its focus. Back in the day, if
you could get your hands on a Government approval for a project, you
ran with it, whether or not you understood the business. As India
changed in the 1990s, it dawned on ITT that it had diversified too
much into unrelated businesses. With rising competition in the decades
that followed, ITT responded by refocusing on its core competence. It
spun off these unrelated businesses into independent companies, each
a profit center in itself. Where possible, it brought in third party
investors and converted these companies into joint ventures, handing
over management control to the venture partner. Lampro was one such
company.
Lampro was principally in the real estate business. Its primary

skill lay in venturing beyond the municipal limits of fast-growing
towns, bulk purchasing land, getting approval to change land use from
agricultural to residential and then laying out large colonies. Manglik
had worked for several ITT companies over the years. When Lampro
was spun off, he worked for Lampro though he was paid by ITT. He
didn’t think Lampro’s changed ownership structure meant anything: it
was still an ITT company. In the six years he worked at Lampro, ITT
continued to pay his salary and his job was subjected to ITT employee
standards and benefits.
As frequently happens in metropolitan India, Lampro’s flagship

project turned out to be something of a cesspool. This large housing
project drew gasps of admiration from the general public but those
who paid for those high-end residential facilities were bitterly
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disappointed. For one, owners did not get what they paid for. Too many
bells and whistles were promised but never built. Up front capital cost
payments were taken for backup power, security, clubhouse and so
forth but all this money was spent elsewhere (if spent it was). Some
years later, when owner moved into their flats, they were asked to pay
again for these facilities on a monthly basis. Finally, owners were told
they would get substantial refunds on their capital investments in
these facilities but when they sold these flats, Lampro had no money to
pay them. Manglik, as an old ITT loyalist, found this troubling. He
protested what he thought were unethical business practices and his
relationship with his bosses plummeted. Anyone could see that sooner
rather than later, something would give way.
From time to time, ITT management encouraged Manglik to

stand down on his disagreements with Lampro policies but he
remained undeterred. He claimed his relationship with both ITT and
Lampro remained civil. He continued to work undisturbed. Eventually,
Lampro’s flagship project came to be completed and his services
became unnecessary. Manglik now expected to be transferred back to
ITT. He approached ITT’s Human Resource Department to let him have
his next assignment. The assignment never came. Soon thereafter, his
salary cheques also stopped.
It took some months for Manglik to notice this! He came from a

wealthy background: it seems he rarely bothered to check his bank
account. By the time he figured it out, he hadn’t received a salary
credit for many months. He now started doing the rounds of ITT’s
departments, seeking clarity on his position. Eventually, the grapevine
told him he was out of ITT: they treated him as a Lampro employee and
he was not their problem. Since they didn’t want to start an argument,
they would act like he didn’t exist. The best he could hope for, he was
told, to start his own argument and exit with some sort of VRS
package. But here is the funny part: Manglik had the impression that
he was viewed as ‘legally’ a workman even though he was a very
senior manager! It looked like he would make money out of this
confusion.
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Manglik now changed tack. He demanded an exit package. He

implied that he would go quietly if he was given one. ITT seemed
delighted with this development. At least they wouldn’t need to avoid
him any longer. They offered him his package. It flattered only to
deceive. It was calculated on the basis that he left ITT when he moved
to Lampro. If they added the six years he had worked at Lampro, the
package would double. He wasn’t mentally prepared to take that kind
of hit. He protested vigorously. Predictably, ITT relapsed into default:
they pretended he didn’t exit. He needed legal help.
The lawyers weren’t very encouraging. He didn’t have a ‘right’ to

a job, like an industrial workman did. All he could claim was his salary
(till his services were terminated). Since he hadn’t worked for ITT for
six years, it didn’t look like he could force a VRS out of ITT. There were
too many open-ended legal hurdles. It would be a long slow fight
through the arteries of the Justice Machine. Manglik didn’t care how
long it took. He could not see himself suing his company after 20 years
of distinguished service. But then, there always comes a point when
outrage and self-interest overcome loyalty and diffidence. One year
later, he wanted blood.
Lawyers created a legal storyline. If he was not an ITT employee,

why had ITT offered him a VRS package six months after ITT exited
Lampro? This wasn’t an argument about his status: it was about how
much of a VRS he deserved. Besides, he never did receive a termination
letter. What is a VRS package? It’s a financial package in acceptance of
Voluntary Retirement. How could he be offered such a package unless
he was an employee. He was and remained an employee till he agreed
to retire voluntarily.
ITT was in no position to contest this. They didn’t have a letter

transferring his services to Lampro and they had never said this to him
even after they exited their investment in Lampro. All of Manglik’s
letters to ITT had elicited silence, not denial. Would they fabricate a
backdated termination letter to make a case against him? Manglik
didn’t think his former colleagues were made of that kind of cynical
stuff. They were a stodgy bureaucracy but they were utterly
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respectable. Most managers worried about their jobs: saving ITT

money wasn’t their priority. Why will they forge documents and
commit a crime to help a faceless employer?
That left one final problem: sex appeal. That A owes B money and
A goes to court has no sex appeal. Cases like that last longer than a
lifetime. Who cares? Manglik was already middle aged and only had
half a lifetime left to live. To win the case, he needed to supply B with
some incentive to settle. In other words, Manglik needed to control
how ITT would react to his case.
It’s important to understand that when dealing with senior

officers (as opposed to labor), Companies do not dole out VRS
packages because they have a legal compulsion to do it: they do it to
be seen as good reliable employers. If you choose to be hostile with
them, they will simply pay you what they legally owe you and ask you
to go fly kites. Manglik could legally sue ITT only for his outstanding
salary. If he filed a simple money recovery case against ITT, he could
expect that ITT would terminate Manglik’s services formally on that
date and send him a cheque. Any hope of a VRS would go up in smoke.
What was Manglik to do?
Manglik needed a grand shakedown scheme. Could he

demonstrate to a court that there was something fishy about the way
he was treated? Was he sidelined for collateral reasons? Could he pre-
empt ITT and ‘prevent’ them from terminating his services if they
chose? Don’t please misread this. Nobody can stop a company from
doing something daft, no matter how illegal it may be. Manglik needed
a grand conspiracy story to tell a court if his services were terminated.
He needed to ‘force’ a settlement so to speak.
Manglik already had a ready-made story. He had steered

Lampro’s flagship project. He knew where flat owners had been ripped
off. He had a thick file of correspondence showing him protesting
Lampro’s conduct repeatedly and in very vocal terms. He need not say
it, but if he went ‘public’, both Lampro and ITT would face public ire,
possibly regulatory scrutiny, possibly criminal prosecutions. It made
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more sense for ITT to offer him a better VRS package than to fight him
and face the shitstorm.
Manglik went into battle on the basis that he had a job with ITT
but was deputed to Lampro. He said he learnt that Lampro was
cheating its customers and he didn’t like it. He protested. This upset
Lampro and ITT. They were now threatening to kick him off the team.
He needed the court to stop this victimization. He wanted back wages
and future salary. In truth, what he wanted was tosh. The law does
not force you to employ this cook or that driver, as opposed to another,
or to have no cook or driver. You can’t enforce a contract of personal
service through a court. A court will give you back wages but it won’t
give you future wages!
ITT know the law better than most people but they didn’t need a
dirty dog fight over petty cash. As soon as they received a notice from
the court, they send him a cheque of past dues and terminated
Manglik’s services. It was all a bit surreal. They wouldn’t talk to him for
three years but the moment he sues them, bingo, he gets all his money.
It was like everyone sympathized with him, but didn’t want to be seen
to be taking sides against the Company by paying him. From a legal
standpoint, he now had nothing to fight for. From the psychological
standpoint, there was the VRS to argue about. Mercifully, there was
this business of skullduggery and fraud blowing in the wind. ITT would
have to pay their way out of this.
Manglik now converted the long-term threat of exposure and

public outrage to front burner status. He filed a couple of applications.
First, he wanted the court to force ITT to disclose his complete HR
record at Lampro and ITT. He said this would show that a conspiracy
had taken him down. This was indeed a nasty weapon. At the very
least, it would show a great track record. When nothing conspiratorial
shows up eventually, he could then claim that IIT and Lampro had
destroyed evidence. It would be a mess.
Second, he wanted Lampro to show all its project related files

and paper This.s was nastier. No construction project is every squeaky
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clean. Everyone cuts corners, if not to make money, at least to avoid

doing stuff twice and wasting money. If you hunt long enough, you will
always find dirty laundry.
By filing these applications, Manglik took complete control of his

opponent’s actions. He had the right to demand documents in the
‘power and possession’ of IIT and Lampro. ITT (and Lampro) now had
only a simple choice left: produce the records and risk a shitstorm, or
pay off Manglik.
ITT and Lampro tried to avoid the inevitable. They gave the judge
a bunch of reasons not to allow this fishing expedition. The judge was
unconvinced. If Lampro had nothing to hide, why were these guys so
neurotic about showing their records? He allowed both applications
and the two were left with nowhere to run
Manglik now opened two new fronts. First, he instigated

Lampro’s customers to demand compensation for constructing
substandard flats. He told them he would provide the paperwork to
help them prove their case. The Project Welfare Society was delighted:
scores of flat owners issued such notices to Lampro and ITT.
At the same time, Manglik tipped off a journalist friend. This

project had become the preferred domain of Page 3 glitterati: how
could the journalist resist? The guy did his own research, interviewed
residents and filed a provocative piece on murky dealings in high
places. He didn’t forget to tell his readers about what happened to the
whistleblower! From that point on, the story acquired a life of its own.
The follow up stories in the media were even more entertaining, and
excessive! Sentences such as “the possibility of some of these ill-
gotten gains finding their way into the hands of senior ITT employees
cannot be ruled out” were liberally sprinkled about the full feature.
Lampro did not particularly care what was published at this

point: all their facilities had been sold and the promoter had made
enough money to retire. ITT, on the other hand was alarmed.
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In no time, an ITT messenger was at Manglik’s door. He offered a

superior VRS package. Parties negotiated and eventually settled.
Manglik took five years of last drawn salary and corresponding
benefits. It was understood and accepted that he was bound to
confidentiality. He kept his word and in the absence of support, Lampro
property owners subsided.
Manglik’s case is particularly instructive because its typical of the type of

problem professionals face in their everyday life. When faced with such a case,
most of the adopt a straight-line approach, which means filing a simple money
suit with no larger plan in sight. Then nothing happens and in time, it all grinds
down to nothing. Manglik’s case also a simple money claim. He had not worked
for a year, had no right to a job and had no legal ‘right’ to a job: they could sack
him whenever they wanted. The difference was that he knew exactly what would
happen to his straight-line case and he thought up a way to avoid a war of
attrition. Instead, he found a strategy by which he could control how his enemy
would react. He successfully set up a case which shifted the paradigm, presented
the enemy with a trap from which there was little escape. By predicting and
planning for all alternative scenarios and then controlling his enemies’ responses,
he made war too expensive for his enemies and won the war.
-x-
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Chapter E4
Rule 4: Exploit the momentum
If you go long distance trekking in the mountains, sooner or later, you will
find yourself in bad weather. That’s when you are at risk of becoming the target
of a falling stone. A 100-gram stone in itself is not capable of having much effect
if it is placed on the human head. When dropped from a height of one meter, it
can cause a minor bump. Dropped from five meters, it can cut through flesh and
open a serious wound. Dropped from ten meters, it will very likely kill. In reality,
you will find that these shooting stone fall several thousand feet before they get
a chance to pulverize you. What are your chances of surviving a falling stone in
bad weather when the steep slopes are slippery?
I recognize that most of us never go trekking in the mountains, but we do

end up in cars. If you drive, you know that braking distances increase
dramatically as speed increases. That is momentum. If a car travelling at 50
kmph stops in 37 meters, it will stop in 40 meters if travelling at 55 kmph. At 60
kmph, it will stop in 45 meters and at 65 kmph, it will stop in 50 meters. All this
seems pretty linear and prosaic. The effect this has on a pedestrian is another
story. If a car travelling at 60 kmph stops just in time and merely touches the
pedestrian, at 65 kmph, it will hit the man at an impact speed of 32 kmph. Here
is a little graph to tell you what will happen to the poor pedestrian if you drive
too fast:
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At 70 kmph, you will hit him at nearly 50 kmph an hour and will very likely
kill him. It is not for nothing they tell you never to underestimate the carnage
you will cause if you go over the speed limit!
To get back to the point, as impacts go, momentum is the greatest of

force multipliers. The ‘power’ in the stone so to speak is truly not in its weight:
it’s in the momentum it is able to generate before it strikes its victim. Think
about this. A one kg stone travelling at 10 kmph has the same momentum as
100-gram stone travelling at 100 kmph. You can see the relevance of this simple
fact in litigation. If you are a small player in the world of commerce and have
only a 100-gram stone to hurt your enemy with, you are not bound to lose the
war only because your enemy has a stone weighing one kilogram to hurt you
with. It is the momentum you are able to generate at the point of impact that
determines what effect your weapons have on your enemy. That is where you
have to bring your tactical skills to bear on your limited resources and multiply its
‘power’ for maximum impact. This is the heart of our fourth rule of litigation
tactics.
There is a second, and in India’s case, greater reason to prioritize

momentum over mass in our litigation tactics. Our adversarial system of justice is
snail speed slow. A case is filed and the court informs the other side. After some
months (or maybe years if he knows how to be elusive), your enemy receives
this notice and appears in court. He then has time to file his reply. If he is a good
story teller, he will buy a lot of time. Even after he files his defense, he can
protract the trial endlessly. There are many ways to protract a trial. Most of them
consist of taking ‘preliminary objections’ to the case you file. You did not add a
party you should have; you added more parties than you should have; the court
does not have jurisdiction; the case is premature. It goes on and on. For every
rule of procedure, we have in Indian courts, I will find you a hundred exceptions.
Sometimes, when the court rejects his objections, he goes up in appeal and the
whole procedure goes backwards a few years. It may be many years before both
sides have exhausted the early-stage jousting and are ready to go into recording
‘evidence’.
In many courts, once all pleadings are complete, your case will come up
for witness statements after 3-4 years. The Justice Machine is clogged with work
and no one has any bandwidth to take on more. By the time your case is
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decided, you may have lost a decade, maybe two. Then, no matter who wins, or
loses, someone files an appeal and the whole show starts up again. Through this
process, you, and your enemy is faced with rising ennui. By the time the case is
decided, everyone is totally fatigued. Let no one remind you that you don’t solve
your legal dispute only because you have won your case. For instance, just
because you have a decree to recover money, it doesn’t mean you will soon have
money in your bank. ‘Execution’ proceedings - meaning the process by which
decrees are enforced - can take years, sometimes decades. I have seen many
cases where by the time it all ended, everyone who started the case was dead!
How are you ever going to ensure that your case doesn’t become an
unfinished opera? You need momentum, and for many reasons. You need it
because you need motivation. Action on a sustained basis is possible only if it is
accompanied intermittently with gratification. You need to see progress and that
will only happen if you can shake the system out of its lethargy. How will you
shake the system? You need to get your court to do it for you. A court is after all
only human. A judge is unlikely to be moved by your case if it shows up on his
list every couple of months. When it does show up on his list, he will likely kick
the can down the road for another six months. You need to find a way to bring it
to the top of his recall and become a burning issue. You can do this through
emotional appeal and that comes in many forms. At the very least, you have to
project desperation. Usually, desperation is projected by filing application after
application thrice a week till the judge gets fed up and gives you what you want
just so you will go away and stop hassling him!
Beyond the light hearted banter though, why do litigants file application
after application in hotly contested cases? Its all about cumulative effect of high-
speed motion, meaning momentum. Its like hitting your enemy repeatedly in the
face, punch after punch. No one punch is particularly powerful but the frequency
with which you deliver these small punches beat your enemy into submission.
This is not only about keeping the initiative; it is also about the cumulative
impact of the momentum, of the series of blows. This requires strategic clarity,
and great planning. You have to plan your war so that your opponent is driven
back slowly but relentlessly, pace by pace, till his back is to the wall, facing
annihilation or flight, at which point, he opts out of the war.
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You can apply this principle in a great variety of situations. To illustrate

momentum in litigation, I have picked up a recent case before our Company
courts which remained at the initial pleadings stage even as the underlying
arbitration was invoked under Singapore rules was decided while the Company
courts were still grappling with short term interim operational issues.
The LoPan case
Lohia Electronics was amongst the first wave of companies who

set their sights firmly on ‘atma nirbharta’ just as soon as the new
government was sworn in. In 2014, they purchased a bankrupt
Ukrainian company, thus acquiring technology for the manufacture of
specialized electronic components used by a wide variety of Indian
industries, from infrastructure to defense. Since they already had an
empty factory waiting to be filled, they quickly moved the Ukrainian
plant to India and rolled out the first wave of electronic equipment late
in 2015.
Initial results were disappointing. From a marketing perspective,

the company’s business plan had its limitations. Without a brand to
back it up, or a track record to boast about, which government tender
or defense contract could they ever hope to win? By 2017, Lohia
Electronics was deep in debt as domestic interest rates squeezed the
company, making it unviable.
It was India’s atma nirbhar policy that rushed to the rescue. It

became harder and harder to import and sell material to the
Government or public sector companies. Another wave of joint venture
formation swept across India as foreign corporations established value
addition factories in India. This is when the Taiwan based Xupan
Industries reluctantly succumbed to their commercial compulsions and
offered to buy a controlling stake in Lohia Electronics.
Lohia loved the idea, but they placed a high value on the
company, a value which Xupan could deliver only after becoming a
shareholder. Xupan did not see why it should pay Lohia for the value it
would deliver to the company after becoming its owner. Negotiations
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stalled but, in the end, Xupon offered to use the earn-out solution. In
culmination, Xupan purchased 60% of the equity up front from Lohia
at its current value and agreed to buy the remaining 40% in annual
installments over four years. At the end of the 4th year, in addition to
payment for the last bloc of shares, Xupan agreed to pay an earn-out
based on the actual Ebitda of the company in the fourth year.
Meanwhile, two Lohia directors would contribute to the management
of the company and serve on its Board.
Xupan positioned Lohia’s continuance in the company as a great

value-add. They offered Chairmanship of the company to senior Lohia,
with the additional right to nominate a Vice-President, who’s approval
would be necessary for the CEO to perform a wide variety of executive
functions. In these four years, Lohia would exercise wide ranging
minority protections at both Board and shareholders levels. A JV
Agreement was signed in late 2017 whereupon Lohia Electronics
became LoPan Electronics and management passed to Xupan.
It wasn’t long before the fundamental flaw in the structure of the

JV reared its head. Lohia earned nothing on the initial share sale: its
upside was backloaded to the day it sold the last block of its shares.
That was just the beginning. The Ebitda multiple for the earn-out was
agreed at 26! Are you willing to buy a business and grow it knowing
that for every rupee you earn for the company, you will have to pay
your partner 26 rupees worth of earn-out? Clearly, the earn-out
formulation disincentivized any commercial success in the company to
the point of absurdity. Xupan would have to be suicidal to honor its
obligation to grow the business.
There is a painful predictability to what came next. As soon as it

took over management control, Xupan shut down a high-value
business segment and started supplying these items directly from
Taiwan. Xupin also started taking Indian orders directly on the
Taiwanese parent, and then handing out subcontracts at a much lower
price to LoPan. It was obvious that Xupan make sure Lopan did not
make a tidy profit just so Xupan didn’t have to pay a huge earn-out.
Lohia protested this skullduggery at successive Board meetings. Xupan
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directors first pretended they did not understand the issue, then
brazened it out. Lohia retaliated by exercising veto powers on any
resolution that even remotely damaged Lohia’s earn-out. This enraged
Xupon and the battle lines were clearly drawn.
The crises now escalated. Xupan retaliated by proposing Board

resolutions which would directly hurt Lohia’s interests. Lohia excised
its veto rights again. Xupan refused to honor these rights, claiming
these matters were not included in the minority protection list. Lohia
further escalated the war, adopting hyper technical and legalistic
procedures so that operations became more cumbersome and dilatory.
For example, LoPan’s main supplier was a Lohia subsidiary, located a
mere stone’s throw from LoPan’s factory. This supplier now started
supplies ‘according to the contract’ and not on priority depending on
LoPan’s needs. When LoPan tried to replace this supplier at a Board
meeting with a third party, Lohia blocked the resolution. Similarly,
LoPan’s main factory was located in an Industrial Park run by Lohia.
LoPan’s inbound shipments of raw material and components started to
be delayed at the security gate of the Industrial Park, sometimes for
days. There were always legally defensible reasons to delay these
supplies, but the highly technical interpretation of the law make life
hard for LoPan. It helped Lohia greatly that most LoPan employees
were still Lohia loyalists.
Lohia took its obstructionist tactics into the company’s internal

working as well. The Company Secretary would not allow Board
meetings to proceed without a nod from the Chairman. The Manager
Finance would not authorize or process any payment unless the
Chairman said he could. The HR Manager ‘persuaded’ other employees
to act according to the Chairman’s wishes. LoPan’s head office was
located in a building owned and controlled by Lohia. Xupan tried to
bring in substitute service providers to replace Lohia loyalists, but the
security guards would not allow them to enter the head office. LoPan’s
operations suffered as a result of this partner dispute.
If you think about it, operational dysfunction in any joint venture

always works to the advantage of the party who carries lesser risk.
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Lohia was an exiting shareholder, waiting to be paid-off. The only

question was how much? If Lohia believed Xupan would diligently
work the company and secure Lohia’s earn-out, its best interest would
lie in preserving the long-term health of the company. But Xupan had
already betrayed Lohia. If cooperation with Xupon would not bring a
substantial earn-out, perhaps holding Xupan’s feet to the fire would?
In turn, Xupan had everything to lose. Business is not a coke-vending
machine: you don’t just run about like a headless chicken and expect a
fat earn-out to come out the other end. If Lohia wasn’t stopped, Xupan
feared that these tactics would do lasting damage to LoPan’s long term
health. What was Xupan to do?
Parties had signed an arbitration clause but that would not help
Xupan. Lohia had the legal right to exercise its veto rights as it saw fit
in its commercial interest. Xupan could not create a legal case based on
how this veto was exercised. That didn’t apply to what Xupan saw as
Lohia’s obstructionist tactics outside the Board room. No party to a
contract has a right to obstruct their common business from
functioning smoothly. This could be the basis of a case. Xupan decided
that its best interest lay in filing such a case in an Indian court, rather
than in an arbitration. This was entirely feasible. You can write any
contract you like, you can choose any jurisdiction you like and you can
select any choice of law you like and it makes no difference to the
Justice Machine. When an Indian court wants to intervene, it will
supersede anything and everything the parties may agree to do
regardless of the consequence.
At the risk of digressing, I should probably explain myself here.

Not so long ago, the Supreme Court cancelled allotments of spectrum
to telecom companies even though these companies had taken vast
loans and spend billions in building up infrastructure based on these
licenses. The contracts were backed up by sovereign guarantees. The
court didn’t care at all that the Government of India may have to pay
vast sums of money for the choices the Justice Machine had made. The
Supreme Court also cancelled a larger number of mining contracts even
though these parties had drawn down on humungous credit lines from
Indian banks based on these licenses. In the result, the Indian banking
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industry came under deep distress as the promoters disappeared in a

puff of smoke. In looking at these decisions, we should remember that
the Supreme Court proceeded from the perception that the
Government of the time had been corrupt in granting these spectrum
and mining licenses. Nine years later, not one person has been
convicted of committing a crime.
Not to put too fine a point on it, the Justice Machine exists to
administer a particularly obtuse type of justice: it does not exist simply
to enforce the law. The Justice Machines also cares only so much about
the intention of parties or the integrity of contracts. If you can tug at
the right heart strings, you can get the Justice Machine to do some
remarkable things, far beyond what the law allows. In choosing an
Indian court to serve its commercial purpose, Xupan made an
impeccable choice. Soon, it petitioned the National Company Law
Tribunal (NCLT) asking that Lohia directors be removed from LoPan’s
management and Lohia be forced to sell all its remaining shares in the
company at a price determined by a court appointed valuer regardless
of whatever was written in the JV Agreement.
Filing this petition did not mean that LoPan’s day-to-day

operational problems were solved. Xupan had several different
problems. First, Lohia’s veto at the Board level had to be neutralized.
To do that, it needed the court to disregard the company’s Articles of
Association and the JV Agreement. Second, it needed LoPan employees
to report only to Xupan. To do that, it needed to remove key Lohia
loyalists. Third it needed to get Lohia’s subsidiaries to resume timely
supplies to LoPan or get out of the way. To do that, it needed to be able
to place orders on third parties and have those supplies come in
regularly without ‘legal objections’ at the security gate. Most of what
Xupan wanted violated both the Articles of the Company and its JV
Agreement. How was it to get away with its own strong arming and get
NCLT to help it steamroll over Lohia? How was Xupan to get an Indian
court to pay any attention to its day-to-day operational problems and
serve up a solution?
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The answer lies in an old Indian adage: “if it doesn’t cry, even a
mother doesn’t feed her baby”. With a mother is as far removed from
everyday commercial life as the Justice Machine is from its
businessmen, the crying has to be corresponding long and loud. In
tactical terms, the child needs to get the environment moving till
everything resonating to its lament. It needs to get momentum!
Xupan unleashed a program of tactical crying while

simultaneously violating every rule in the book. It instituted and
maintained relentless attacks on a daily basis on Lohia, confident that
sooner rather than later, Lohia would collapse under the pressure. The
rest of this story is about litigation momentum.
No sooner had the decision to attack Lohia been taken, Xupan

called a Board Meeting. It asked for Board resolutions to be passed
implementing sweeping management changes which included
replacing the Company Secretary, the HR Head and the Manager
Finance. It asked for changes in bank signing authorities It asked for
parties to move LoPan’s head office out of the Lohia owned building.
Lohia reacted by exercising its veto. It refused to let the Board Meeting
be convened. Lohia demonstrated its control over the company
premises by preventing Xupan’s consultants and service providers from
visiting LoPan’s offices without a legitimate business purpose. Xupan
went to court. It was an acrimonious hearing and both sides had their
perspectives. At the end of the day, company business can’t go on if no
Board meetings are held. NCLT ordered LoPan to have its Board
meeting under the guidance of a court appointed ‘Observer’. In the
interim, Lohia was ordered not to obstruct the free movement of
company employees in and out of the Head Office.
No sooner had the order been published, Lohia was in court

seeking its modification, citing new facts and subsequent events. It
asked that no voting occur on matters reserved to its veto rights. The
court devoted several hours to this case once again. Since most of
Lohia’s concerns were protected in the Company’s Articles, NCLT
decided not to interfere. Instead, NCLT said any Board decision would
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be subject to its own and the shareholders’ final approval. It also

ordered LoPan to videograph the Board Meeting for posterity.
The ensuing Board Meeting was acrimonious. Xupan came with

several lawyers in tow, declaring that these were special invitees
present to support Mandarin speaking directors who understood little
English and even less of Indian law. Right off the bat, the court
appointed Observer took control of the meeting (as opposed to merely
observing). Lohia heard him muttering to Xupan’s Indian director that
it was time to teach Lohia a lesson. He then went on to steer the
meeting as if he was its chairman, steamrolling over old man Lohia.
Disregarding the protests of Lohia’s directors, the Board passed a
succession of resolutions that were illegal on the face of them. It
replaced key management personnel, removed and replaced directors,
approved new signing authorities for banks and establishing new
operational procedures to exclude Lohia loyalists and directors. It was
a bloodless coup, conducted with cold efficiency.
It was now Lohia’s turn to knock on NCLT’s doors. It wanted

these resolutions stayed because they violated the company’s Articles
of Association. NCLT was unmoved. With the pressure of work the
Justice Machine faces day on day, there never is a legal problem so
glaring it can’t be ignored. That didn’t mean that Lohia had rolled over
and surrendered. NCLT’s refusal to hear Lohia did not mean that it had
approved these sweeping resolutions. Lohia adopted ‘direct action’ on
the ground, treating these resolutions as illegal and refusing to comply
with them. Lohia dared Xupan to go to court and get clarity. The
security guards wouldn’t allow the new Company Secretary, HR
Manager and Finance Head to enter company premises. The
incumbents refused to hand over charge to the CEO. The Finance Head
refused to change Bank signing authorities. Lohia loyalists refused to
allow new operational procedures to come into effect. Everything had
changed on paper and yet on the ground, everything remained the
same.
Frustrated, Xupan went back to NCLT asking that it be allowed to

implement these controversial resolutions. This time around, NCLT
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gave parties an equally patient hearing. Within the day, it allowed

Xupan’s application, conferring legitimacy on the Board Meeting. It
ordered Lohia to allow these new employees to enter company
premises. It also changed signing procedures. For the moment, Xupan
had won.
The moment didn’t last. Soon enough, Lohia was in appeal before
NCLAT (the appellate forum over NCLT), asking that NCLT’s orders be
stayed and the whole case referred to arbitration. NCLAT’s attitude
reflected a partial departure from the ‘majoritarian’ predilections of
NCLT. It reinstated old signing procedures but still took the view that
Lohia could not cherry pick who it would allow into LoPan’s office. It
was a partial victory for Xupan, and to that extent, the momentum had
worked.
Xupan was not willing to let this momentum dissipate without

lasting benefit. Shortly thereafter, it sent a mass of external
consultants, security guards and what appeared to be congenital
ruffians to visit Xupan’s directors at LoPan’s head office. It was a case
of intimidation as much as it was a case of legal opportunism. With no
discernible business to conduct at the head office, the security guards
denied access to this noisy herd. Xupan was quick to file a contempt
petition against Lohia directors, ask that they be imprisoned. NCLT was
forced to take notice.
Now, bear in mind that as a general proposition, the Justice

Machine does not like to hold its citizens in contempt or send them to
jail. Even Arundhati Roy’s vitriolic rhetoric against the Supreme Court
only cost her a day in court, spent twiddling her thumbs serving her
sentence of contempt! NCLT did what the Justice Machine often does.
It summoned Lohia directors, tore into them, told them to behave
themselves but held the case over to another day without written
orders. It didn’t work. Lohia directors waited for written orders. Since
nothing changed on the ground, NCLT called these directors again in a
few days, dressed them down one again and still passed no written
orders.
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While these dynamics played out before NCLT over successive

hearings, Xupan turned up the heat a notch. It filed a series of
applications before NCLT. In one, it asked that Lohia directors be
ordered to make their companies supply goods and services to LoPan
at preferential rates on a priority basis. In another application, it asked
that LoPan be allowed to use other suppliers without reference to
Lohia directors. In practice, this meant that they wanted Lohia group
companies to supply them whatever they wanted on priority at a price
they liked but they also wanted the freedom to buy whatever else they
liked from third party sellers at much higher prices. It was grotesque
unfunny but in the innards of the Justice Machine, irony is capable of
transforming into macabre reality.
NCLT’s orders on this application turned out to be a glass half

full. Xupan was free to place its own orders on anyone it chose and
supply these goods to LoPan at any price it chose but it could not force
LoPan to pay any arbitrary price for this. NCLT directed Xupan to share
the details of these purchases with Lohia directors and enjoined them
to ensure that LoPan did not suffer. To be fair, this is as much as Xupan
could have expected. It was after all a bridge finance issue. It needed
to finance procurement for a while and it could then balance the books
when it had better control over the Company.
Did this put an end to this controversy? No, it didn’t, because

Lohia was not done yet. When this material turned up at LoPan’s door,
the Industrial Estate security gate took a highly technical view of the
paperwork and refused to let the truck in. The truck stood there four
days across a weekend, forcing Xupan to again knock on NCLT’s gate.
Xupan filed another batch of contempt petition against Lohia directors.
On this occasion, Xupan also filed contempt against every employee
who had participated in this ‘obstruction’. It was truly extraordinary: in
the annals of Indian judicial history, has a shareholders’ dispute ever
resulted in a shareholder filing contempt cases against its own
employees?
NCLT heard the matter at length. It sympathized with Xupan and

rightly so. It once again directed Lohia to get out of the way.
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With each application and each court action, the fight was
getting dirtier. Xupan had exerted as much pressure as it could within
the legitimate envelope of the issues between the warriors. It now
turned up the heat a notch and started to manufacture its own
grievances. It ordered a host of small supplies with different
manufacturers. When these supplies came in, Xupon asked these
suppliers to stop the trucks in the bylanes well short of the industrial
park gate. This became the pretext of a new set of grievances. Xupan
issued a series of aggressive letters to Lohia and then reported the
‘obstruction’ to NCLT. In the bargain, Xupan then filed another batch of
contempt petitions against Lohia directors. Exasperated, NCLT
expressed its displeasure in court and then passed orders allowing all
these trucks in. If Lohia resisted, it warned that Lohia directors would
head for the slammer. The learning if any is that extra-judicious
methods sometimes bring extraordinary results in judicial proceedings!
Xupan was nowhere near done. It unleashed its next tactical

attack by not sending operational decisions to Lohia’s directors for
several weeks. Three weeks into this blocking maneuver, it send 274
cryptic decisions to Lohia directors, each on a separate page with no
explanation. It demanded immediate consent. Without waiting for a
response, it petitioned NCLAT next day, complaining that Lohia
directors were not cooperating, and were obstructing legitimate
operational decisions. It asked NCLAT to allow the company to follow a
new simplified decision-making process. NCLAT was displeased but
refused to intervene on the spot. It directed Lohia directors to attend
court at the next hearing. Lohia’s directors responded quickly. They
filed written replies explaining that they could not understand what
they were being asked to approve. Perhaps NCLAT saw through the
game. Nevertheless, NCLAT delivered to these directors a stern pep-
talk and then ordered them to sign all operational approvals in future
within 48 hours ‘after all information had been made available’.
Given this qualification, the order looked good on paper but

changed nothing on the ground. It didn’t change Xupon’s tactics either.
Xupan employees continued to bunch up operational approvals till they
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added up to a thick mass. They continue to send these masses of

papers to Lohia directors without details for signatures. In response,
Lohia directors continued to dictate long emails seeking clarification on
what these approvals actually meant. Xupan then responded by filing
successive contempt petitions before NCLAT. By now, NCLAT was
utterly exhausted. It got to a point where it simply would not hear the
case if it could possibly help it. Still, it was clear that Lohia was
beginning to run out of gas. Litigation costs money and takes energy.
How much can anyone fight over little things?
Even as Lohia’s responses began to fade, Xupan now widened its

theatre of battle as it continually escalated its pressure tactics. It next
filed applications before NCLT complaining that Lohia directors, HR
Manager, Finance Head and the Company Secretary were withholding
company records and refusing to share them with Xupan’s executive
directors. Xupon wanted the records handed over and these persons
hauled up for contempt once again. NCLT was sympathetic. It called
Lohia’s directors to court once again and dressed them down, telling
them they would be in jail if they did not cooperate within two days. By
now, Lohia was at least as exhausted as NCLT. It handed over these
records and let its loyalists recede into the background.
Not long afterwards, Xupan engineered another approval logjam.

It then went back to NCLAT, protesting that it simply couldn’t run the
company amidst all this bureaucratic to-and-fro even as Lohia diluted
its shareholding year on year. NCLAT had done everything to protect
Lohia within reason but the writing was on the wall. How long can the
Justice Machine protect the man with no stake in the future of the
company? NCLAT modified its previous orders and allowed Xupan to
take near total control over the company. Lohia had finally been
eclipsed.
Lohia didn’t give up immediately though. Against legal advice, it

approached the Supreme Court, asking for its protection. The Supreme
Court wasn’t about to interfere with this kind of operational stuff. In
four weeks, it dismissed the appeal and directed NCLT to decide the
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whole case within 6 months. The cheese had finally moved and the
Justice Machine had washed its hands off Lohia.
Let us synopsize the balance sheet. It took Xupan thirteen

months to expel Lohia from company management. To achieve this
result, Xupan had filed 19 separate judicial actions before two different
forums in India. Xupan had also initiated contempt proceedings on 6
different occasions not only against Lohia directors but also against its
own employees who had no interest in this dog fight. I can confidently
state that in 42 years of law practice, I had never seen anything like
this. The learning if any is that the pressure generated by momentum
does pay if you can sustain the pace. It beats down the opponent, but
perhaps just as significantly, it exhausts the Justice Machine to a point
where it sometimes gives you what you want.
The Lopan case is excellent illustration of the extraordinary results that

momentum can achieve. If you look at each element of the action, nothing
particularly extraordinary occurred. It was in the cumulative impact of the
pressure: where Lohia was slowly but surely driven back and attacked continually
that results came. More significantly, it was in the ‘pressure’ Xypan put on the
court with its cry baby tactics that led to the court finally giving it whatever it
wanted. The experienced litigant therefore knows that to win, it needs to adopt
the fourth rule of the Seven Tactics. This is how strategic power achieves
successful projection.
-x-
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Chapter E5
Rule 5 - Employ the Blitz
If you ever went to military school, you would find that they teach a lot of
history. It’s clear that in the main, they take lessons from one war and hope to
teach you how to fight the next. The practical reality though is that no two wars
can ever be alike. It’s not just that the field and conditions of battle change: it’s
also that technology moves forward and a great many lessons of the past
become obsolete. Nations that are able to adapt their war games to these
changes in technology find themselves making great gains when new battles
begin. This is the main reason Germany gave its enemies such a drubbing in the
opening chapters of the Second World War. Central to this drubbing was a new
tactic they called the Blitzkrieg.
Let us recall that the First World War had been reduced quickly to a
bloody battle of attrition. The invention of the machine gun gave a huge
advantage to the defending side in every battle. Very quickly, any attempt at
aggression ground down to a halt under a hail of bullets. Both sides dug
themselves into trenches on either side of the battle lines. Anyone showing their
head over the trench stopped a bullet. Soldiers were compelled to remain hidden
while lobbing cannon shells into the trenches of their enemies. Both sides tried to
break the stalemate but suffered horrific casualties. In the end, it was not
success in battle that won the day: it was economics. The cost of battle
bankrupted Germany faster than the allies, forcing them to sue for peace.
This war convinced war theorists that the state of the art in technology
was such that no one could win a modern war. For the next thirty years, every
nation focused on building mounds, trenches and machine gun pill boxes along
their national frontiers, believing that any subsequent war would suffer the same
fate. But the cheese had moved already. Two developments in the First World
War pointed to the shape of the future. First, England invented the battle tank.
Technology at the time was too rudimentary for tanks to truly shine in the war.
With the benefit of hindsight, we can see that bigger better faster machine with
heavier amour would run over fixed machine gun posts in no time at all. Then
there were the fast-evolving flying machines. Combat aircraft in the first world
were truly just kites with a gun attached. Can you imagine flying slowly in a
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contraption built of wooden spars and covered with leather or cloth as your
enemies shoot at you? You have to be mad to think this makes any sense at all.
But pilots did it and most died within weeks, if not days, of joining battle.
Airplane technology leapt forward in the thirty years between the wars. By the
time the Second World War came around, the game had changed. Germany’s
contribution to war theory was to invent a tactic that combined fast moving
ground amour supported by air power to create an irresistible force capable of
overwhelming all opposition.
At the commencement of the Second World War, the German army know
the allies were in a numerical majority. But then, the allies were also stretched
along a long battle line. The Germans attacked with pin point focus, pulverizing
one small strip of the battle line with aerial attacks, followed by an artillery
barrage. Once the defense in this small area had been weakened, they then
launched a massed infantry attack backed up by armor. In hours, they generally
broke through and outflanked allied armies. Central to this blitzkrieg – lightening
war – was its narrow focus.
Litigation in India today throws up substantially the same challenges that

conventional wars did in the mid-twentieth century. In the main, court actions
tend to be fought slowly along defined battle lines, with fixed positions and little
attempt to find narrow focus. They become battles of attritions, sapping the
strength of both sides, swallowing resources till one or the other party can’t see
the economic justification and sues for peace, or just gives up. For sure, this is
one way to fight a legal war. Sometimes, there is no other choice but to grind
away at an insoluble problem. But if you think there is a way to fight a more
decisive fast concluding war, you are going to have the find the tactics to make it
happen.
There are two elements to this. First, you need to recognize that the tools
you use to win your wars have changed. Laws change as do the players in the
Justice Machine. Parliament makes new laws and new Tribunals and Regulators
take over old roles that were done by other courts. They have powers and
limitations different from those they replaced. These tools can be used in ways
that their predecessors could not. To win a legal war, you have to constantly be
aware of the true power, and limitation, of these new tools and fight your war
accordingly.
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The second main element to litigation tactics is the idea of focus. It’s a
legal blitzkrieg, hard hitting fast action which overwhelms the enemy.
Intelligently applied, the absolute strength of your enemy becomes irrelevant. If
you throw enough resources with pin point accuracy at a few carefully selected
targets, you will overwhelm your enemy. He will break, and you would have
won.
Let us see how this operates in practice.
The Shrimrig case
Shrimrig Industries was the smallest of three major players in

the chemical industry at the dawn of the 21st century. Desai, its
principal promoter, was generally seen to be a dynamic industry
spokesman. He was one of many who found inspiration in the BJP’s
‘India Shining’ campaign of 2004. Even though the feel-good
sloganeering didn’t win the elections, Indian entrepreneurs continued
to feel good about the economy. Desai developed a business plan to
rapidly expand his manufacturing facilities. To fund his ambitions, he
engaged with a number of private equity firms.
Soon enough, a consortium of two major private equity funds -

HSP and PDP - together bought approximately 40% of Shrimrig’s paid
up equity at a hefty premium. Naturally, they extracted a large bouquet
of minority protection rights too. Shrimrig rolled out its expansion
plans ahead of schedule and generated impressive returns very quickly.
In two years, Shrimrig was ready for further expansion. Desai told the
Board of Directors as much.
The problem was it was too much money. Shrimrig could not
generate this kind of cash and the Funds didn’t want to put in more
money. Everyone agreed they should make an IPO. In the ordinary
course, you would have expected the two Funds to sell their shares at
that point. They didn’t. They saw a rosy future and decided to hold on
to about 12% of shares each. Because this was now a listed company,
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their minority protection disappeared but they retained their right to

have a director each on the Board.
This time around, Shrimrig was slow to roll out its new
expansion plans. Desai had a readymade story to explain the delay. It
all started to fall apart when Desai suddenly told the Board that he had
decided to buy a small company called WLP for Rs. 100 crores. Why
didn’t he take Board approval? Desai told another story. Before the
Funds bought equity, Desai had already taken Board approval to make
acquisitions up to Rs. 300 crores. He had the resolution to back it up.
None of this made any sense. Who and what was WPL? The
Funds did their homework. It turned out WPL was a Shrimrig Vendor.
It had no business except the orders Shrimrig placed on it. Still, Desai
had accepted a valuation based on discounted cash flows. How can you
buy a company based on its expected cash flow when you are the only
one providing the cash flow? This was the most blatant type of
siphoning of funds. They confronted Desai and Desai backed down.
The scene was now set for distrust and acrimony between the
shareholders. The Funds wanted to have a close look at the affairs of
the Company. Desai could not refuse them. They did their diligence and
found that Desai had raised Rs. 200 crores of debt even while the
company maintained free reserves of 300 crores in an unknown
cooperative bank in southern Maharashtra. The Company paid 17%
interest to borrow 200 Crores and earned 9 % interest on 300 Crores.
It cost the company 17 crores annually to pursue this strategy. Was
there a method to this madness?
In the coming months, it got worse. At the next Board meeting,

Desai asked the Board to approve an investment of some Rs. 300
crores in a new but related area of business. Directors were asked to
approve the investment immediately. The Funds couldn’t understand
the business case. As things stood, China had excess capacity in that
area. India had little demand for that product. Shrimrig could not sell
overseas because China would price it out. Why was Desai in such a
tearing hurry? Desai would not back down. It turned ugly. In the end,
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the majority overruled the two Fund directors and the investment was
approved. At the same time, the Company also approved payment of
dividend.
A month later, Desai circulated the Quarterly Results of the

Company. These revealed that over a three-day period, the Company
had recently invested some Rs. 230 crores on the new project. How
was it possible to spend that kind of money in three days? Desai was
unfazed. These were advances against capex. How blatant can it get?
If this was not syphoning of funds, what was?
Two months further down the road, it all came crashing down.
Newspapers reported that Shrimrig had failed to pay dividend within
the time stipulated by law. What was the problem, the Funds asked?
Desai said the lenders had prevented the Company from paying out
dividend. Lenders wanted the quarterly installments of loan
repayments had been remitted first. Was the Company in default to its
lenders? Was the Company in trouble? If it was, then Directors were in
deeper trouble because they carried liability for this default, lender or
no lender. The poop had hit the fan.
The Funds went into a huddle. Desai refused all information now.
He would not allow inspection of Company records either. As a minority
shareholder, outvoted in the Boardroom, the Funds saw no way
forward but litigation.
Private equity investors generally make very poor litigants. A

Fund’s job is to invest at promising targets at a price, grow the
business and get out for a profit. Investors don’t put money into a Fund
and expect it to blow up the money in litigation. That apart, if you don’t
like the way the promoter manages a company, what are your options?
You can either manage it yourself, or you can shut up. Do you want to
take over management with your combined 24% shareholding? Are
you part of the solution, or just the abusive rabble rousers in the
stands?
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Poor litigant or not, the facts had to be faced. The rate at which
Desai was siphoning money out of the company, it would go belly up in
months. Was their investment worthless already? The Funds had to
stop Desai, or write off their investment. They needed to chuck Desai
out of the company, and then either find a third-party buyer or
abandon the investment to its fate.
This brought them to the heart of the problem. They were

investors only to make money. They could not sustain an expensive
lingering litigation. They had a bigger problem: what could they do that
would not also drive down company valuation? A public circus about
Desai’s shenanigans over the last year would only generate a scandal
and erode shareholders value.
The Funds created the frame of a legal case telling a simple story.
Desai had one too many skeletons in his cupboard. He had siphoned Rs.
230 Crores in three days. He wanted to buy his own single-customer
vendor for Rs. 100 Crores. He was unable to pay his loan installments,
leave alone dividends. He had stripped Shrimrig of all the money it had
collected at the IPO. He would not allow inspection rights to the Fund’s
Directors because he feared its outcome. With a busted public company
on his hands, he was obviously planning to flee the country. He had to
be stopped and the business had to be saved. They now unveiled their
blitzkrieg.
First, the nominee director of both Funds formally wrote to the

Securities and Exchange Control Board (SEBI) reporting default in
payment of dividend, annexed their letters of protest, roundly
criticizing the company’s position and expressing helplessness in
remedying the situation. These directors weren’t personally off the
legal hook only because they wrote these letters but it would make
their story look better in court if they were prosecuted for the dividend
payment default. They then followed up with personal meetings with
SEBI officials. Meanwhile, the Funds guided several small shareholders
and steer them to write letters to SEBI complaining about Shrimrig’s
failure to pay dividend. It worked. SEBI reacted and sought Desai’s
explanation.
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Not long after that, two independent small shareholders filed

cases in a small mufassil civil court in Tutticorin (Tamilnadu) and
Katwa (West Bengal). They asked the court to restrain Desai from
spending money they had paid the Company for its shares. These were
strange cases to file but they had the intended effect. Two local papers
picked up the news and within the next 24 hours, the national press
was onto Desai. Alarm bells immediately started to ring amongst the
general body of shareholders.
Next, the Funds persuaded a ‘professional’ shareholder to

requisition a general meeting of the company. The national press
picked this up as well. Desai immediately became something of a
celebrity amongst stock traders who specialized in shorting shares.
Finally, one Fund’s nominee director filed a petition in the

Company Law Board1 (CLB). He said he could not discharge his duties
as a director unless he was allowed to inspect company records
regarding the two new investments. He also wanted to be protected
against the inevitable consequence of Shrimrig’s failure to pay
dividends. CLB was sympathetic. It issued notice to the Company and
immediately gave him inspection rights.
Desai was in deep trouble. He tried to ‘manage’ the inspection

and limit disclosure. It was a tough ask. The inspection revealed that
the Company had made a whole new bunch of doubtful investments. It
also revealed that the Company paid out large sums of money as fees
to persons unknown for no visible service. The bombshell though was
the cash. Last year’s Balance sheet showed Rs 300 crores of cash but it
wasn’t consistently there. Every month, the promoters brought in cash
on the last day of that month and took it out on the first day of the
following month. Desai was window dressing his accounts. The fat was
now truly in the fire.
1
Its successor now is the National Company Law Tribunal
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One week later, the first Fund filed a very substantial petition in
the CLB claiming oppression and mismanagement. They wanted Desai
and his nominee directors removed from the Board. They wanted a
reconstituted board of external directors approved by SEBI. They
wanted Desai’s investments and acquisitions reversed. CLB was
sympathetic. While issuing notice to Desai and the Company, it
appointed an independent observer to the Board and allowed the
Funds to comprehensively inspect the Company’s records.
Desai was now primed for a slaughter. The Funds assigned a

large team of auditors to toothcomb the last five years records of the
Company. Desai did his best to obfuscate this record. He produced
what appeared to be fabricated books of accounts. Amongst other
things, these books did not carry the customary stamps of the
Company’s auditors. The Rs. 230 crores of pay-outs did not appear
genuine. It was made to Indian agents of European industrial
machinery manufacturers. Desai paid 100% advance against orders
but the orders were unspecific and no delivery dates were agreed.
These agents did not appear to have genuine addresses. Many
payments were isolated pieces of paper: auditors found no
correspondence leading up to the invoices and their corresponding
payment.
This was also true of overseas suppliers. A range of substantial

payments had been made for materials and machinery to off-shore
Mauritius tax haven entities with post box addresses. Other than an
invoice and its proof of payment, there was no correspondence to
explain the transaction.
The Funds never quite got to understand what had actually gone
on in Shrimrig. One body of opinion held the Company had never made
a profit. It held that Desai had been “borrowing profit entries” to
beautify the balance sheet. He did this to tap the stock market for
money from time to time. The stock market crashed of Jan 2008
decimated Desai’s strategy. His “borrow money to show profit to prop
up share price to raise public funds” strategy became unfinanceable. A
second body of opinion disagreed. They argued that Shrimrig was
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profitable but Desai systematically juiced the money and spirited it out
of India and into his Mauritius based trust companies. The Jan 2008
stock market crash interrupted his plans so he used short term market
borrowing to make up the shortfall. When he pulled in more money at
the IPO, he had his opportunity to balance the books. His new project
represented a golden moment to over invoice his capex imports and
come full circle. There was yet a third body of opinion. Based on market
rumors, this view argued that Shrimrig always made substantial
profits, but Desai siphoned off some of these funds to punt on the
stock market. When the stock market crashed in 2008, Desai took a
whipping and he tried to pay his stock market debts by milking
Shrimrig.
Whatever the story may have been, it was time to deliver the
coup de grace. Just a soon as this information came in, the second
Fund filed a substantial petition claiming oppression of minority rights
and gross mismanagement of the Company. The recently unearthed
evidence became the center piece of the case. This fund definitely
wanted the company wound up. Through all this excitement, Desai had
failed to respond to the general meeting requisitioned by the
independent professional shareholder. This shareholder too now filed a
petition before CLB demand that a general meeting be convened
immediately. In the result, Desai now found himself facing a SEBI
instituted investigation, two small town civil litigations, a CLB action at
the hands of each of HSP and PDP, a CLB action from a professional
shareholder a press running amuck in search of sound bytes. That’s as
good as a blitz gets.
To his credit, Desai put up a credible show in his own defense. He

told CLB that he had a consistent track record of excellent
performance, that he was as bullish as ever. He said that the two Funds
were basically disgruntled shareholders with no interest but to sell at a
high price and the recent stock market crash had made exit difficult for
them. He said he was an achiever while the Funds were just financial
academicians who knew all about spread sheets but nothing about
business. It was just a shakedown. For good measure he added that he
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wished he could buy them out he hadn’t the money and besides, this
would trigger the takeover code which he couldn’t possibly support.
In the end, it was the street that overwhelmed Desai, not the
Justice Machine. The stock market was running way low. Desai knew
he was ripe pickings for a hostile take-over. He had to settle. At the
same time, the Funds too knew that a third-party acquisition of the
Company was everyone’s best option. The Merchant Bankers worked it
out. Desai handed over management control to a purchaser and parted
with 15% of the equity he held with an option to purchase more in
twelve months. Meanwhile, the Funds transferred their shareholding to
off shore special purpose vehicles. The purchaser then acquired these
vehicles. In this way, without triggering the takeover code, the case
was amicably settled between the parties.
The beauty of the Blitz is the speed with which it is unrolled and the
intensity with which it is applied. It works well when it overwhelms the enemy
and stream rolls over all opposition. The Blitz requires careful planning, a lot of
people to run it well and a lot of money. If applied correctly, it produces magical
results.
-x-
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Chapter E6
Rule 6 - Be unpredictable
For as long as I can remember, the rules of grammar were largely

immutable. Everyone knew good English from bad English. SMS killed that
clarity. No one is going to thumb-type ‘people’ or ‘point of view’ or ‘in my humble
opinion’ when ‘ppl’, ‘POV’ or ‘IMHO’ would do. Crude and jarring it may be, but
shorthand is effective. As it turns out, life imitates the march of technology and
for the same reason: convenience! As you navigate through life, you tend to use
stereotypes and short hand. “You can’t generalize”, an outraged friend may
complain. Well of course you can’t my dear, but you should. It takes far too
much effort to process each situation case by case every day. There are too
many decisions to take and not enough hours in a day. Rules of thumb and
shorthand thinking cuts through the logjam of decision making.
In this world of shorthand decision making, perhaps the most useful of all
is the ‘Incentive Rule’. If your enemy wants to figure out what you will do, he will
try and understand where your incentives lie. If he can read your incentives well,
he can easily predict what you will do next. If your behavior is predictable, your
tactics can be anticipated. How can tactics work if your enemy knows what you
will do next? It is the element of surprise that lies at the heart of all successful
warfare. If he cannot anticipate what you will do, he cannot prepare for it and
will not be able to defend your attack.
There is a second reason why surprise is critical to successful war tactics.

Like you, your enemy has a finite resource base and he needs to decide how to
deploy his resources. If it chooses to strengthen himself in one area, he leaves
other areas open to attack. If he chooses to strengthen those other areas, he
leaves the first area open to attack. If he chooses to divide his forces equally
along all areas, he is weak everywhere. The biggest benefit of being
unpredictable is that it forces your enemy to strengthen himself as best he can
everywhere and then he is weak everywhere.
In the legal world, each party has both strengths and weaknesses
throughout its organization and structure: in the law supporting its position, on
the ground, at the level of the Board of Directors, amongst its allies, in its
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networking, in its ability to handle the governing environment and so forth.

Often, if you were to prepare a balance sheet of relative strengths, you will find
that both armies are equally strong. Yet, when the fight gets underway, one
party is able to beat the other. Generally, it turns out that the party able to
effective project its strategic power through its tactics wins the war. Equally
inevitably, unpredictable tactics are seen to have contributed to the victory.
When it comes to unpredictable tactics, the Celestial Pharma case is about

as unpredictable as it gets.
The Celestial Pharmaceuticals Case
The roots of the Celestial Pharma case date back to the mid-
1990s when the world woke up to the Indian opportunity. India was
still too exotic a market for European companies to go it alone and
Celestial Pharma was no exception. For a ‘local’ partner, they
eventually settled on a dynamic owner driven politically well-
connected business family who preferred to live abroad but had a
substantial presence in a variety of Indian businesses: heavy
engineering, construction, machine tools and power related equipment
all operating under the Kaveri banner. Their Indian companies were
professionally managed, but they knew nothing of pharmaceuticals.
Negotiations between Kaveri and Celestial culminated in a deal

by which both became equal partners with equal representation on the
Board of their JV Company, CK Pharma. The Chairman of the Board
rotated between the partners on an annual basis without a casting
vote. Sometimes around 2004, they took their CK Pharma public.
Naturally, at this point, their private shareholders agreement lost all
meaning. Nevertheless, on a gentlemen’s handshake basis, they agreed
to honor the substance of the shareholders contract after listing. When
the theater went up on their coming war, Kaveri and Celestial each
nominated four directors to the Board and each had 26% of the equity.
The rest of the equity was widely held by the general public. The Board
had just about appointed Celestial’s nominee director as the Chairman
of the Board.
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As is often the case, at the heart of their differences were

differing perceptions on India’s commercial opportunities. In India,
Celestial focused only on its Pharma business. Celestial’s global
business piggy backed on a variety of niche products, mostly cures for
exotic diseases. Medicines for these diseases sold at very high prices in
India. Celestial wanted to bring its products to India at much lower
prices, take advantage of India’s lax Intellectual Property Rights
regime. Celestial felt that once it had established itself in India, it
could then roll out the same bouquet of cheaper products throughout
South East Asia, Africa and the Middle East. Long before of-shoring
became the buzz it is today, they also wanted to move much of their
research and manufacturing to India. It did not strike them that Kaveri
may have different plans.
Kaveri’s companies were cash rich but the Promoters were not
focused on Pharma. They had no global pharma business to protect, no
technology to speak of and no future in the busines. CK Pharma, was
well established in India. Already, their leverage in the company had
declined. On the other hand, they had the inside track on the
Government’s plans. They knew that Dr Manmohan Singh’s
government would create enormous new opportunities in the coming
years. Government contacts and relationships lay at the heart of their
business model! Kaveri’s self-interest lay in preserving the status quo
within CL Pharma while they pursued opportunities elsewhere.
Blissfully unaware of these fault lines, Celestial prepared

expansion plans and presented them to the Board of CK Pharma. These
plans proposed that partners recapitalize CK Pharma through a rights
issue at substantial premium, erect a new factory, launch new brands
in 16 segments and push exports hard, all in a phased manner. The
plan was good but Kaveri directors stalled. Celestial didn’t mind. Its
always good for Directors to deliberate well before taking a decision.
Inevitably, the decision failed to materialize. Pushed to take one,

Kaveri directors tried to stall, and when that failed, criticized the plans
for all kinds of peripheral reasons. Celestial found itself stone walled. It
was time to speak to the Kaveri family. It was at these owner level
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meetings that the truth spilled out. Kaveri did not mince words. If they
supported a rights issue at a hefty premium, the public would renounce
its rights. Kaveri did not wish to invest more in the pharma business:
they had other plans. Kaveri would renounce its rights too, which
meant that Celestial will become CK Pharma’s single biggest
shareholder. Kavera did not want Celestial to renounce its gentleman’s
handshake on partner parity.
Celestial did not believe a rights issue at par was defensible. The
market wasn’t deep enough to mop up enough cash at par. It made no
sense to offer shares at lower than their intrinsic worth in order only to
protect Kaveri’s concerns. Celestial did not see the point in vastly
expanding the business, only to then reward public shareholders. They
saw Kaveri as a ‘dog in the manger’. They felt Kaveri should
participate, or step aside. They told Kaveri as much. It took five
meetings over eight months for parties to know they had arrived at a
complete deadlock. Parties now had a fundamental and irresoluble
conflict of commercial interest. Celestial went to its lawyers.
Lawyers did not offer any good news. Their reasons were clear
enough. The Board was deadlocked and while the Chairman could steer
meetings, he had no casting vote. The Managing Director was a Kaveri
man and would fight Celestial at the ground level. Bear in mind that in
a listed company, it is the MD who controls Company operations. In
effect, if Celestial starts a legal war, Kaveri would use CK Pharma to
fight Celestial, meaning that it will make Celestial pay for Kaveri’s case.
Finally, Celestial had no handle on the governing environment. Just as
Kaveri know nothing about the manufacturing side of pharma, Celestial
knew nothing about the political side of pharma. It was another
deadlock. It was not possible to break this deadlock without
addressing each of its three elements: Board parity, MD loyalty and
Government influence.
If you think about it, the deadlock actually had two elements to
it, not three. If you took out the MD, Board parity would automatically
disintegrate, leaving only the governing environment to worry about.
The governing environment had three elements to it: workers, public
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shareholders and of course, the Government. How was Government to

be managed? It needed voter leverage, because that, and election
funding, is what politicians worry about. Celestial immediately
increased its engagement with the government and roped in the trade
unionists to further its cause. At this point in time, Trade Union
elections loomed even as the Trade Union agreement had expired and
negotiations were underway. To win the next elections, the Union
President needed a reasonable settlement. Celestial made a bargain
with him.
To the public shareholder, celestial sold the technology story.

Celestial wanted to take the company forward, but Kaveri had other
plans and didn’t want to pay the bill. They told anyone who would
listen that Kaveri was holding back progress. In this way, they created
a basket of noisy allies, mainly workers and public shareholders.
Eventually, Celestial got to judgment day. It was time to take out

the MD and change the balance of power on the Board. This was a big
ask. The MD was a great professional. He delivered results and his
performance could not be faulted. Celestial roped in the Company
Secretary, convincing him that his future lay with Celestial. Did he have
any dirt on the MD? Had he swept anything under the carpet, window
dressed numbers, taken kickbacks from vendors, anything? Nothing!
The MD was clean. Celestial would have to do something
unpredictable, perhaps unimaginable, even unethical!
Eventually, opportunity came knocking. During the course of a

random feel-good discussion with the Union President, Celestial learnt
that the Managing Director was carrying on with his personal
secretary. He would go off for meetings accompanied by his very
attractive secretary, but actually visit a friendly hotel with day rooms
on hire. It seems the Union President knew about this because his
brother worked at that hotel. Celestial had its opening. Would the
brother inform Celestial the next time the MD showed up at the hotel?
Soon enough, that call came. Celestial activated its rapid action
force. Remarkably, events soon escalated well beyond Celestial’s plans.
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Celestial had intended that the Union President remain in the hotel
lobby with his gaggle of workers while Celestial’s lawyers surprised the
MD. The plan was to persuade the MD to resign rather than face public
humiliation. As it turned out, fifty workers followed the lawyers up to
the hotel room and practically broke down the door, catching him buck
naked in bed. Both rushed into the toilet, leaving their clothes behind.
When Celestial’s local Director arrived at the hotel an hour later, he
found 50 belligerent workers in a luxurious environment shouting
slogan while the love birds crouched behind the bathroom door. This
Director managed to evict the workmen but he could not get their
clothes back and he then conducted the rest of the proceedings with
his MD dressed in a towel. His resistance broken, the MD readily signed
a resignation letter hand written by the Director. In due course, the
clothes were returned and the workmen dispersed. It was done.
Kaveri was not informed of the MD’s disappearance for several

days. In this period, Celestial directors progressively increased their
presence in the company, getting to grip with both operations and key
personnel. Eventually, Kaveri directors started to inquire of the MD’s
whereabouts and it was time to unveil the next step of the plan. CK
Pharma now issued a notice of a Board meeting to ‘discuss the
emergent situation’. Expecting trouble, all Kaveri directors were
present at this meeting. They could not understand why the MD had
resigned. Unsuccessful efforts were made to contact him from the
Boardroom. The meeting ended with the Directors agreeing to let the
next man in the pecking order assume charge as the Chief Operations
Officer.
It seems Kaveri did eventually find the former MD in his ‘home

town’ but that hardly helped. Kaveri was one director short of parity on
the Board of the company. Kaveri now wrote to the company
nominating a replacement director. Bear in mind that Celestial didn’t
have a legal obligation to appoint whoever Kaveri wanted it to. Still,
Celestial wanted to maintain the illusion of parity because this would
yield dividend if the matter showed up in court. Celestial needed to find
a strategy that would project parity but serve its original purpose.
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What did Celestial really want? It wanted to expand operations

through a rights issue at a premium. If it had that in the bag, Kaveri
would be forced to relinquish its rights. At that point, the parity of
directors on the Board would also change. Why force the pace when
the same result would come to it in time?
On receiving this nomination, Celestial responded by calling for a

Board meeting to resolve issues pertaining to the new expansion
project. Kaveri didn’t mind that, so long as there was parity on the
Board. In a classic case of unpredictability, Celestial contrived with the
Company Secretary to secure that the agenda of the Board Meeting
placed the item on the new expansion project before the item on the
new nominee director. The scene was set.
At the very commencement of the Board Meeting, Kaveri

directors raised a storm of protest on the order of the agenda items.
They wanted their co-director appointed before any other item was
taken up. Propriety was on their side but the law was not. It was
acrimonious. Eventually, after everyone had exhausted themselves, the
Chairman put this issue to the vote and Celestial’s directors had the
majority. Exactly as you would expect, the Board voted to retain the
agenda unchanged. Kaveri directors wisely chose not to walk out.
The acceptance of the resignation of the MD the was first item on

the agenda. He had resigned. There was nothing to be done. The item
passed without incident. The Second item – on the new project - had
no such luck. All directors had their very vocal say, but in the end,
Celestial had the majority and the resolution passed subject to
shareholders approval. The board authorized the Company to call for a
shareholders meeting.
The brought up the agenda item on the appointment of a new

Kaveri director. Kaveri did not have a legal ‘right’ to nominate directors
but the Justice Machine could take the view that Board representation
should be proportional. Why bait a sleeping lion? The item needed deft
handling. Celestial was at its unpredictable best. Celestial directors
deliberated the matter in harmony with Kaveri directors and then took
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the view that they needed to meet the gentleman before taking a
decision! Kaveri directors were incensed but they were outvoted. The
meeting adjourned amidst considerable tension. Two days later, the
company issued notice convening an extraordinary general meeting of
shareholders asking for fresh equity injection to fund the expansion
project.
Kaveri was before the Company Law Board within the week.
Their case rested on three planks. First Kaveri produced the former
MD’s affidavit swearing that he had been forced to resign by a Celestial
director. This is why his resignation was in the handwriting of the
Celestial director on hotel stationary. Such a resignation was invalid.
Second Kaveri argued that both the gentlemen’s handshake and
corporate propriety required proportional Board representation. How
could such a strategic capital structure altering resolution be passed
without first inducting a Kaveri director into the Board? Finally, Kaveri
claimed bad faith. Celestial had hatched a conspiracy, orchestrated a
meeting and arrived at a pre-meditated result, the consequence of
which would be a change of management control within CK Pharma.
Kaveri asked the shareholders meeting should be stayed till a fully
constituted Board has properly examined the business expansion
proposal.
Celestial presented a simple defense. A resignation is final once

accepted. If this former MD believes he is competent to be appointed
to the same position again, he can apply to the Board afresh. Only then
would questions of competence, moral rectitude, reliability and track
record be deliberated. At this point, the court had nothing to decide. As
for appointing a replacement director, no party has a right to nominate
a director. Now that Kaveri had made a nomination, the Board will
treat this as a recommendation and deal with it in their best judgment
as a mature Board would do. Finally, as regards the new project, it was
established law that the courts should not restrain shareholders
meetings or substitute their wisdom for the wisdom of shareholders.
Let the shareholders take a view.
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The Company Law Board saw the defense sympathetically. It

took the view that it was nobody’s case that the MD did not sign the
resignation. As for the appointment of the replacement director, the
action was premature as the Board was deliberating on the
appointment and they should have a reasonable opportunity to
exercise their mature wisdom. Finally, CLB could see how it can stop a
shareholders meeting. If shareholders want the expansion project
executed and were willing to pay for it, why would CLB interfere?
It was now time to prepare for the Shareholders Meeting.

Celestial expected Kaveri to act predictably doing the stuff cash rich
promoters do. Not long after the CLB petition was filed, CK Pharma’s
share price began its northward march. Clearly, Kaveri’s local group
companies were very busy. Kaveri did not expect Celestial to do the
same. As a foreigner, it would need regulatory approvals. It was a
smart plan, but they bet wrong. Celestial found a way. It financed a
Foreign Institutional Investor through a tax haven who in turn started
mopping up CK Pharma shares. Simultaneously, Celestial pumped up
the Union to take a strong stand at the meeting. Celestial also put
together a group of four ‘professional’ public shareholders and
persuaded them to make a nuisance of themselves at all shareholders
meetings.
The shareholders meetings proved to be extremely animated.

Professional shareholders made long speeches extolling the glory of
Celestial, drubbing Kaveri for their treatment of their shareholders in
other Kaveri group companies. They sang odes to Celestial’s
technology and applauded Celestial’s aggressive India plans. In turn,
Union leaders spoke glowingly of the benefits Celestial’s technology
had brought them. They spoke of Celestial’s commitment to India.
Kaveri sensed the mood and called for a poll. When the results were
announced, it was clear that market operations by both parties had
cancelled each other out. It came down to the remaining public ‘swing’
vote, and Celestial carried the day. The resolution was carried.
Kaveri’s CLB petition took a body blow. CLB would not stop the
equity injection. Instead, it encouraged Kaveri to exit at valuer-
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determined price if they wished. Kaveri found itself between a rock and
a hard place. Still, a smaller stack in a fast-growing pile was better
than a quick exit at a low price. Kaveri chose to stay invested and were
diluted. As 11% shareholders today, although they remain a thorn in
Celestial’s side, Kaveri has benefited greatly. Meanwhile, CK Pharma
has grown exponentially and Celestial has realizing its India ambitions.
There is a common perception among lawyers and layman that where the
relative strengths of a case hang in the balance, the fate of the case also hangs
in the balance. This is untrue. While much depends on the often unpredictable
view that the Justice Machine may take of any legal issue before it, there is no
such thing as rigid tactical configuration in litigation. More often than not,
unpredictable creative tactics carry the day.
-x-
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Chapter E7
Rule 7- The Rule of Deception
Any commercial deal, as we all know, is ultimately a give and take. No

one gets exactly what they want. Still, if you know what the other side wants
and they know what you want, it's possible to close a deal quickly, efficiently and
to everyone’s satisfaction. That’s a win-win. The question is: how do you manage
your negotiation such that you efficiently get to this win-win?
There are two ways to run any business negotiation. One way is to let
your counter party know exactly what you care about, meaning what you really
want from the deal. The theory behind this tactic is simple: if you counter party
knows exactly what you want, they will factor it into their thinking and give you
what you want without too much trouble. They will do this because they know
that if they don’t, you will walk away from the deal. In the bargain, they will also
hopefully tell you what they really want and you are then be able to cut through
the noise and make them an offer they will accept. This transparent way of
functioning makes it easy to close a deal. This is what makes for a great win-win,
which is what all those self-help business books sell to you all the time.
The problem is that in the real world, deals are not pure win-wins:
somebody always gets something extra over the counter party even though the
deal is projected as a win-win. How do you do this? You know what you want.
But if you say it the way it is, your counter party will see your easy-gives and
devalue those in its negotiation tactics. Since you have revealed your hard-gives,
your counter party will value those up and negotiate hard for those. In fact, if
your counter party is really smart, it will convert your hard-gives in your hands as
a gotta-have in its hands. So, both sides argue about your hard-gives while your
easy-gives become not things you have given but something to be taken for
granted. It’s as if those easy-gives have no value at all.
I am talking about weightage. If you say I will buy more from you but I
must have committed timelines, your counter party immediately understands
that you are under delivery pressure. It will commit to your time line but demand
that you buy a much higher quantity or at a much higher price. Conversely, if
you care little for the deadline but care a lot more to have a lot of quantity, it will
purport to be able to deliver on time but offers you a smaller quantity except at a
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higher price. To put it simply, it positions your hard-gives as a deal breaker and
positions everything you are willing to give as valueless stuff they don’t care
about. If and when you do close the deal, you may find that you gave away
more than you really would have if you had been less transparent. At that point
you may also realize that in each win-win deal, there is a bit of a win-lose too,
and that is often the result of deception.
We are not of course reading a book on business negotiation so we can

remind ourselves that litigation isn’t a win-win at all (though settling a dispute
may well need win-win deal making skills!). Litigation is a win-lose and for the
most obvious reason: someone always loses. You beat up the other guy. It
becomes easier to do if you are willing to engage in deception.
In a way, deception is built into every tactic we have spoken of so far.

Anticipating and pre-emptying the opposition lies at the heart of litigation tactics.
To win, we must be unorthodox, we must seize and control the initiative, we
must control the enemy’s responses, and we must be sure not to be predictable.
Each of these tactical moves entails an element of deception. War history is full
of deception. Conditions for the 1971 Indo-Pak war were created because India
send in its soldiers disguised as part of a home grown ‘mukti bahini’ freedom
fighting force in the wake of Mujibur Rehman’s demand for independence, a
masterly deception. The Pakistani army came under enormous pressure in the
east eventually leading to its vivisection and the creation of Bangladesh. The
Kargil war started with Pakistan sending its troops disguised as freedom fighters
to occupy the heights above Kargil even as Pakistan’s PM Nawaz Shareef talked
brotherhood of man and solutions to the Kashmir issue with India’s PM Atal
Bihari Bajpayee in their Lahore meeting.
In the narrow litigation context, I can think of many classic occasions

where deception brings incomparable benefit, indeed is probably necessary.
Deception is used to set up a case, meaning to ‘construct a case’. As I have said
before, a legal war begins when parties detect a conflict of business interest. In
court, litigation comes much later, or the conflict may be settled long before
litigation comes at all. If we are to win our legal wars, we must ‘steer’ the facts
and create a story we can sell to a court if we end up there. As often as not,
deception is necessary to get a suitable story.
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Once a court case begins, deception may also be necessary to make one’s
story stronger, or it may be necessary to weaken the defense. For instance, you
can position your case in a way where it is difficult for your enemy to understand
where the pulse of your case lies, till it is too late. This works better in arbitration
than it works in court not least because arbitration runs faster than Indian court
cases. All the witnesses get to testify one after the other so there is little time to
plug a gap in your defense which you failed to spot because you were deceived
into thinking the pulse of the case was elsewhere.
Let us first look at the role of deception in constructing the narrative of a

case. To do so, we return to a case we discussed in the first chapters of this
book.
The Weizmann case
Recall the Weizmann case, a global engineering major who

entered India on the back of a joint venture with promoter Gupta. It
then acquired a large stake in a sick company under the protection of
BIFR. Shortly after making its investment, Gupta disclosed that the
actual losses in the company were four times what had been
represented to BIFR, to lenders, to public shareholders and to
Weizmann too. When Weizmann investigated this accounting fraud, it
realized that Gupta had faked sales volumes, inflated inventory,
booked bogus expenses, and diverted both employee loans and
creditors payments to himself.
It was obvious that Weizmann had to remove Gupta as Managing

Director. In Indian law, removing a director is always difficult. The
larger problem was that Gupta controlled the factory, the
management, labor, and he had complete control over both the local
and the regulatory environment. Any attempt to take away his
executive power through corporate due process would be stonewalled
through BIFR intervention and court injunctions. Weizmann knew that
it needed to perform a commando type operation. If possible, it needed
Gupta, or one of his executive directors to admit to this fraud.
Weizmann needed to lure Gupta into complacency, have him admit to
the essential facts and then hang him for it.
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As the strategy unfolded, Weizmann informed Gupta that these

‘losses’ could not be repressed any longer. While disclosure would have
to be made, Gupta was free to provide an appropriate explanation to
the Board of Directors. Gupta didn’t understand the point of this Board
procedure. Why did Weizmann need him to admit anything? Why
couldn’t the company simply reconcile accounts and inventories and
then write off what wasn’t there to keep? Weizmann remained calm
but politely firm. In a public company, even a write off had to be
justified. Weizmann need to complete its paperwork. It needed the
previous management to defend its position. Could Gupta please
provide an Explanatory Note for the Board to consider?
Gupta was deceived by the soothing words in which Weizmann

wrapped its request. Maybe it’s just how these foreigners work, he
thought. Weizmann invited the Director (Finance), another Gupta
nominee director, to help frame this Explanatory Note to the Board. To
be fair, the Director (Finance) did a fine job of explaining away the
huge hole in the balance sheet. He could not, and did not, deny the
essential facts, but he put out a slick defense of it. Weizmann faxed
this note back to Gupta. Gupta now tinkered with it some more to
further vindicate his actions but yet again, the basic ingredients of the
accounting fraud were accepted as a fact. In culmination, this
Explanatory Note arrived back on Weizmann’s desk, duly signed by
both MD and Director (Finance)! Thus, through a simple deception,
Gupta and his associate were persuaded to freely admit to an
accounting fraud in the company.
‘This set the stage for a coup d’etat, but there was another
deception to unfurl yet. Obviously, the company could not have an
agenda item in the next Board meeting telling the world that
Weizmann was going to remove Gupta. Doing that would most
certainly invite a stay order from a court. Instead, Weizmann inserted
this Explanatory Note as part of the “consideration of the accounts of
the company”. Gupta agreed to help the Directors better understand
the Explanatory Note at the Board Meeting.
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That Gupta was stripped off his executive powers is a story we

have already heard. What is relevant here is for us to understand that
the battle was won because Gupta was deceived into signing a
confession. This damaged his legal position irretrievably. Would
Weizmann have succeeded in doing all that it did if Gupta did not
believe that the Explanatory Note was merely a sugar-coated bitter pill
designed to create a story around a very hefty write down?
The Weismann case shows us how to construct the narrative of a legal

case so that the facts support you when you go to court. Even after a court case
has begun, deception remains a major part tactic in your arsenal. Here is an
illustration of the use of deception as a central tactic in court to compel victory
over the enemy.
Recall that Metro Cable was a large Indian cable company which
purchased 51% equity in a joint venture called AP Cable with a local
strong man in the fragmented cable TV business at that time. Metro
Cable then leased to its own subsidiary AP Cable all equipment
required to set up a satellite signal receiving Head End. The 49%
partner, Reddy, became the Managing Director of AP Cable and its local
face. As time went by, he alone came to know the customers (i.e. the
cable operators). In this way, he controlled the revenue stream and
was able to leverage his numerous local contacts. In time, Reddy grew
richer while AP Cable continued to bleed and Metro received little if
anything by way of lease rentals for the Head End.
Over the years, Reddy also allowed dues from cable operators to
run into arrears while he loaded a lot of luxury spend on AP Cable. He
purchased luxury cars, took expensive business trips, financed a range
of office equipment purchases and generally threw money around, thus
practically emptying out all of AP Cable’s bank accounts. He then
started talking to Metro’s competitors. Rumor had it that he offered to
move all ‘his’ cable operators to the competition if they paid him a
substantial sum of money. Metro needed to get back into the company.
To nail Reddy, it also needed to seize the accounts files, take control of
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the Head End, take over the cable operators and run Reddy out of AP
Cable. How this was achieved is a good illustration in deception.
AP Cable’s Board at that time had three directors - Reddy and

two Metro nominees – but Reddy had complete authority to run the
company as he pleased. AP Cable’s accounts were entirely controlled
by Reddy: all Tally statements were fed into his personal desktop
computer alone. It was impossible for Metro to access any accounts
data without grabbing this computer. Reddy had rented A.P.Cable’s
business premises in his personal name, then sub leased them to AP
Cable at a higher rent! He was the only authorized signatory of all AP
Cable Bank accounts. He had excellent contacts with bureaucrats and
cops.
To get into the Company, Metro needed to control four areas of

AP Cable’s business: (1) Operational control, i.e. the Board of the
Company; (2) Finance, i.e. access to its accounts; (3) Cable Operators
i.e. the revenue stream; and (4) Head End, i.e. its factory. Lawyers
spend much thinking about how to orchestrate this, finally coming up
with a strategy that would transfer this control to Metro in a single
shot. Embedded in this strategy were large elements of surprise.
In planning the physical ‘capture’ of the company, Metro put

together a ‘commando’ team of technicians and security boys. At the
same time, the Directors were briefed on the script they would run at
their Board Meeting. Metro now called this Board Meeting at a local
hotel, far from the Company’s office. On the appointed day, Reddy
swaggered in, confidence writ large on his face, primed for a screaming
solo performance. To give the Metro commandoes enough time to
capture the office, the meeting began with a leisurely coffee session,
peppered with local political gossip. Meanwhile, the commandoes
entered the Head End and physically took control of all assets including
Reddy’s computer. They fished out the accounts sheets and quickly
emailed them to the Directors.
Metro directors now started their meeting, moving quickly to a

discussion on accounts. Before Reddy could come to grips with the
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emerging reality, Metro’s nominee directors changed tack, placed the

accounts sheets before Reddy, and demanded explanations about the
large holes in the accounts. Reddy was belligerent, claiming these
accounts were not accurate and that many of the expenses were
justified. It made no difference. The Board rejected his explanations,
and eventually stripped him of his executive powers. They cancelled all
Powers of Attorney granted to him and appointed a committee to look
at all allegations of financial impropriety. Simultaneously, they co-
opted another director, appointed him as the CEO and empowered him
to operate bank accounts. While Reddy was still shouting at the
illegality of it all, the new CEO occupied Reddy’s office and started
working. Deception won the day.
Deception again was at the heart of Metro’s success in keeping

control over the last mile cable operators. Within hours of taking over,
the CEO invited all cable operators for a joint meeting. At the meeting,
he asked to be paid old outstanding. What old outstanding? They had
all paid Reddy already. They could provide signed cash receipts. The
CEO asked to see these receipts. Within hours, he received proof that
Reddy had indeed been diverting AP Cable funds into his own pocket.
That was not the end of Metro’s deception tactics. Reddy was
expected to go to court and he did. He wanted to get back control of AP
Cable. He was its Managing Director and 49% shareholder. There was
a good chance the court would give it to him. Metro now unfolded
another act of deception. While the drama unfolded in court, Metro set
up a parallel head End in another property and moved all Cable
Operators to that company, complete with freshly signed contracts.
Metro also terminated the AP Cable Head End lease contract. The story
about the fight for control of AP Cable has already been told in these
pages. The battle lasted seven months but when Reddy eventually got
his court orders, he had been fighting for the corpse of an empty shell
with no business to its name.
335
In a way, the last element of Metro’s deception demonstrates a

particularly variation on the rule of deception. Here, Metro led Reddy to believe
that he should fight for AP Cable when AP Cable was not worth fighting for
because the cheese had moved. It meant that even if he won, Reddy would still
lose. This particular tactic has many imaginative variations. At its simplest, you
can frame your case and project it as something other than what it is, while
hiding your real objective. Thus, you can fool your enemy into fighting a mirage.
If you succeed, your enemy cannot understand your agenda and ends up
fighting for something you don’t care about. Here is an example we have already
studied in these pages.
The E&D Case
Recall that back in the 1980’s, a large Indian corporation notified

a global tender. They wanted a contractor to build a hydro power
project in the remote Himalayas. The project needed the contractor to
build a long tunnel. The tender specified that the area to be tunneled
was stable. Based on this representation, E&D bid low and won the
tender.
To build the tunnel, E&D imported a bespoke tunnel-boring

machine, commonly called a ‘TBM’. TBM’s are truly large – the length of
three railway coaches – and are built to project specification. They are
assembled on site and are very expensive. Because they are project
specific, after the project is delivered, they are generally sold for scrap.
The Project ran into trouble during construction of the headrace

tunnel. The TBM struck a vast field of sub soil mud. By itself, this is not
a problem. It’s possible to bore through a vast mud field by cladding
the tunnel walls with steel as one bores. If E&D had known about the
mud, it would have changed the specifications of the TBM to include
cladding abilities. E&D had relied on the information given to it by the
project owner and that was its undoing. A sea of mud filled the tunnel
early during construction, burying the TBM one kilometer under the
earth and killing several workmen. Work came to a grinding halt. It
was a disaster. The mud could not be removed by hand but worse, E&D
336
would need a different TBM to get through the mud reservoir. Who
would pay for the equipment and the delay these changes would cost?
When E&D’s lawyers read the contract, the legal risk was not
that clearly specified. You could say the owner was responsible and
you could say the contractor was responsible. What was E&D to do. If
it completed the project, it would suffer colossal losses. E&D needed to
get out of the project, but how? If it refused to complete the project, it
would spend years in litigation, perhaps decades. In the end, E&D
decided that its only objective was to cut its losses and exit. How to do
that was a whole different can of worms.
This is when fate and fortune played its hand. Political

insurgency flared up in the area and a spate of violent incidents
created an environment of fear and neurosis. Extremists blew up
infrastructure around the project, the workers camp came under sniper
fire and several villagers were killed in the neighborhood. Since E&D
had already decided to exit, this ‘Political Force Major’ was a godsend.
E&D issued notice suspending performance of the contract till these
conditions improved. It was all nonsense of course. Isolated events are
not the same as true war like conditions. Even E&D knew that it was
perfectly capable of constructing the project. In fact, fifty miles to the
north, another international consortium was constructing another
hydroelectric project at the same time. Both projects faced the same
insurgency problem but the other one never declared Force Major.
E&D’s deceptive tactic completely changed the rules of the game.

Suddenly, the legal issues between parties because the question
whether E&D could declare Force Major or not. This story too has been
told before. The Indian owner decided it would cost too much time and
money to fight this case in a global arbitration and the results would
never be certain. The owner thought it made more sense to get E&D
out of there, finish the project somehow and make money selling
electricity instead of spending it on lawyers. The owner offered a no-
strings exit to E&D which was just as quickly accepted. Thus, E&D
extracted itself from the situation without engaging in costly
annihilation.
337
The E&D case is not just a great example on how to deceive the enemy
on what the fight is about. It is also a great illustration how to select the right
‘terrain’ in litigation. Armies always choose where to fight and this is true for
litigation as well. If the owner had known what E&D was trying to do, it could
have kept the pressure on E&D and the result could well have been very
different.
-x-
338
Part F
Conclusion
339
Chapter F
Conclusion: The paramount rule of war
As you come to the end of this book, you could pause and ponder on the
lessons learnt. These pages continually remind us that you don’t go to court
without a very clear sense of what you are likely to achieve. You have to be
realistic and you have to be practical. Litigation is a tool to achieve your
purposes: it is not itself ever its own purpose. You must litigate because it is
profitable: avoid it when it is not profitable.
You may have learnt also that as you fight your legal war, every decision
you take keeps in mind the strengths and weakness of the two fighting armies.
You also keep in mind the conditions on the field of battle. Your greatest duty to
yourself is to remain cool and calculated, to think through the issues, to evaluate
the situation as it is. You cannot afford to let your emotions and your prejudices
distort your thinking. Livelihoods and lifestyles are at stake, and effective
decisions cannot be taken unless you are totally calm and calculating. If you go
wrong in your calculations, the results may be disastrous.
Beyond pragmatism, you also need to reassess what you are doing
continuously. It may well be that conditions favored you when you started your
legal war, but these favorable conditions changed as you went along, leading up
to a point when it was not realistic for you to continue the fight. When this
happens, you must have the capability, and the maturity, to reevaluate your
situation and change course while there is still time. If you do not, but bash on
regardless, disaster is inevitable. In all things, and at all times, practical realities
must guide your decision making. There is no other way. This is the central
message of this entire book.
For our last case study, let us look at a case where the reality on the
ground changed during the course of the war. Even though this was clear to
everyone, one of the warriors persisted in his fight in circumstances where he
should have stopped. This had unfortunate consequences.
The Jaguar Case
340
As the Sensex climbed from 6250 in 2004 to 21,200 in 2008,

many dizzy punters believed that the era of high GDP growth was here
to stay indefinitely. Financial mavericks and flyboys quit their jobs,
punted profitable on the bourses and waited for the inevitable steep
correction, believing that the time for hostile acquisitions of listed
companies would come. Some anticipated events better than others
and organized themselves just before the market collapsed. The Jaguar
Value Cartel was one of them.
Staffed entirely by young stock traders and analysts, Jaguar was

an unincorporated association of wealthy individuals, their heads
brimming with ideas. In the summer of 2009, they set their sights on
what they believed was a grossly undervalued company: Rajamundry
Textiles. It was a classic story of the aging patriarch presiding over a
large family-owned business with too many senior citizens resisting
change and growth. Inevitably, this led to savage infighting and the
younger members of the family group won. As the curtain went up on
our story, Rajamundry was slowly making a come back but it had miles
to go yet.
There is no doubt that Rajamundry Textiles was grossly

undervalued. It had large real estate holdings in several metros, none
of which had been correctly valued in its balance sheet. Jaguar
believed these properties were worth more than the business! Like
many listed companies, Rajamundry’s promoters owned only 16% of
its shareholding, 29% being held by Financial Institutions. Rajamundry
had floated 55% of its equity on the stock exchange. The company’s
management remained stable because financial institutions and
promoter generally acted together. If Jaguar wanted to mount a
hostile take-over attack, they would have to gain control of more than
45% of the company’s voting power. This did not make for an easy
hostile bid.
As plans developed, Jaguar‘s case for a hostile acquisition rested

on two central issues: (1) how to effectively bid against the promoters
and (2) how to unlock real estate value in the face of India’s complex
land use laws.
341
Given the long history of lackluster performance of the

underlying stock, Jaguar that the financial institutions could be
persuaded to switch sides. All Jaguar had to do was match
Rajamundry’s promoter holding. Jaguar would then be in a position to
persuade these financial institutions that their political contacts had
the ability to deliver land use conversion approvals. Jaguar’s partners
were not poor but picking up 16% of Rajamundry’s equity at a realistic
price was no cakewalk. In any case, being good stockbrokers, they
were not about to punt on their own money. They needed subscribers
to their acquisition bid and they needed deep pockets with lots of
patience.
Eventually, Jaguar found Kochhar. Kochhar was a wealthy self-

made man with driving ambition. He was in many businesses – steel,
forging, auto parts – and he was growing. He was also cash rich. Most
fundamentally though, he was a rebel in search of a cause, always
wanting to bend the world to his will. He bought into Jaguar’s idea, but
he could not understand how he would pick up 16% of Rajamundry
without the share price shooting through the ceiling. Jaguar’s lawyers
had the answers.
In those days, the Takeover Code didn’t need an acquirer to

disclose his purchases till be had accumulated 5% of the equity of a
listed company. If two or more acquirers acted in concert, their
cumulative holding had to be disclosed at the 5% threshold. Jaguar
needed to find four unconnected persons to each buy 5% of
Rajamundry’s equity. Kochhar was happy to provide a second name,
an old-world punter called Seth, very conspiratorial, very savvy, nine-
tenths ‘under the water’. He said he could pick up 5% without trouble.
After introducing Seth to Jaguar, Kochhar now insisted that

Jaguar also buy at least 1% of Rajamundry’s equity using its own
money. It was a ‘put your money where your mouth is’ argument, and
Jaguar agreed. Eventually, they found the fourth player, a Portfolio
Manager tapping into foreign funds. The die was cast.
342
As the scheme rolled out, Kochhar’s company approved a large

expansion project based on advance orders received from a large Dubai
based business house. He then used these orders, and the Board
authorizations, to get funding from his long-standing lenders. He used
this money to place purchase orders on several European machinery
suppliers and paid them large advances. This money was routed to
various tax havens, flipped to Dubai and came back to the Portfolio
Manager as investible funds. Meanwhile, the other two players lined up
their own funds. This Gang of Four now moved into the market, picking
up small lots, week on week. In less than six months, the Portfolio
Manager, Kochhar and Seth had each picked up 5% of Rajamundry’s
equity. Jaguar meanwhile had picked up 1%. Promoter holding
matched, Kochhar, Seth and the Portfolio Manager now made their
disclosure under the Takeover Code. This triggering Act two of this
particular play.
Curiously, despite these massive purchases, Rajamundry’s share

price didn’t move much. The bull run between 2004 and 2008 had led
most people to believe that modest price rises were the natural state of
being for even poorly performing companies. Since the old guard had
recently given way to the new, Promoter inexperience may also have
had something to do with it. Whatever it was, the Promoters now had a
mess to contend with. Three people acting independently had each
picked up 5% of the company and this combined holding now equaled
promoter holding. What was to be done?
Although Indian stock markets were widely believed to be

opaque at the time, in truth, be it politics, economics or society itself,
India has always been completely transparent. Everyone knows what
everyone else was doing. The grape wine was generally very effective.
In two weeks, Rajamundry promoters knew that Seth and Kochhar
were acting in concert. They didn’t quite know what to make of the
Portfolio Manager but they were not about to leave it to chance. They
decided to attack each of the three players. This is when Jaguar’s
scheme began to come unstuck.
343
Rajamundry promoters had several choices. For one, they could

start mopping up substantial shares themselves. It took money to do
this and they did not have funding. Alternatively, they could go to SEBI
and complain about the manner in which the Gang of Four had gone
about buying shares secretly without following the law. The Promoters
didn’t like this route. It was a matter of legal interpretation and SEBI’s
action could not be predicted. Their last option was to attack the
acquirers rather than the share acquisition. The youngsters went to
seek the counsel of the senior members of the family. Rajamundry’s
old guard had grown up in the license-permit-quota raj of old.
Although times had changed, they understood the political-regulatory-
Justice Machine better than the new age Jaguar flyboys.
As the curtains went up on Act Two, the Portfolio Manager

suddenly found himself faced with a 26-page inquiry from the
government. They were crawling all over his business with a
microscope. There were questions about the Rajamundry investment
but there were questions about everything else too. They had the right
to ask him these questions but if he answered, he would jeopardize
practically all his investments. It was obvious they were throwing the
book at him. The Portfolio Manager stalled. Inquiry followed inquiry
and the stream of paperwork intensified. Eventually, they wanted him
to make highly confidential disclosures about his source of funding, all
funding. They truly pressured him. Eventually, they called him in, read
him the riot act and declared that he would either give them the
information or lose his license. The Portfolio Manager knew he was
beaten. He told Kochhar he was out of choices. To be fair, the Portfolio
Manger was more than reasonable. He was ready to discount his fee
and sell his Rajamundry holding to any person of Kochhar’s choosing.
Meanwhile, Rajamundry’s promoters turned their attention to

Seth. Seth was a pure punter, loyal only to his investments. He realized
the plan had unraveled the moment the Portfolio Manager lost his
nerve. Rajamundry’s promoters told Seth to sell in the market or to
them, at his option. Seth told them he would not sell at a loss.
Rajamundry’s promoters offered to buy him at his purchase price. Seth
said he would think about it. In turn, Seth very fairly called up Kochhar
344
and recounted the whole conversation. He then took up the classic

punters position: he would sell to the highest bidder! He sat on the
fence, ready to weigh his options. Kochhar had lost control.
Rajamundry promoters now approached Kochhar. At this point,

they did not know who was leading this Gang of Four. Perhaps
something in Kochhar’s demeanor gave the game away. They told
Kochhar they had both Seth and the Portfolio Manager in the bag. They
told him he stood isolated and offered to buy him out at his purchase
price.
Kochhar was now at one of those defining moment in time when

history waits to be made, or bypassed. His ego overwhelmed his
pragmatism and he failed to see the writing on the wall. He became
incensed and turned down the offer. Worse, he was abusive, allowing
his ego to drive his agenda in the heat of the moment. The blunder
made, Kochhar now constructed a solution in his head. He would find
someone to take the Portfolio Manager’s holding. He would then
persuade Seth to change his mind. The plan could still be on track.
Rajamundry’s old guard decided Kochhar was not a man to

reason with. They had enough experience of political intervention to
understand the cost. They decided to pay the price, whatever it was.
Kochhar found himself in the middle of a war.
Rajamundry launched a bitter and concerted attack on Kochhar.

They used their political clout to deliver a succession of extremely
crippling blows. Income tax authorities raided Kochhar. It went on for
a day and a half and the authorities followed it up with several demand
notices. The Sales Tax authorities raided Kochhar’s factories,
warehouses and dealers. His trucks of merchandise were seized on at
least four occasions within a week. Out of the blue, Kochhar’s bankers
started asking invasive questions. They hinted that his expansion
project was under scrutiny. The Reserve Bank of India made a routine
inquiry on the expected date of delivery of the machines he had
ordered abroad. Kochhar’s business now came under threat.
345
All of this cost Rajamundry aplenty. They were cool-headed

customers and didn’t have a financial death wish. If they could, they
would settle. Two months after the first offer, they send Kochhar a
second exit feeler. They now offered him current market value plus
10% for his shares. It was substantially below his purchase price.
Looking at the creek he was paddling in, it was a pretty good offer.
Kochhar’s ego got in the way again. He now wanted to teach
Rajamundry a lesson: finish them off, destroy them, ruin their name,
and so forth. He had blood in his eyes. He called the others for a
meeting. Seth and the Portfolio Manager were aghast. What was
happening to Kochhar? He had punted and lost: this was no big deal. It
wasn’t personal. The logic of the situation was to cut their losses and
run. Their three-way meeting ended in bitter acrimony, much of it
coming from Kochhar.
The Portfolio Manager was the first to act. He sold his shares
back in the market at whatever price he could get. Since Kochhar had
funded him, he sent whatever he got back to Dubai. His Dubai based
business associates took their fee and send the balance back to
Kochhar’s machinery purchase advance account. Kocchar took a body
blow. He now had a huge foreign exchange regulatory regime issue to
deal with. Soon after that, Seth, the quintessential punter, sold his
shares to the Rajamundry promoters at his purchase price. He lost
nothing. Jaguar was never in the equation. When the deal came apart,
they traded their 1% on the screen and wrote off their losses. They
were never paid their consolidators fee but all things considered, they
didn’t worry about it. You can’t win them all.
Kochhar meanwhile ended up entangled in a war he could not

control. The battles carry on to this day. The investigations into
Kochhar’s businesses have escalated his problems. He faces litigation,
demands and penalties. The fight is no more about Rajamundry. It is
no more about unlocking real estate value. It is a simple war of
domination and control and both sides are entrapped. Rajamundry
engages as little as possible but circumstances force them to react
when they would rather not. Kochhar is in retribution mode: his hatred
controls his actions and he responds to every real and imaginary
346
provocation with counter attacks. Like an enraged child, he is in

permanent tantrum mode. It’s all rather sad to be honest, and it shows
no signs of ending.
Jaguar is a good example of a war that perhaps should not have been
started. The five conditions necessary to start a winnable fight did not favor
Kochhar. Kochhar’s preparations for the fight were good and while his strategy
may be faulted, his basic failure was not strategic. Kochhar lost out on the
tactical game. He could not seize and control initiative, he could not control his
enemy’s responses, he could not exploit the momentum and he certainly could
not achieve unpredictability or deploy the unorthodox. Beyond detailed debates
on good and bad tactics however, Kochhar fundamentally violated the
paramount rule of war.
So let us state it one more time. Anger and frustration have no role in
litigation. Life is ephemeral; environmental conditions alter, feelings are
transient, emotional realities change. The night turns to day but acts that have
been done, cannot be undone. We cannot erase the hand of history, we cannot
rewrite our fate after it has unfolded and we cannot stop the moving hand,
which having one written, has moved on.
In the end, we can only remind ourselves that in whatever we do, we

need to ponder hard, decide our actions unerringly, and then we can move with
conviction, with commitment. In all this, every day, we must reflect on where we
are, evaluate constantly if we are on the right course, and then adapt and adjust
our actions to be in resonance with nature. This is the secret of a successful
personal and professional life. It is also the secret of good litigation.
-x-
347
348

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Winning Legal Wars

How to successfully fight court cases in India

Admitted to the Bar in 1981, Ranjeev C Dubey has more than

Over these four decades, he has also acquired extensive

Ranjeev C Dubey frequently speaks at various business and legal conferences

“This is not a work of history. All characters, events and issues

Within the constraints of time and cyberspace, I am always happy to discuss

Part A. Understanding the Justice Machine

A1. Do you want to fight a court case? 4

Part B. Do you want to Start a fight?

B0. Introduction: Do you want to deploy the Justice Machine? 71

Part C. Preparing for the Fight

C0. Preparing for Litigation: Five Action points. 141

D0. Configuring Litigation: Seven Strategy Tools 184

Part E. Fighting Tactics

E0. Fighting Tactics: The Seven Tactics 256

F. The Paramount Rule of War 340

Up until 1992, India was a textbook case of a socialist License, Permit,

As entrepreneurial spirit went, Kini was pretty good. He has a highway

As this expensive litigation slowly ground to halt in fruitless frustration, the

There is a third choice. The Arbitration Tribunal can choose to do nothing.

In turn, Subtek had no motivation to complete the arbitration quickly. If it

What do you think happened next?

I can offer you some alternate scenarios.

Which one are you betting on?

Looking back at my career, I can think of many examples. I can think of

1. The legal ‘system’ is a purpose-built ‘solution’ to provide a dispute resolution

The conclusion is inescapable: you have to have a war strategy.

Already, I think I hear some protests. How can a layman participate in a

I can feel your resistance! When lawyers need years of experience to

There are of course as many justice dispensing institutions as there are

This needs to be understood in its proper context. It is critical we understand

Starting in 1988 or thereabouts, politicians progressively amended rent control

How is this power exercised? In India, it is first exercised by seizing publicly

Everyone is profoundly pulverised because in any democratic society, the fall

So why do we mouth platitudes about justice? No doubt, larger forces are at

Second, there is the procedural law. ‘Procedural’ comes from procedure

This book is therefore split into four parts thus:

This book is an expansion of experience gained over 40 years of fighting legal

Naturally, I continue to remain bound to my confidentiality obligations. I would

I could multiply these examples endlessly. When my daughter entered college,

Before I go there, allow me to formally state a disclaimer. I first explained this

This brings us to the Buffalo School of Jurisprudence. Consider this scenario.

Thanks to your semi-rural grand-parenting, your love for dairy products is

Once it is clear that recourse to ‘local self-government’ is not a solution, you

“How much money can he accuse you of misappropriating?” he wanted to know.

“Perhaps fifteen-twenty lakhs”

By now, I was smiling right back, as amused as I was relieved.

Jiski lathi uski bhains!

And that my friends is the heart of the Indian school of Jurisprudence.

That apart, the accused is also entitled to present an alternate sequence of

What we end up with is a criminal administration that is cumbersome, slow,

To get around this complexity, we amended our Negotiable Instruments law in

In discussing this noble truth, we must recognize the essential difference

Narratives run as a powerful threat throughout our public discourse. When a

to a newly created class of zamindars, agricultural land was thus subject to a

To close the loop, I can also supplement my argument by drawing attention to

What we get in the result is a kind of celebrity bias. This is unexceptional. If

India opened up to foreign business in 1992. We lawyers worked at a frantic

It wasn’t a smart thing to do though. Alternative dispute resolution is a huge

In 1996, we amended our arbitration laws in an attempt to conform them to

This is only the beginning of the logjam. On the perfectly reasonable

Within the context of privatized justice as an alternative to our Court system,

Darwinism is a theory of biological evolution first proposed by the English