Case study I:

UFLEX.LTD … (APPEALANT)

VS

GOVERNMENT OF TAMIL NADU & ORS. …

(RESPONDENTS)

AUTHORS:
Yashraj Vaidya (K064)
Akshay Ravi (K001)
Atharva Karvir (K018)
Uddhav Gupta (K015)
Hushrav Tantra (K057)

SUMMARY
1. Brief facts of the case

 The Tamil Nadu State Marketing Corporation had issued a notice

inviting tender for production and supply of polyester-based hologram
excise labels to be pasted across the liquor bottle caps on 1 st October
2020 along with technical specifications and eligibility criteria.

 Two companies - Kumbhat Holographics and Alpha Lasertek

challenged the tender conditions before the High Court claiming that
the tender eligibility criteria were tailor-made to favour Uflex and
Montage Enterprises.

 The single judge of Madras High Court dismissed their petition in

February 2021 but a Division Bench reversed this finding ordering a
fresh award of tenders. This decision was challenged in the top court by
Uflex and Montage.

 Uflex argued in Supreme Court that the two companies before the High
Court had not bid for the tender as one did not meet the benchmark of
having eight-year experience in supplying holograms while the other
was a partnership concern. 

 The petitioners told the Supreme Court that the High Court committed
an error by examining the funding pattern of the successful bidders.

 This was essentially a dispute between two business firms on one side
attempting to have a tender award to two other entities set aside.

 The parties were instructed to file their bill of costs by order dated
17.08.2021, having the aforementioned goal in mind.

2. Issues

 There were three bidders and only one of them met the technical
specifications but could not satisfy the financial and turn over terms
under Part 4 of the NIT.

 The hidden text was visible only through Polaroid by adding a film and
colour change background viewable with film as an identifier did
not attract the rigour of this stated patented technology.
 Division Bench incorrectly stated that the secret colour specification
was patented and that no bidders were eligible.
  The Courts before the Supreme Court focused a lot on the financial
relationship of the two companies i.e., Uflex and Montage.

 According to the Court, there appears to be a hesitancy in our legal

system to impose expenses, as if it were a judgement against the
lawyer.

3. Final Decision:

 After examining the submissions made by all the parties i.e. Alpha ,
Kumbhat , Montage , Uflex and The State of Tamilnadu , the Supreme
Court came to a conclusion that the impugned order cannot be
sustained for all the aforesaid reasons and must be set aside
and the appeals are accordingly allowed.

 The Supreme Court set aside the Madras High Court order of April 29,
2021 directing the state to float fresh tenders with generic
specifications and noted the present reality where every tender is
challenged before Court either by parties who did not take part in
bidding or in public interest litigations.

 The court warned high courts against making the mistake of acting as a
"appellate authority" on technology and commercial expediency in
tender cases, saying that the courts should only evaluate whether the
decision to award the offer was "lawful," not "sound."

 The bench said, “The tender jurisdiction was created for scrutiny of
commercial matters and, thus, where continuously parties seek to
challenge award of tenders, we are of the view that the succeeding
party must get costs and the party which loses must pay costs.”

 Based on counsel fees and other actual expenses incurred by the

successful bidders – Uflex Limited and Montage Enterprises – as well as
Tamil Nadu Government, the bench ordered the corporate entities who
challenged the tender before the High Court - Kumbhat Holographics
and Alpha Lasertek India LLP – to equally share the burden of costs of
over ₹23.25 lakh to the successful bidders and ₹7.58 lakh to the state
government within four weeks.

Case study II:

 TATA CONSULTANCY SERVICES LIMITED …(APPEALANT)

VS

CYRUS INVESTMENTS PVT. LTD. AND ORS. …(RESPONDENTS)

AUTHORS:
Yashraj Vaidya (K064)
Akshay Ravi (K001)
Atharva Karvir (K018)
Uddhav Gupta (K015)
Hushrav Tantra (K057)

SUMMARY
This case is based on the companies act of 2013, where Tata Sons is the petitioner in
the case against Cyrus Investments. A long battle which favoured both the parties in
different time periods, is an ideal case of the Companies act. This report summarizes
the case in brief.

A brief timeline which led to the petition are as follows:

 Cyrus Mistry was appointed as the Chairman of Tata Sons Limited on

December of 2012.
 In October of 2016, Cyrus Mistry was removed from the post of Chairman of
Tata Sons Limited by a majority of the Board of Directors for loss of
confidence.
 Cyrus Mistry was subsequently removed as a Director of the board of Tata
Sons, by the shareholders’ vote during a general meeting on February, 2017.

Cyrus investments filed a suit against Tata sons under the pretence of unlawful
removal of Cyrus Mistry from the chairman position. This was based by Sections 241,
242 and 244 of the Companies Act, 2013. This suit was filed in the National Company
Law Tribunal (NCLT), Mumbai.

Cyrus investments based their suit with a few talking points,

 The Sapoorji Pallonji Group (SP Group) led by Cyrus Mistry held 18.37% of the
total paid up share capital in the Tata Sons Limited.
 Grounds of abuse of Article of Association of the Company were suggested by
the SP group.
 Tata Sons contended the suit and pleaded that removal of Cyrus was based on
the votes of the shareholders and board of directors.
 Furthermore, Tata Sons pleaded that Cyrus was no longer making decisions
that favoured/in good faith of the company.
 With regards to the shares held by Cyrus, it was in the majority and the NCLT
felt the removal of Cyrus Mistry from the directorship was just. It ruled in
favour of Tata Sons.

Discontent with the ruling of NCLT, Cyrus advanced the case to National Company
Law Appellate Tribunal (NCLAT). The NCLAT ruled in favour of Cyrus, reinstating him
as the chairman of Tata Sons. NCLAT concluded that the board directors removed
Cyrus from the directorship not because of the lack of performance, but due to the
abuse of authority. This violated the stature of the companies act. NCLAT also gave
the SP group the power of delegating the future decisions taken by the board of
directors even though they were in the minority.
In the final stages the case was moved to the Supreme Court by Tata Sons. The
Supreme Court ruled in favour of Tata Sons. It concluded that, the removal of Cyrus
from the role of chairman was just as he was guilty of misconduct and not acting in
the best interests of the company. The court found that the board was in their sound
mind and were capable of making the decision.

The Tata Group and the S.P. Group's appeals are likely to be dismissed. The appeal
C.A. No.1802 of 2020 is upheld, and the NCLAT order dated 18.12.2019 is modified.
Alternatively, directing Tata Sons and others to separate the S.P. Group's ownership
interests in Tata Sons through a capital reduction scheme that extinguishes the S.P.
Group's shares in lieu of fair compensation effected through a transfer of
proportionate shares of the underlying listed companies, with the balance value of
unlisted companies and intangibles, including brand value, being settled in cash.