Navigating Competition: Unraveling Pricing Dynamics in India’s Legal Landscape


The introduction of new technologies promises a number of advantages from the perspective of competition, including more competition, cheaper costs, a greater selection of goods and services, etc. These claims of procompetitive benefits, however, frequently serve as a cover for the potential anti-competitive consequences that these technologies carry. One such invention that should encourage more market competition is pricing algorithms. But these algorithms are frequently just instruments for manipulating market pricing. 

It is now simpler to carry out anti-competitive agreements and avoid legal action because to algorithms. The use of pricing algorithms to carry out price-fixing agreements is now known worldwide for its anti-competitive effects. It is surprising, nevertheless, that the Competition Commission of India disregarded, without conducting a thorough investigation, a similar complaint against Ola and Uber (cab aggregators). The informant said that taxi drivers and cab aggregators fixed market rates for taxi fares by agreeing to use an algorithm to calculate prices. 

This amounts to hub-and-spoke cooperation, which is anti-competitive in nature, claims the Informant. This argument was denied by the Commission, which maintained that a clear agreement between the hub and spokes to coordinate on price is necessary for this kind of collusion. In my opinion, this is essentially predicated on a misinterpretation of the Commission. Given that comparable algorithm-based agreements are currently permeating the market, it is important to give the matter another look in order to guarantee that competition is encouraged in the marketplace. In this essay, I aim to evaluate the Commission’s order and make the case that the contract between taxi aggregators and their drivers tends to stifle competition by setting market rates. An arrangement of this kind is therefore anti-competitive. 


Every day, a new and inventive technology emerges from the market as science advances. These technologies are widely accepted and frequently provide a plethora of benefits and promises. These days, more people than ever use the internet, big data, artificial intelligence, and frequently unknown pricing algorithms. They appear to provide a host of procompetitive benefits, including better quality, price comparison, and a greater selection of goods and services at significantly reduced costs, from the perspective of competition. It is simple to become blindsided by the abundance of procompetitive benefits that are touted and neglect the necessary research into the potential effects that these technologies may have on competition. 

In order to address the Competition Law challenges appearing in this new digital market, this compels us to reconsider and reinterpret the policies pertaining to Competition Law and to implement adjustments that have been badly lacking. 


There are four ways that algorithms can be used to facilitate collusion, according to the legal literature that is currently available: employing computers as messengers; hub and spoke collusion; implicit cooperation by using computers as predictable agents; and using artificial intelligence as a digital eye.In the first case, algorithms are only employed to carry out the wishes of humans. After humans get into an agreement, computers or algorithms are used to carry it out or keep an eye on it. The easiest type of collaboration to prove is this one. In the second scenario, spokes and a central hub make vertical agreements. 

The spokes do not actually need to agree for this to happen. In the third case, rivals employ a single pricing algorithm with the knowledge that other competitors are following suit. Since the pricing of the products on the market are determined by this algorithm, all competitors will set their prices at the same amount. Nonetheless, there isn’t a clear contract between rivals to set market prices. The artificial intelligence that is being deployed in the final scenario will control prices on its own. There is no requirement for any anti-competitive agreement or intent on the part of the parties. 

The 2015 case of USA v. David Topkins1 was the first recognition of the crime of price-fixing through the use of a pricing algorithm. Topkins entered a guilty plea for manipulating poster pricing on the Amazon Marketplace through the use of complex algorithms2 Since then, there has been a great deal of controversy over the use of pricing algorithms to violate antitrust laws. We need to reconsider the idea that collusion is restricted to discussions in smoky rooms in light of such algorithm-based cartels. 

Since then, there has been a great deal of controversy over the use of pricing algorithms to violate antitrust laws. We need to reconsider the idea that collusion is restricted to discussions in smoky rooms in light of such algorithm-based cartels. The European Commissioner for Competition Margrethe Vestager and the President of the German Federal Cartel Office, Andreas Mundt, have acknowledged in statements that businesses are using algorithms to facilitate collusion and that they shouldn’t be able to use these tools as a cover for breaking anti-competitive laws. 

This leads to the conclusion that, since price fixing agreements are anti-competitive, it makes no difference if they are carried out through intermediaries like pricing algorithms. This is now acknowledged by all legal systems, and the United Kingdom, Singapore, Russia, and the European Union have all reached identical judgements. 


Despite the fact that pricing algorithms have an anti-competitive effect that is becoming widely acknowledged, India appears to be lagging behind in this regard. The Competition Commission of India issued an order in November 2018 dismissing the claim that Ola and Uber (collectively, the Cab Aggregators) colluded using pricing algorithms.3 

In this instance, the informant maintained that the Indian Competition Act’s provisions are broken by the Cab Aggregators and the drivers’ sharing of a hub and spoke collusion to fix the cab fare in the market. The commuter and the driver are connected via mobile applications by the Cab Aggregators. The motorist that is closest to the commuter receives an automatic ride offer via the application. The commuter makes an offer, which the driver can accept or reject without having to haggle over. The offer is made to the next nearest driver if the driver does not take it within 15 seconds. This process keeps going until a driver decides to accept the offer. 

The Cab Aggregators determine the rate for the ride based on a number of variables, including time, distance, surcharges, and tolls, using a particular pricing algorithm. Here, drivers agree to accept the fare determined by the pricing algorithm by signing the Drivers Terms and Conditions. There is no room for negotiation on the part of the commuter or the driver. The informant maintained that the drivers and the taxi aggregators are fixing pricing by doing this. Section 3(3)(a) in conjunction with Section 3(1) of the Competition Act is violated as a result, as agreements that “directly or indirectly determine purchase or sale prices” are forbidden. But the Commission dismissed the case after rejecting this kind of accusation.  

The Commission claims that a hub-and-spoke arrangement necessitates an explicit pricing-fixing conspiracy. Here, sensitive data is shared between the hub and spokes via a third-party platform. In the case of ride-sourcing or ride-sharing services, a hub-and-spoke cartel will need the platform to coordinate prices amongst the drivers or an agreement to set prices through the platform.But in this instance, the price is established by the Cab Aggregators’ pricing algorithm, which takes into account the rider’s specific information as well as other factors like traffic, time of day, and so on. According to the Commission, there isn’t a formal agreement between the drivers to set costs, thus there isn’t any hub-and-spoke collusion. But it appears that this interpretation of the Commission is incorrect. 

Three conditions must be satisfied, under the Indian Competition Law, in order to prove that a cartel is anti-competitive. First, a coordinated action that suggests a conspiracy must be taken; second, this agreement must result in market price fixing; and third, this agreement must have the goal of limiting or completely eliminating competition in the market.4 It is further contend that these conditions are met in the Uber and Ola case. 


Price-fixing cartels pose a serious risk to the level of market competition. Consequently, certain jurisdictions adhere to what is commonly referred to as the per se norm. This means that a price-fixing cartel’s very existence is anti-competitive in and of itself.5 Nonetheless, the rule of reason—which states that the effect a price-fixing agreement has on market competition determines its legality—is upheld by Indian jurisprudence. 

The nature of the restriction and its real or expected effects must be examined in order to comply with the rule of reason.6 The onus is on the Opposing Party (in this example, Uber and Ola) to prove that the existence of a price-fixing agreement has no anti-competitive effects once it has been established. 

The primary issue with pricing algorithms is that they make it simple to monitor and enforce anti-competitive agreements that are impossible to carry out in any other way. Algorithms essentially facilitate the execution of anti-competitive agreements and legal evasion. This was seen in the Competition and Markets Authority (CMA) dispute involving Trod and GB Eye Limited. 

According to the European Commission, it is anti-competitive to use price algorithms to limit market competition. Four UK firms forced their online retailers to pay minimum or fixed retail pricing. Algorithms for price fixing were employed to enforce the same. The manufacturers limited the retailers’ ability to compete with one another by imposing this agreement on them, so limiting market competition.7 

The manufacturers effectively limited competition in the market by enforcing the same agreement on the retailers through price fixing algorithms, which the Commission deemed to be an anti-competitive price fixing agreement. This case underscores the potential threat posed by pricing algorithms because it is simple to enforce anti-competitive agreements without leaving significant evidence. 

By imposing the same agreement on the retailers using price-fixing algorithms, the manufacturers effectively reduced competition in the market. The Commission considered this to be an anti-competitive price-fixing agreement. Because it is easy to enforce anti-competitive agreements without leaving significant proof, this case highlights the potential threat posed by pricing algorithms. 

The drivers would be able to engage in pricing competition to foster a healthy level of competition8 But rather than doing this, Uber uses its pricing algorithms to set fares for the drivers. An agreement to fix prices like this is intended to limit market competition. The competition is significantly harmed by this. Thus, it can be deduced that the Cab Aggregators employ these algorithms in an effort to eradicate market rivalry. 


  • Coal India Ltd & Anr. v. Competition Commission of India & Another (Supreme Court – June 2023): Context: After a ten-year legal battle, the Supreme Court clarified that the provisions of the Competition Act, 2002, apply to Coal India Ltd (CIL) and similar public sector undertakings. Significance: This decision confirmed the Competition Commission of India’s (CCI) jurisdiction to investigate and take measures against statutory monopolies (like CIL) in abuse of dominance case. 
  • Telefonaktiebolaget LM Ericsson (PUBL) v. Competition Commission of India & Another (Delhi High Court – July 2023): Context: The Delhi High Court held that disputes related to allegations of anticompetitive conduct in patent licensing cannot be examined under the Competition Act but should be addressed under the Patents Act, 1970. 
  • Institute of Chartered Accounts of India v. Competition Commission of India & Others (Delhi High Court – June 2023): Context: The CCI’s jurisdiction was challenged regarding its authority to examine decisions made by other statutory regulators.Outcome: The Delhi High Court ruled that the CCI does not have jurisdiction to review decisions made by other regulators, emphasizing the need for clarity on overlapping jurisdictions. Impact: This decision effectively barred the CCI from examining disputes related to patent licensing terms and conditions. Licensees must now approach the Controller of Patents for such issues. 


The Competition Act states that an agreement does not have to be official, written, or expressed. As a result, the concept of an agreement is extremely inclusive. The standards in the event of a hub-and-spoke collusion are further relaxed. The hub of a hub and spoke collaboration must carry out a single, unlawful scheme. The hub and spokes come to an agreement for this. It is not necessary for the spokes to come to an agreement with one another. It is presumed that the spokes agreed to and took part in the hub’s strategy as they engage into an agreement with the hub knowing that additional spokes will follow suit. 

The drivers are the spokes in the Uber and Ola models, and the Cab Aggregators are the hub. The drivers consent to utilise the hub’s pricing algorithms, aware that other market spokes have already consented to use the same algorithm. This will be considered a legitimate agreement between the Cab Aggregators and its drivers in accordance with current jurisprudence on hub and spoke collusions. 

The Cab Aggregators’ pricing algorithms are used to determine market rates for fares. This is an all-inclusive fare. The commuter and the driver must agree on this fare price. This is definitely a price-fixing pact, no question about it. It appears that the Commission has acknowledged that Cab Aggregators utilise the algorithm to set market rates. The main point of contention in this topic is how such a price-fixing agreement hurts competition. 

The current situation was not comprehended by the Commission. It found that there cannot be collusion in the absence of an explicit agreement and emphasised the necessity of having one. Furthermore, a hub-and-spoke collusion eluded the Commission as well. The agreement between the hub and spokes to share confidential data via a third-party platform is considered a kind of collusion. In order to use the platform to set market prices, all drivers must also agree to do so. This, as was previously mentioned, is untrue. To encourage more competition in the market, it is important that the Commission gains a deeper comprehension of the matter. 

“PRIME LEGAL is a full-service law firm that has won a National Award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal fall into a category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer.” 

 Written By Riddhi S Bhora


Unlocking India’s Entrepreneurial Potential: A Legal Exploration of Equity Crowdfunding

Startups and small businesses in India are continually looking for reliable sources of funding. At the same time, small investors are looking to diversify their portfolios and bet on promising new ventures. This, combined with the rising popularity of the startup environment as a result of TV series such as Shark Tank, has resulted in the emergence of numerous platforms that allow companies to interact with investors and crowdsource their financial needs. However, equity crowdfunding in India operates in a regulatory grey area because there are no clear statutes, rules, or regulations governing it. 

The absence of regulatory clarity provided an opportunity for certain equity crowdfunding platforms to construct creative instruments that are not securities in and of themselves, but have a monetary value comparable to the issuing company’s shares. These platforms enable firms to raise cash from small retail investors using a “community subscription offer plan” (CSOP). A CSOP is an investment plan enabling retail investors to invest in exchange-traded funds and a type of instrument for acquiring shares or rights. 



The path to funding in the form of venture capital and angel investments is difficult to navigate because the latter favour investments, particularly those of significant size. Because of this, many start-ups miss out on the opportunity to introduce a promising idea to the market. Traditional banking sources are unable to meet the specific needs of small business owners. As a result, a lot of startups and small businesses look to alternate funding sources to get by.  

One such alternative funding source that offers small enterprises and start-ups a workable solution for raising capital is crowdfunding. As its name suggests, crowd fundraising is the process of raising modest sums of money from a large number of investors.  

Crowdfunding obtains funds from the general public, as opposed to traditional business financing, which is mostly provided by affluent individuals and institutional investors. There are two varieties of crowdfunding models: equity-based models and non-equity based models. Absence of Equity Online donations or purchases of goods or experiences in exchange for contributions are known as crowdfunding.  



Funding for a crowdfunding offering is open to everybody. If you are an accredited investor, investment crowdfunding is limitless; if not, there are limits on the amount you can invest depending on your income or net worth. Final regulations for the Jumpstart Our Business Startups Act (JOBS Act) were released by the Securities and Exchange Commission (SEC) in 2016. These regulations made it possible for a larger range of investors to participate in crowdfunding in the United States, provided that the necessary regulatory framework was in place. 

Businesses and entrepreneurs can ask for crowdsourcing to finance debt, equity, and real estate purchases. The possibility of losing your entire investment is one risk, as is the lack of liquidity resulting from the difficulty of rapidly reselling crowdfunded shares. Another risk is that your shares are already somewhat diluted and may become even more so if additional funding rounds are held. 



Equity investment crowdfunding is a means of investing funds and acquiring shares in companies, most of which are in their early stages. Companies pique your interest by describing their company goals through web channels. You have a variety of spending options, each with a gradation of percentage investment in the company. These shares increase in value in the event that the business does well, just like ordinary equities do. That being said, given the rather uncertain future of startups, there is risk associated with your ownership position. 



Crowdfunding for investments can also be used to swap loans for stock or interest payments. As a debt investor, you can interact with a sizable organisation that serves as a microloan provider. You’ll be able to evaluate the terms of the loan, such as the length of the loan, the interest rate, and the predicted credit rating of the borrower, through the platform that you use. 

When traditional borrowing is either too expensive or unavailable, borrowers may turn to this source of funding. In order to obtain seed money to launch a new company, entrepreneurs usually borrow money from banks, friends, and family, or they provide stock ownership in exchange for investments from angel and venture capital investors, as well as from friends and family. When alternative options for fundraising are either unavailable or prohibitively expensive, a firm can use investment crowdsourcing to seek relatively small investments from numerous backers. 



One of the fundamental goals of crowdfunding is to close the funding gap for small- to medium-sized businesses and startups by utilising social media and technology through crowdfunding platforms. This lessens the physical distance between the investors and the entrepreneur. By spreading the word about the idea to numerous potential investors online, it serves as a means of accelerating investments and is more effective than the conventional method of borrowing money from friends and relatives. It addresses the issue caused by traditional investment sources’ high interest rates, which frequently make it impossible for small firms to produce a consistent cash flow to pay them back. Additionally, the lack of liquid assets to use as security limits access to a variety of kinds of funding.  

  • Low Entry Barrier: Equity-based crowdfunding, a relatively new financing model, lowers the entry barriers for entrepreneurs by enabling them to acquire capital from a far wider range of possible investors than ever before. Businesses can now obtain capital considerably more quickly and readily than in the past thanks to the ease of access to a wider pool of investors.  
  • Minimal Risk: By utilising equity-based crowdsourcing, investors can benefit from the possibility of large returns without assuming the same degree of risk associated with conventional investing. The risk is capped at the amount invested by the investor because they are not required to make any upfront payments. 
  • Low Cost: In comparison to more conventional financing methods, equity-based crowdsourcing is also significantly less expensive. Paying fees or commissions to a third party is not necessary because the investment is made directly to the business. 
  • Diversification: Portfolio diversification can be achieved by investing in a variety of companies through equity-based crowdsourcing. Both risk and possible profits may be decreased in this way. 



Depending on the platform, crowdfunding campaigns fail somewhere between 69% and 89% of the time. From the viewpoint of investors as well as entrepreneurs looking to raise money, crowdfunding carries a number of dangers. Because crowdsourcing is primarily internet-based, money can be raised from people all over the world, which may cause issues with local laws in the various nations. 

  • When in need of money for medical help, turn to crowdsourcing as a final option. Delays in receiving prompt medical attention may result from persons trying to sell their possessions or apply for medical loans. 
  • Contrary to popular belief, crowdfunding is not just for new or established companies. Charity, NGOs, and individual causes can all benefit from crowdfunding. 
  • The general public’s perception also holds that internet crowdfunding is limited to raising little sums of money. Yet, other fundraising initiatives have brought in millions of dollars for beneficiaries’ social, medical, or personal causes. 
  • Furthermore, a common misconception is that no one uses crowdfunding platforms to make donations. This is untrue. Many fundraisers have noticed a notable outcome after sharing their campaign on social media with their friends and family; nobody, not even complete strangers, has donated to their campaign. 




The Jump Our Business Start-ups Act, 2012 (also known as the “JOBS Act”) was introduced in the United States on April 5, 2012, with the goal of enabling small businesses to sell their securities to the public through the internet. The act did this by amending the Securities Laws that were in place at the time. However, these regulations only went into effect on May 16, 20161. 

In terms of crowdfunding exemptions, the Securities Act of 1933’s Sections 4(a)(6) and 4-A include the majority of the legal criteria. Moreover, all transactions must be carried out via intermediaries registered with the SEC, which might be a registered broker or a “funding portal.”2 



One of the first nations to develop a crowdfunding regulation23 was Italy in 2013. However, the regulations that were created were overly onerous, which prevented the market for equity crowdfunding from expanding3 The regulation was originally intended exclusively for “innovative start-ups,” but it was later broadened to include “innovative SMEs” that wanted to raise money via crowdfunding.  

The regulation contains several significant provisions, such as the requirement that online portals be registered with CONSOB, which is then tasked with the assigned task of shareholder protection; the requirement that controlling shareholders and individuals performing managerial and supervisory functions declare their integrity and adhere to professional standards; and the requirement that information obtained from investors by the portal manager be kept confidential. It is the responsibility of the platforms to educate novice investors about the dangers of investing through equity crowdfunding and to verify the veracity of the claims made by companies looking to raise money through this method.  



In China, the crowdfunding landscape is extremely active and changing quickly4 The lack of governing restrictions, which in turn allows for the setting up and quick start of operations, is the reason for this rapid expansion. Because of the legal ambiguity, crowdfunding in China has taken on a more “sale-oriented” form. This indicates that investors purchase the product at an advanced stage of production, prior to it being manufactured5. Because this helps to transfer the risk from investors to entrepreneurs, the portals that employ this strategy have lower fees overall.  

Similar to the international Crowdfunding platforms, the investors in China likewise need to accept a standard service contract while they open an account with the portal and this contract emphasises on the intermediate role played by the portal between the investors as well as the entrepreneurs. 



Prior to delving into the complexities of India’s crowdfunding laws, let’s examine the Sahara India Real Estate Ltd. v. Securities and Exchange Board of India6 case, which examined crowdfunding perceptions for the first time. 


During an EGM of SIRECL, a special resolution was passed with the aim of raising capital through the issuance of unsecured OFCDs through a private placement. The two unlisted companies under the control of the Sahara Group of Companies are Sahara India Real Estate Corporation Limited (henceforth “SIRECL”) and Sahara Housing Investment Corporation Limited (henceforth “SHICL”). 

The offer details were contained in the Red Herring Prospectus, which the Sahara Group believed needed to be submitted to the Registrar of Companies. It made it very evident that the only people who could invest in the OFCDs were those who had received the Information Memorandum (IM) and/or those who were connected to or associated with the Sahara Group.  

The Sahara Group was also said by the RHP to have no intention of listing. they believed that the RHP would need to be filed with the ROC rather than the Securities and Exchange Board of India in order to list the supplied securities on any recognised stock exchange. 

The fundraising activities of two firms, SIRECL and SHICL, which had raised money by issuing OFCDs to a significant number of people for a considerable amount of time, were the subject of several complaints and concerns from the public. These activities were not included in the DHRP of SPCL. 

Consequently, SEBI requested explanations from Sahara Group, but they declined to reply. Sahara Group argued that as the firms were not intended to be listed on any stock exchange, SEBI was not permitted to request information for the same reason, as stated in the RHP. However, SEBI authorised an investigation to look into if anyone has broken any rules or board directives regarding the securities market since it is concerned about protecting investors.  


The Supreme Court reviewed Act Section which addressed the issuance of debentures to the general public. The proviso of Section 67(3), which specifies that an offer made to fifty or more people will be deemed a public offer and fall under the purview of this section, was highlighted by the court. Regarding this matter, the Court determined that the OFCDs do not fit under the private placement category because they were distributed to the broader public.  

The Court decided that the requirements of Section 73, which included requirements for the required listing of the shares on stock exchanges, would be addressed after determining that the contested offer qualified as a “public offer.” As a result, SEBI was directed to receive a refund of the money received through the RHP, along with 15% interest, from SIRECL and SHICL, whose offers were ultimately deemed to be public offers.  



Due to a lack of rules, there is currently uncertainty in India over the legality of crowdfunding. However, SEBI has a strong position against equity crowdfunding and has declared it unlawful in a Caution Press Release. The release states that SEBI has become aware of fundraising activities taking place through Private Placement on unapproved online platforms (such as websites and other internet-based online portals) in violation of the Securities Contract (Regulation) Act, 1956 and the Companies Act, 2013.  

As a result, it is unlawful to issue securities in India through these unapproved web platforms. Following the press release previously indicated, SEBI sent show-cause notifications to a number of crowdfunding platforms operating in India, requesting details regarding the platforms’ legitimacy’s fund-raising process. Following these platforms’ violations of the private placement guidelines, SEBI received notifications, and as a result, the companies queued up to register as Alternate Investment Funds (AIF) with SEBI.  

The scope of crowdfunding will be significantly limited if the crowdfunding platforms are brought under the AIF, which means they will be subject to the SEBI (Alternate Investment Fund) Regulations, 2012 (also known as the “AIF Regulations”).  

Although the fundamentals of crowdfunding are quite sensible, only investors with a minimum net tangible asset value of two crore rupees are permitted to participate because of AIF regulations. A programme requires a minimum investment of 20 crore rupees, while the minimum investment required from an investor is 1 crore rupees (unless they are employees or directors of funded entities).  

Also, there is a cap of 1,00064 investors at any one time (and the Companies Act, 2013 will apply if the AIF is a corporation). Due to the strict AIF laws that will control the crowdfunding process, it may be concluded from the aforementioned provisions that the fundamental principles of crowdfunding are deteriorating. 

“PRIME LEGAL is a full-service law firm that has won a National Award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal fall into a category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer.” 


Written by Riddhi S Bhora. 



Zee And Sony’s Proposed Merger Encounters A Hurdle – A Closer Examination Of The Shelved Deal


ZEE Entertainment and Sony’s Indian intended to merge to become one of the biggest entertainment companies in India. The two-year-old announcement of the $10 billion merger included plans to combine two streaming platforms, over 75 television channels, and film assets. Sony, however, has cancelled the merger due to unfulfilled requirements. There have been rumours of a dispute among the leadership, and ZEE has hinted that it might sue Sony. The parties have now cancelled the agreement and filed lawsuits against each other.


In the fast-paced world of media and entertainment, the proposed merger of ZEE Entertainment Enterprises Ltd. and Sony Pictures Networks India was a watershed moment with the potential to reshape the Indian entertainment industry. However, the highly anticipated merger was officially terminated on January 22, 2024.


In September 2021, the two media behemoths announced their initial merger agreement, which was a calculated decision to merge their digital assets, production operations, linear networks, and programme libraries. The goal of the merger was to establish the biggest entertainment business in India, with a broad range of products and services to appeal to different types of consumers. On December 21, the two companies signed the merger agreement following the completion of the 90-day due diligence period.

The proposed merger would give the Japanese group a sizable market share at a time when consolidation is changing the media landscape in India by creating a 74-channel powerhouse. Sony has pledged to invest $1.6 billion to increase its footprint, and the company will own 53% of the merged company.

Now, Sony Group Corp terminated its merger with ZEE Entertainment Enterprises Ltd. on January 22nd, after nearly two years of negotiating the $10 billion transaction. The situation was first reported on by Bloomberg, who cited leadership conflicts exacerbated by Indian regulatory authorities.


Sony released an official statement stating that the definitive agreements required the parties to discuss in good faith an extension of the end date required to make the merger effective by a reasonable period of time in the event that the merger did not close by the date twenty-four months after their signature date. It said that, among other reasons, the closing conditions of the merger had not been met by that date, which is why it did not close by the deadline.

The issues with the appointment were one of the primary reasons for cancelling the deal. Sony and Zee disagreed about who should lead the merged entity. Sony advocated for NP Singh, its India managing director and CEO, to take over as managing director in the interim, citing concerns about Punit Goenka, Zee’s managing director and CEO. These were exacerbated when the Securities and Exchange Board of India (SEBI) barred Goenka from holding any managerial positions while investigating allegations of fund siphoning. Goenka’s ban was eventually lifted. Nonetheless, Sony remained hesitant to proceed. Goenka offered to step down just days before the merger deadline, but he disagreed with N P Singh’s authority over the deal.


Sony invoked arbitration and legal action against ZEE for alleged breaches along with a $90 million termination fee with this cancellation, which could result in a protracted legal battle. ZEE, under the direction of Punit Goenka, has declared that it will refute Sony’s assertions.

At the Singapore International Arbitration Centre (SIAC), Sony has filed for arbitration against ZEE. To put the previously approved merger plan into effect, ZEE has filed a petition with the National Company Law Tribunal (NCLT) in Mumbai.


It’s possible that the merger’s termination will be detrimental to both parties. Sony and ZEE were both thinking about growing into the Indian market. Both businesses lost out on a chance to solidify their positions in India’s fiercely competitive entertainment sector as a result of the failed merger.

In conclusion, the ZEE-Sony merger’s unravelling serves as a reminder of the difficulties associated with media mergers and acquisitions. It highlights how crucial it is for all parties involved in such transactions to communicate clearly and conduct due diligence. It will be interesting to watch how ZEE and Sony face the legal implications and handle the opportunities and challenges in the rapidly evolving Indian entertainment industry once the dust settles.


“PRIME LEGAL is a full-service law firm that has won a National Award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal fall into a category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer.”

Written by – Surya Venkata Sujith


The Three Major and Developments in Indian Corporate Law


This paper explores three interconnected topics influencing the evolution of corporate India. Part 1 examines the landmark Supreme Court verdict on tribunalisation of company law in India, highlighting the debate over legislative competence, separation of powers, and the constitutionality of the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT). Part 2 delves into the concept of independent directors, underscoring the need for redefining their roles, responsibilities, and selection processes. It discusses the challenges in maintaining true independence and suggests measures to enhance their effectiveness. Part 3 analyzes the position of statutory auditors in companies, particularly whether they hold an “office of profit.” It examines legal principles, corporate structure, and implications of appointing auditors without shareholder resolutions. By addressing these themes, the paper sheds light on critical facets shaping the trajectory of corporate India.



The corporate landscape in India is undergoing transformative changes due to global market shifts, economic growth, power dynamics, and climate concerns. This paper delves into three interconnected topics that are shaping the evolution of corporate India. Part 1 focuses on the Supreme Court’s watershed judgment on tribunalisation of company law, discussing its implications, challenges, and debates. Part 2 examines the concept of independent directors and their role in corporate governance, suggesting reforms to enhance their efficacy. Part 3 analyzes the position of statutory auditors and the question of whether they hold an “office of profit” under the Companies Act.

Part 1: Tribunalisation of Company Law in India:

The Supreme Court’s judgment on the establishment of the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) is a critical development in the evolution of corporate India. This judgment has sparked debates about legislative competence, separation of powers, and the constitutional framework. The court’s decision to uphold the legislative competence of the Parliament to create NCLT and NCLAT is a significant validation of its authority to reform corporate justice. However, the judgment has also deemed specific aspects of the tribunal’s structure unconstitutional, necessitating amendments. This held in the case of Union of India v. R. Gandhi[1].

The question of legislative competence revolves around the constitutional provisions of Article 323A and 323B, which deal with tribunals’ establishment. Some argue that the court’s interpretation of these provisions can lead to potential conflicts with the principles outlined in Schedule VII of the Constitution. While the court’s judgment suggests a harmonious interpretation, concerns are raised about the potential erosion of separation of powers and the independence of the judiciary. This debate prompts reflection on the delicate balance between administrative efficiency and safeguarding the core principles of governance.

The issue of vesting judicial functions in technical members of the tribunal also draws significant attention. While the court acknowledges the importance of domain expertise, questions arise about the potential compromise of judicial independence. The requirement of technical members to possess certain qualifications might inadvertently dilute the tribunal’s decision-making autonomy. This leads to contemplation on whether expertise can genuinely replace the attributes of impartiality, judicial wisdom, and protection against external influences.

In the case of State of UP v. McDowell & Co.[2], a three-judge bench of the Supreme Court underscored that a law enacted by the legislature could only be invalidated based on two specific grounds: (1) lack of legislative competence, and (2) contravention of any fundamental right enshrined in Part III or other constitutional provisions. These two aspects form the core of the author’s argument, with the remaining aspects being extraneous to the present discussion.

However, the judgment does not definitively clarify whether the Parliament possesses the requisite competence or whether its actions run afoul of Article 323B of the Constitution. An additional concern revolves around the involvement of non-judicial individuals as adjudicators.

In this context, the foundational principle of the “separation of powers,” an inherent element of our constitutional framework, appears to be in jeopardy. While this concern is intuitively comprehensible, the author refrains from delving further into this extensively addressed topic.

Part 2: Independent Directors and Corporate Governance:

The concept of independent directors is integral to maintaining corporate governance and stability. However, the practical implementation often falls short of expectations. The definition of independent directors, as outlined by SEBI in Clause 49, is considered inadequate in ensuring genuine independence. The Enron case, where even the Dean of Stanford Business School failed to detect irregularities, and the Satyam fraud, which exposed gaping weaknesses in governance, underscore the urgency for reform.

The suggestion of statutory protection against arrest for independent directors becomes crucial in light of cases like Nagarjuna Finance, where arrests of former independent directors raised concerns. The fear of legal action can deter competent professionals from accepting directorships, leading to a potential shortage of qualified candidates. Transparency in the selection process, minimizing cozy relationships between boards and independent directors, and addressing conflicts of interest are all necessary steps to enhance the effectiveness of independent directors.

Furthermore, the paper’s recommendation for retirement policies for independent directors is based on the idea of maintaining fresh perspectives and preventing entrenchment. While concerns about industry experience are valid, the role of independent directors as enlightened generalists cannot be understated. Striking a balance between experience and a forward-looking approach is essential for a robust governance framework.

Part 3: Position of Statutory Auditors in Companies:

The role of statutory auditors in corporate financial irregularities has prompted discussions about their liability and accountability. The question of whether they hold an “office of profit” under the Companies Act raises pertinent issues. By examining legal principles and corporate structure, it becomes evident that statutory auditors are appointed by shareholders, indicating a distinction from the company itself. The intention of ensuring independence and an unbiased audit process reinforces the argument against considering them to hold an “office of profit.”

The term “office of profit” remains undefined within the Constitution of India. Through a series of judicial pronouncements[3], the Supreme Court of India has established a set of criteria to determine whether a given position qualifies as an office of profit under the government. These criteria encompass:

  1. The origin of the appointment, whether it emanates from the government;
  2. The authority vested in the government to terminate or dismiss the incumbent;
  3. The source of remuneration, whether disbursed by the government;
  4. The nature of duties undertaken by the holder, including their alignment with government functions;
  5. The extent of control exercised by the government over the execution of these responsibilities.

However, Section 314 of the Companies Act presents a challenge. This section requires shareholder approval for appointments to offices of profit, leading to potential conflicts with the role of statutory auditors. The paper highlights the need for careful consideration of these conflicts and their implications on auditor independence. Balancing the regulatory framework to prevent undue interference while maintaining transparency and accountability is essential.

While assuming an office inherently implies wielding some degree of authority, whether significant or subordinate, on behalf of a company, the assumption of a position or role need not invariably entail exercising authority. [4]In light of this context, it is not legally sustainable to assert that statutory auditors of a company hold a position of profit within the company. According to Section 314(1), the appointment of specified individuals to an office or position of profit necessitates shareholder approval through the passage of a special resolution during a general meeting. This requirement applies to instances like the appointment of a relative of an Independent Director to a position of profit within the company.

Taking into consideration the aforementioned rationale and in conjunction with Section 314 of the Companies Act, it becomes apparent that a statutory auditor can be designated without necessitating a shareholder resolution, even in cases where the auditor has a relationship with one of the Directors. Such a scenario could potentially compromise the autonomy of the Statutory Auditor, undermining their ability to function independently, devoid of undue influence from the company itself


the evolution of corporate India is at a critical crossroads, driven by factors spanning economic shifts, legal transformations, and ethical considerations. The analysis of tribunalisation, independent directors, and statutory auditors exemplifies the intricate landscape that shapes the future of Indian corporates.

The Supreme Court’s stance on tribunalisation highlights the delicate equilibrium between judicial autonomy and operational efficiency. Debates over legislative jurisdiction, separation of powers, and technical expertise underscore the need for a balanced approach that upholds legal principles while accommodating modern business complexities.

Within the realm of independent directors, fundamental challenges arise, evident in cases like Enron and Satyam. Calls for safeguards against unwarranted arrest, transparent selection processes, and well-defined tenures emphasize the urgency to foster a cadre of directors capable of championing robust corporate governance.

Amidst these debates, the role of statutory auditors emerges as a linchpin. The question of whether they hold an “office of profit” intertwines legal interpretation, corporate autonomy, and accountability. As the nexus between shareholder appointments and auditor insulation from direct company influence counters such categorization, their interplay with Section 314 necessitates nuanced consideration.

Overall, these deliberations encapsulate the convergence of legal doctrines, economic realities, and ethical imperatives in the corporate landscape. The pursuit of regulatory oversight while preserving entrepreneurial vigor stands paramount. As India strides forward, these issues signify not just legal concerns, but essential societal benchmarks. They underscore that the transformation of corporate India is not just a process of change, but a profound reimagining. The amalgamation of law, economics, and ethics constitutes a complex mosaic, posing challenges alongside transformative prospects for India’s corporate trajectory.

“PRIME LEGAL is a full-service law firm that has won a National Award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal fall into a category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer.”

Written by- Ankit Kaushik

[1]  Civil Appeal No. 3067 of 2004 with Civil Appeal No. 3717 of 2005, unanimous, judgment dated May 11, 2010, per Justice Raveendran)

[2] (1996)3SCC 709

[3] See Maulana Abdul Shakur v. Rikhab Chand and another (1958) SCR 387; M Ramappa v. Sangappa & others, (1959) SCR 1167; Guru Govinda Basu v. Sankari Prasad Ghosal & Others, (1964) 4 SCR 311; and Shivamurthy Swami Inamdar & another v. Agadi Sanganna Andanappa & Another, (1971) 3 SCC 870, Pradyut Bardolai v. Swapan Roy, JT (2001) 1 SC 136.

[4] Rendell v. Went [1964]2 All ER 464(HL)