Madras HC strike sends wrong signals

CHENNAI: Proceedings at the Madras High Court have come to a grinding halt following the worst ever clash between lawyers and policement on Thursday.

It has only worsened the situation for companies that are already reeling under downturn. Several merger and acquisition cases, writ petitions and other cases are piling up at the court, aggravating the agony of companies across sectors.

Companies are even looking at High courts in neighbouring states to expedite their cases. The tendency to boycott\strike work by advocates has baffled even international solicitors.

Says senior counsel Arvind Datar: "during the last strike in September/October, we had shipping solicitors coming from London and Dubai to attend to cases but they had to return to their countries clueless about their next hearing."

But when the second hearing of the clients concerning these international advocates came up at the HC, they were once again at a loss. This time it was because after a month-long strike by advocates, the court was once again closed.
"We got emails asking how advocates could go on strike," he said adding they were simply unable to understand the concept of strike.

While a token strike is acceptable, it is not an option for the judiciary, Mr Datar added. If Chennai Port Trust, Ultratech Cement, Chennai Real Estates Developers Association of India, Pentasoft-Pentamedia and a major jewellery chain figure among the scores of cases that have not made much progress in hearing, there are instances of a few IT firms, that are even contemplating to shift their cases to Bangalore or Hyderabad.

A service tax case, pertaining to the acquisition of software, came up for hearing on Thursday. But the mayhem in the court led to Mr Datar remaining locked up in the court till late hours. Even the hearing of the case between Premji Invest and Blue Green Construction and Investment had to be postponed to March 3 on account of the strike.

A corporate lawyer, on condition of anonymity, said "we are behind timelines which only affects the restructuring process of several companies." While M&As take two months for unlisted entities, listed companies take 4 to 6 months for some conclusions. Fortunately, this lawyer got a merger case of the jewellery chain sorted out.

Of the 200 cases that are heard everyday, 20 to 30 concern M&As while others are writs, original side applications, appeals and such matters.

According to a legal veteran, the stakes are high for companies and businesses suffer losses of several crores on account of such unexpected incidents. Passing of interim orders to give urgent relief or cases where properties have to be attached and such instances are matters that the legal system has to address, he added.

"There have been no winding up petitions in the last five years but post-meltdown, we have handled three liquidation cases involving non-payment to suppliers, at MHC. These are manufacturing and IT companies with turnovers ranging from Rs 5 crore to Rs 30 crore," says corporate law specialist P H Arvindh Pandian. "Imagine the plight of those in jail unable to obtain bails even," another lawyer pointed out.