In the landmark case Tata Sons Limited
v. Cyrus Mistry (2018), the Supreme Court addressed the rights of minority shareholders and the concept of fiduciary duty owed by majority shareholders. The Court established principles regarding oppression and mismanagement under the Companies Act. Which principle was established?

Solution

In Tata Sons v. Cyrus Mistry, the Supreme Court held that majority shareholders owe a fiduciary duty toward minority shareholders, similar to directors' duty toward the company. The judgment established that oppressive conduct by majority shareholders—conduct that unfairly prejudices minority interests—can be remedied under Section 398 of the Companies Act (oppression). The Court clarified that while majority has governance rights, these rights must be exercised in a manner that does not illegally or oppressively harm minority interests. This landmark decision has become foundational in protecting minority shareholder rights and establishing the principle of shareholder rights balance.