The third generation lawyer tells Shobhana Subramanian that the Indian legal system is loaded against the small guy. And he?s concerned about how the state is entering the boardroom, possibly as an extreme reaction to the Satyam fraud

With a new Companies Act in the making and the Takeover Code getting a much-needed makeover, it?s as good a time as any to catch up with Cyril Shroff. The unassuming lawyer doesn?t care much for publicity but has got used to it since he was forced into the limelight about six years back while sorting out the settlement between the Ambani brothers. When I call to invite him to lunch with FE, Shroff tells me it?s a toss-up between three of his favourite restaurants. We finally decide to meet up at the Ming Yang at the Taj Land?s End. A self-confessed foodie, who ?lives to eat? and doesn?t stress unduly about exercising or calories, Shroff tells us he wishes the legal system in India would evolve so that it?s less loaded against the small guy.

The Ming Yang is surprisingly not crowded on this pleasant Saturday afternoon and we get a table of our choice right away with a terrific view of the sea. The third generation lawyer, ?born, bred and spoilt in Bombay? says he likes his food spicy and promises me some spicy comments, too. And so we?re off to a great start with vegetable dim sum and some clear ginger lemon soup. Shroff?s clearly enjoying life in the fast lane; the practice that his grandfather founded, Amarchand Mangaldas, now has 50 partners and 500 lawyers and will soon be a hundred years old, and he doesn?t regret taking to the family business one bit. Life has been good, he says, whether in Bombay Scottish, Sydenham or Government Law College. And in the ancestral home on the Worli Sea Face. Shroff confesses he belongs to the old school in some ways; he prefers to dictate letters rather than email them.

The rest of the office, however, is as modern as it gets. Not investing enough in technology, Shroff says, is one reason why many of Mumbai?s reputed family-owned legal firms had to shut shop. The bigger reason was, of course, the fact that they weren?t able to create career opportunities for their employees. This is probably why there are only a handful of top law firms in the country today, despite the fact that the country desperately needs more lawyers. At some point, Shroff believes, foreign firms will be allowed to set up shop in India, though he feels a level playing field would need to be created before that happens.

In the meanwhile, cases pile up in the courts, drag on for years and justice is denied. Even the Ambani settlement, Shroff recalls, took almost two years before it was settled. Among other favourite disputes, the Swaraj Paul versus Escorts case as also the litigation between L&T and financial institutions were time-consuming. As was the acquisition of Tetley Tea by the Tatas. Shroff is all praise for the direction that the draft Takeover Code has taken, happy that it?s in line with global practices and also because it recognises that minority shareholders need to be protected. On the issue of whether Indian industrialists would be at a disadvantage with their global peers since M&A funding isn?t available in India, Shroff believes the system will find a way out.

Otherwise though, he?s quite concerned that the law in India isn?t evolving as it should, probably because it?s often written by large committees trying to accommodate too many diverse viewpoints. What?s happening as a result is that ?we?re adjusting to the lowest common denominator.? Moreover, he?s concerned at the manner in which ?the state is entering the boardroom?, possibly as an extreme reaction to the Satyam fraud; why, he asks, should the government be telling companies how many directors to have and how long their terms should be? Shroff believes the new Companies Bill is not just high-handed, it?s also causing a lot of confusion between what should be done at the Companies Act level and at a regulator?s level in the case of listed companies. ?We?re building in a lot of inflexibility by providing it in the statute and it takes years to amend the Companies Act. Is legislating in Parliament the right way to do it or can other tools be used? I believe Parliament should lay down the principles and let regulators take care of the rest.? The upshot of the high-handedness is that it?s making it difficult for good people to join company boards as independent directors. Shroff himself has stepped down from several boards because he says he?s not too clear on the role and responsibilities and moreover is not willing to take on the stated liabilities and risk the hassle of running to the courts.

The main course arrives?vegetables and asparagus in a light sauce, Kenyan beans and some burnt garlic fried rice. Shroff tells me that although he?s partial to Chinese,Thai and Italian cuisines, in that order, it?s Gujarati and South Indian food that he loves the most, adding that he can have South Indian food for breakfast, lunch and dinner. Every six weeks, he makes a trip to Matunga in central Mumbai to check out the idlis and dosas at Madras Cafe. And he never stresses about putting on calories. ?I delude myself from time to time that I?m exercising but I?m not a regular at the gym.? In fact, he calls himself lazy, the type who makes New Year resolutions and promptly forgets them. That?s probably because he?s always on vacation during that time; the family never misses its annual holiday between December 20 and January 2, every year, whether it?s in Sydney, Rio or Cape Town. Shroff says he uses the time not just to unwind but also to think about issues. And to read. Though he does manage to find time even otherwise to read not just newspapers and magazines but also books on management and biographies, which he?s particularly fond of. Shroff is also a fan of Bollywood movies, which he catches on the weekends or even on a Friday night; he says he enjoyed Band Baaja Baaraat and No One Killed Jessica, the latter more so because it was a comment on the Indian legal system. Of course he didn?t miss a single episode of LA Law while it was airing on television and tries to keep up with Boston Legal.

It?s a pity, he says, that we?re exporting our legal system, referring to the increasing number of companies being compelled to opt for foreign arbitration while entering into joint venture agreements or major supply contracts. ?With the arbitration process in India having deteriorated over time, and having been reduced to some sort of appellate procedure, foreign firms insist on foreign arbitration,? he tells me as the dessert arrives, honey nut ice-cream for him and date pancakes with vanilla ice cream for me. What this effectively means is that the Indian system is getting bypassed and, moreover, commercial contracts are getting distorted. Shroff also believes that the corporate governance that?s evolving in India is based completely on the wrong model in that it has blindly adopted a lot of western concepts, whereas the reality is that 99% our corporates are promoter driven. He?s also concerned that the system is such that it?s loaded against the small guy; what can they do except vote with their feet, he asks? In some ways, he feels, it?s the lack of activism on the part of institutional shareholders that?s responsible for managements getting away with almost anything. But then again, one can?t really blame them because the legal system is so weak, they would rather not waste their time. Moreover, the lack of a bankruptcy code, Shroff believes, lets many managements off the hook.

All in all, Shroff?s convinced Indian law isn?t evolving the way it should; a few deep thinkers rather than teams of people thrown together arbitrarily, he says, need to be writing the law. He himself likes to take time out to ruminate and while not as regular a templegoer today as he used to be, does land up at Siddhi Vinayak ?when there?s some important moment in life?. Staying in touch with God, he believes, helps one uphold certain values, which is what it?s all about. ?All temples are the same, they?re just different branch offices,? he says. Touch