She is a partner at one of India?s top three law firms, AZB. Zia Mody tells Shobhana Subramanian that India Inc will suffer if the government doesn?t legislate the role of independent directors carefully: too many of them have quit since the Satyam scam

With the Indian judiciary suddenly more strident, a new take from the Supreme Court on euthanasia and both the takeover code and the Companies Act getting makeovers, there couldn?t be a better time to catch up with Zia Mody. Given her parentage, it was probably a given that Mody would pursue law but the lady has turned out be a successful businessperson as well; AZB & Partners, which she now runs with Bahram Vakil and Ajay Bahl, wasn?t something that she inherited, but is now reckoned to be among the top three law firms in the country. Although she is busy and barely manages to eat her ?dabba?, Mody agrees to a quick lunch with FE, her secretary giving me a time slot of just an hour and fifteen minutes. The lawyer, who was part of the Raghuram Rajan committee on financial reforms, cautions that too many independent directors are quitting and that if the government doesn?t legislate carefully on their roles, India Inc will suffer.

We?re at Vetro, the Italian restaurant at the Mumbai Oberoi and, true to its name, the place is done up exclusively in glass. The maroon, yellow and black glass strips lining the walls make for striking d?cor and it?s a bit of a surprise that we have the place entirely to ourselves. My guest chose the place because she enjoys Italian cuisine, although she confesses to not having eaten here too often. We decide we?ll skip the starters and have some soup instead, and while Mody prefers the porcini mushroom soup, I decide to have a clear chicken broth. I am surprised she has been vegetarian since the age of 10, wondering how she could have grown up in a Parsi household and not have missed patrani machhi and salli boti. She says she doesn?t mind any more, having lived in a Gujrati household ever since she got married; for lunch it?s just rotis without ghee, some shak and salad. Her mother, of course, continues to send across Parsi delicacies for her husband and three daughters. You would think a hotshot corporate lawyer wouldn?t worry about the more mundane issues but it?s a revelation that Mody is at home talking about everything from the state of domestic help to why children these days don?t seem to be reading too much.

It was the discussions at the dining table, at which her father?the eminent jurist Soli Sorabji?presided, that inspired Mody into following in her father?s footsteps. She knew it was what she wanted to do because she claims she was always argumentative by nature. So, she educated herself first at Cambridge and later earned herself a master?s degree from Harvard, before taking the New York State Bar examination. She is a tad disappointed, though, that none of her three daughters is about to join AZB and is hoping her nephew or perhaps grandchild will do so.

What is her take on the recent decision on passive euthanasia? That?s a difficult one, she says, explaining that she is of the Bah??i faith and the Bah??i doesn?t advocate euthanasia. However, Mody says she can see the moral dilemma for relatives. In the meanwhile, the main course arrives. There are more mushrooms for my guest in the form of a morel mushroom tart, some red snapper roasted on a crust for me, and some angel hair pasta. Mody has just been to a charity event the night before, where classrooms were auctioned to support education for the underprivileged. The lawyer believes that the government can?t really push corporates to take on social responsibilities, saying if there is peer pressure, companies will spend on CSR.

Many in corporate India sniggered at Warren Buffett and Bill Gates when they were in India recently, I point out. Mody doesn?t think it was such a bad idea because it might have just nudged those who were perhaps half-inclined into giving. The awareness, she thinks, is good for the younger generation. As a youngster, she enjoyed arguing in favour of public interest litigations against builders. ?We would get a chance to scream and shout and all the judges were sympathetic because the facts were on our side. It was quite exciting because we had a voice and once we were able to get eight floors of a building on Peddar Road demolished.? Mody recalls the nexus between builders and the municipality, telling me how land records would simply get changed, and a 1,000-square-yard plot would become 10,000 square yards on paper. Another case that left an impression on her was a fight between three brothers of a business family. ?They would just not stop fighting about anything! Only when they ran out of money, paying the lawyer?s bills, did they finally settle,? she says. The memory of their follies makes her laugh.

It?s rare that Mody gets to enjoy a lazy weekend, but she is off for a four-day break with the family soon. Not to New York though, the city that she really loves, having lived there for five years and where she can shop, eat and meet friends. Someday she would also like to go back to Vietnam, which she found fascinating. But right how her schedule is hectic?she works till eleven at night on most days and is sometimes in the office till the wee hours of the morning?and Mody confesses that at times she is so tired that she drops off to sleep midway though a movie! But she does enjoy a day out at the races with her husband, especially if their colt Autonomy or filly Yana is running. That?s not surprising because she used to ride when she was young, winning the the Amateur Ladies Champion race three years in a row. Now, of course, there?s no time to ride, only to watch movies about horses or catch them on the National Geographic or Discovery channels. Mody says she is hoping to swim and do all the other things she has missed out on when when she retires, although it is hard to believe she will ever be able to keep herself away from her work. She clearly enjoys every minute of it except, of course, the travel.

What she is most concerned about right now is the way legislation on independent directors is moving. ?Why would anyone want to become an independent director? You just don?t know if you are going to be held accountable for what you could not know? Who wants to get into a mess? I think it will be a challenge and the country will suffer if you don?t legislate carefully,? she says. Mody points out that most directors who resigned after the Satyam scandal haven?t been replaced; probably, the same set of directors are taking on more work. ?Unfortunately, the roles have become adversarial; they keep questioning the board in an attempt to protect themselves and, therefore, the business of the board in terms of looking at strategy is suffering,? she cautions.

She also believes that the country?s bankruptcy laws could be made more effective. That could make India a more attractive destination because foreigners would know they can genuinely get creditor workouts and are not stuck collecting for 20 years. ?CDRs are a kind of a Chapter 11, which goes on forever because the promoter is given a soft landing,? she says, adding that ?philosophically, in India, our banks don?t like to see shocks to the system.? In fact, the proposal to have an 100% open offer, once an acquirer has crossed the 25% threshold, could help inefficient promoters, she cautions, saying it should be rolled back to 30-35%. The proposal, apart from giving foreign acquirers an advantage over local companies, would prevent a domestic-to-domestic takeover in instances where the promoter genuinely wants to get out. ?He may not be big enough or interesting enough for a foreigner, while a domestic company would think it?s too expensive to go through with it.? She points out that, in any case, the empirical evidence?of the 400-odd takeovers in the last five years, only 40 saw a response of over 10%?doesn?t quite support the move.

Between us, we?ve polished off the pasta and I can?t coax my guest into having either dessert or coffee. Mody says it is debatable whether large corporates should be allowed to set up banks. ?How are they going to deal with the conflicts and the fact that RBI suspects these things will happen?? She feels that it is unlikely that the proposal for one financial regulator, as suggested in the Raghuram Rajan report, will be accepted, but feels that regulators will talk to one another more than before. Our chat, though, must end now although I?m not done with my questions and we walk back together to our offices across the street. It?s time to get back to work.