Ness Wadia's conviction in Japan in a drug case has hit the shares of listed Wadia Group companies but ambiguities regarding relevant legal provisions could delay the issue's impact on boardrooms, according to reports. A court has handed a two-year suspended jail term to the 47-year-old scion of one of India's oldest industrial conglomerates who is no stranger to controversies including molestation charges.
The boards of the Wadia Group companies are apparently on a firmer footing because the law is ambiguous about conviction in a foreign court, a report on the Hindu Business Line says. As per the Indian Companies Act, a person has to vacate his position as a director if he is convicted by a court of any offense, whether involving moral turpitude or otherwise and sentenced in respect thereof to imprisonment for not less than six months, the report quotes Ashish Kumar Singh of Capstone Legal as saying. "The definition of courts is not proper as it has no mention of any foreign courts in it, and hence, the sentencing by the Japanese court will not have any impact on his (Ness Wadia's) directorship," Singh said. The government may have to interfere in matters like this to protect the larger interest of shareholders by amending the law, he says.
Another expert drew a parallel with the former ICICI Bank boss Chanda Kochhar, who had to step down following the filing of criminal charges. There are several provisions available in the Companies Act under which action can be taken against a person under the above-mentioned circumstances, Prem Rajani of Rajani Associates said. In Wadia's case, there was a conviction and sentencing.
However, the bloodbath of the listed companies of the Wadia Group, which Ness' father Nusli Wadia heads, continues on the market. The group's flagship company Bombay Deying, listed on Bombay Stock Exchange (BSE), was hovering over Rs 119 around noon on Thursday, having closed at Rs 112.60 on the last trading day of Tuesday. The market was closed for Maharashtra Day on Wednesday.
On Tuesday, the share opened at Rs 125 and hit a low of Rs 103 before recovering a little to shed 9.78 percent of its value. Britannia Industries was trading about 2.75 percent down on National Stock Exchange (NSE) around noon on Thursday at Rs 2,814 after opening at Rs 2,927. On Tuesday, Britannia lost about 2.5 percent to close at Rs 2,896 after opening the day at Rs 2,970. Bombay Burmah Trading Corporation was trading at Rs 1,237 on NSE around noon after opening the day at Rs 1,250. It fell by about 2.40 percent on Tuesday to close at Rs 1,246 after opening the day at Rs 1,276 and hitting a low of Rs 1,190. The continuing uncertainty over the legal issues is expected to roil the market for a few more days, according to market observers.
A media report says cricket administrator Board of Control for Cricket in India (BCCI) has asked Indian Premier League (IPL) team Kings XI Punjab of which Ness Wadia is a co-owner for clarification on the case and may examine the reply on Friday's meeting. The legal opinion, however, is that the cricket team may argue that the sentence has been suspended and, therefore, should not be the cause for any action against the team. The team also co-owned by Bollywood actress Preity Zinta, businessman Karan Paul and businessman Mohit Burman is virtually out of this year's edition of the tournament as it is among the two worst-performing teams, the other being Indian cricket captain Virat Kohli-led Royal Challengers Bangalore. Though budget airline GoAir is a Wadia Group company, it is not listed yet.