A brief history of Indian companies' tryst with class action suits

Companies ranging from IT to pharmaceuticals have been dragged to courts

Reports have emerged of two American law firms — The Rosen Law Firm and Schall Law Firm — initiating class action suits against HDFC Bank, over alleged improprieties in its vehicle lending business, which affected investors once it was brought to light. The bank’s securities fell almost three per cent as a result.
 

HDFC Bank isn’t the only listed Indian company to face a class action suit, where claims of multiple people are aggregated into one case.
 

Companies in sectors ranging from information technology to pharmaceuticals have all been dragged to courts at various times. Here are a few prominent cases:
 

Satyam Computer Services
 

American investors in the IT firm filed a lawsuit after the company’s shares plummeted in 2009. Founder Ramalinga Raju had admitted to overstating earnings reportedly by over $1.5 billion. Cases were filed in January 2009 after the revelations. The Mahindra group took over the company after the allegations. The company paid $125 million to settle charges in February 2011. However, that did not cover individuals, including Raju.
 

Institutional investors from multiple countries — including the UK, Norway and Denmark, apart from the US —  were involved in the case.

 

Dr Reddy’s Laboratories
 

A class action complaint was filed against the firm in August 2017, alleging violations of American securities regulations and detailed “22 false or misleading statements”. These pertained to its compliance with the American drug regulator’s rules, inspection observations and the company’s efforts at remedial action along with accompanying production delays.
 

The operative complaint was filed in March 2018. Some allegations were addressed in a March 2019 court decision. The company announced a settlement of the remainder of the litigation on May 2020. It paid $9 million without admitting or denying wrongdoing.
 

Infosys
 

A whistleblower’s letter alleged financial irregularities at the firm. Investors filed a class action suit based on this. “The complaint, which was filed in the Eastern District of New York, was brought on behalf of a class consisting of persons or entities who purchased the company’s publicly traded securities between July 7, 2018, and October 20, 2019, and alleged claims for violations of the US federal securities laws,” according to  company filing. The company said  the suit was dismissed in May 2020.
 

Tata Consultancy Services
 

 The firm faced a class action suit from its workers. Former employees alleged that it forced non-Americans to hand over tax refunds. This was granted class action status in April 2012. The company denied the allegations. It paid $29.75 million in 2013 to settle the case without admitting or denying the charges.