Satyam Fraud Makes Govt. Rethink Class Action Suit

by CXOtoday Staff    Jul 27, 2009

The Satyam fraud case has finally made the government realize the need to include the concept of class action suit in the new Companies Bill, to help investors claim damages from fraudulent companies.

The government is likely to introduce the Bill in the current session of parliament.

Salman Khurshid, the minister for corporate affairs, said small investors, who at present are not able, unlike in the US, to get compensation in cases of fraud due to the absence of any such law, will be able to fight for justice with class action suits.

Class action suits allow one party, on behalf of a group of individuals, to file for claims against erring companies in a court of law.

Recently, the Midas Touch Investor Association, an NGO, had filed a petition with the National Consumer Disputes Redressal Commission asking for compensation on behalf of Satyam investors. The petition alleged that they were deceived by misleading statements of the IT company and duped into buying its shares at a manipulated price.