The Evolution of Corporate Law in Post-Colonial India: From Transplant to Autochthony

Abstract

The essential thesis of this paper is that while Indian corporate law began as a legal transplant from England, it has been progressively decoupled from its source with subsequent amendments and reforms being focused either on finding solutions to local problems or borrowing from other jurisdictions. To that extent, decolonization has had a significant effect of radically altering the course of Indian corporate law. Current Indian corporate law not only represents a significant departure from its colonial origins, but the divergence between Indian law and English law as they have developed since independence has been increasing. While the Indian lawmaking process indulged in close cross-referencing of English legal provisions during the colonial period and immediately thereafter, the more contemporary legislative reforms pay scant regard to corporate law in the origin country that initially shaped Indian corporate law. This offers valuable lessons. First, even though India is considered to be part of the “common law” family, corporate law has evolved somewhat differently from the origin country, England. In that sense, it casts significant doubt on the assumption that all countries within a legal family bear similarities. On the contrary, each host country may follow a trajectory that is different from that followed by the origin country of corporate law. Second, it supports the proposition that legal transplants can be challenging unless the local conditions in the host country are similar to that in the origin country. Variations in economic, social, political and cultural factors may bring about dissonance in the operation of a transplanted legal system. Third, a comparison of the historical colonial experience in the functioning of the transplanted legal system and the more contemporary experience in the post-colonial period suggests fragility in the foundations of the transplant.