NCLAT admits Mistry’s plea, issues notice to Tata Sons
NEW DELHI: An appellate tribunal on Wednesday admitted ousted Tata Sons Ltd chairman Cyrus P Mistry’s plea challenging a National Company Law Tribunal (NCLT) order that upheld his removal as chairman.
The National Company Law Appellate Tribunal (NCLAT) has issued a notice to Tata Sons seeking a response on the matter within 10 days.
The petition, which has been filed by Mistry in his personal capacity, requests the appellate tribunal to set aside the order passed by the Mumbai bench of NCLT on July 9. Mistry has also said that some words and comments written against him in the NCLT order should be expunged.
The NCLT bench had, as part of the same order, allowed Tata Sons to become a private firm, which has also been challenged in NCLAT by the Mistry family.
The two-judge NCLAT bench, headed by Justice SJ Mukhopadhyay, on Wednesday said that the plea filed by Mistry will be heard on September 24 along with the other petition filed by Mistry’s family-run investment firm, Cyrus Investments Pvt. Ltd.
Last week, the appellate tribunal admitted the plea by Cyrus Investments seeking an interim stay on the conversion of Tata Sons into a private company from a deemed public company and posted the matter for hearing on September 24, after which the fate of Tata Sons as a public company is likely to be decided. It also restrained Tata Sons from forcing the Mistry family out of the holding company till the hearing on the matter is over.
“If the appellants (Cyrus Investments) are forced to sell their shares, which may affect the merits of the appeal as they will cease to be member(s) of the company, we direct the respondents (Tata Sons) not take any step in terms of Article 75 for transfer of shares of minority shareholders like appellants and others during the pendency of the appeal,” said the tribunal in its interim order issued on Friday.
Article 75 of the Articles of Association relates to “company’s power of transfer shares”.
If the appellate tribunal allows Tata Sons to become a private firm, it would insulate the company from any threat of being taken over by any entity in a “hostile manner”.
This means any shareholder of privately held Tata Sons will have to seek permission from its board before selling his stake to another entity, including one with a hostile intent. The Mistry family, which had deep ties with the Tata group before the public spat, owns 18.4% stake in Tata Sons valued at $17 billion.
Shareholders of Tata Sons on September 22, 2017 voted in favour of the Tata group holding firm becoming a private company at the first annual general meeting (AGM) under the chairmanship of N Chandrasekaran.
The move was opposed by the Mistry family, represented by a proxy, because it would restrict the ability of his family firms to sell their stake. Mistry, in his appeal filed through a family run investment firm, had also alleged “oppression and mismanagement” on the part of Tata Sons.
Taking note of the issue, the NCLAT in its order said on Friday, “We have noticed the rival contention of the parties. We are not inclined to decide the aforesaid issue at the stage of hearing for grant of interim relief.”