Plea against Tata Sons
Cyrus Mistry’s family firms will now move appellate tribunal against NCLT’s decision, say lawyers
MUMBAI: The National Company Law Tribunal (NCLT) on Monday refused to grant a waiver to Cyrus Mistry family firms from the minimum shareholding requirement for filing a petition alleging mismanagement and oppression of minority shareholders at Tata Sons Ltd.
NCLT also dismissed the main petition alleging mismanagement and oppression. In an oral order, the two-member bench dismissed the waiver petition and main petition. The final order will be available on Friday.
The Mistry family firms will now be moving the National Company Law Appellate Tribunal (NCLAT) against NCLT’s decision once they receive a copy of the order, said their lawyers.
Cyrus Investments Pvt. Ltd and Sterling Investments Pvt. Ltd asked the NCLT to waive the requirement that shareholders hold at least 10% of a firm to file a petition alleging mismanagement and oppression.
They were seeking the waiver after NCLT on 7 March ruled that their petition was not maintainable because of this technical requirement. While these firms hold 18.4% of ordinary shares in Tata Sons, when preference shares are counted, it comes down to only about 2.17%.
Aryama Sundaram, counsel for the Mistry family firms, argued for the waiver citing concerns on voting and veto rights accorded to Tata trustees on the board of Tata Sons.
The spat between the Mistry firms and the Tatas started when Mistry was removed as Tata Sons chairman on 24 October. He was later ousted from its board.
“Tata Sons interprets the ruling by the NCLT as demonstrating that the petitioners failed to make a convincing or compelling case that warranted a hearing on alleged mismanagement, oppression or other actions,” Tata Sons said in an emailed statement. “We hope this brings to an end a vexatious campaign against the Company, the Tata Trusts and Mr. Ratan N. Tata.”
A spokesperson for Cyrus Mistry declined comment.
Some legal experts said they were surprised at NCLT’s decision. “They had a valid reason for a waiver because it’s (Tata Sons) not a private company and the holding company holds several public companies,” said Ramesh Vaidyanathan, managing partner at law firm Advaya Legal. “Therefore, in my view, the option could have been exercised in favour of the petitioner. The tribunal, by dismissing the petition, has adopted a very hyper-technical approach.”
That said, the legal battle has not ended as there are several options for the Mistry investment firms, including approaching the high court or civil sessions court apart from NCLAT.