Tribunal dismisses Mistry’s plea

Ousted Tata Sons chief claimed oppression of the firm’s minority shareholders

(FILES) This file photo taken on June 27, 2014 shows Tata Group chairman Cyrus Mistry addressing the 10th Annual General Meeting of Tata Consultancy Services in Mumbai. India's largest conglomerate Tata faces one of the most turbulent periods in its long history after its sudden decision to sack its chairman Mistry, analysts say, as it battles to save its global reputation. Seventy-eight-year-old patriarch Ratan Tata dramatically returned to the helm of the family business on October 24, 2016 after he became upset at the direction Mistry was taking the sprawling group. / AFP PHOTO / INDRANIL MUKHERJEE / TO GO WITH INDIA-ECONOMY-COMPANY-TATA,FOCUS BY VISHAL MANVE

The National Company Law Tribunal (NCLT) has dismissed the plea filed by investment firms owned by ousted Tata Sons chairman Cyrus Mistry seeking waiver from the shareholding requirements for filing a plea against Tata Sons and its directors.

On Monday, the NCLT Bench, headed by member B.S.V. Kumar, dismissed the petition, which effectively dismisses the main petition as well filed by the two entities – Cyrus Investments Pvt. Ltd. and Sterling Investment Corporation Pvt. Ltd. – against oppression of minority shareholders by the directors of Tata Sons.

The tribunal had earlier ruled that the petition was not maintainable but decided to hear the matter to decide if a waiver could be granted.

‘Vindication of position’

“We are pleased that Mr. Mistry’s claims have been dismissed by the NCLT. The order of the NCLT represents a vindication of our position,” said F.N. Subedar, chief operating officer, Tata Sons said in a statement.

“We hope this brings to an end a vexatious campaign against the company, the Tata Trusts and Mr. Ratan N. Tata. Tata Sons will continue its focus on its future development under the stewardship of our executive chairman, Mr. N. Chandrasekaran,” he said.

“Cyrus Mistry’s waiver application as denied by NCLT, Mumbai, unambiguously reflects literal interpretation made by the Hon’ble Bench of NCLT on Section 244 of the Companies Act, 2013 which lays down threshold percentage of 10% to bring a case of oppression and mismanagement under Section 241 of the said Act and does away with applicability of any proviso to Section 244 which could be invoked in exceptional circumstances,” said Nishit Dhruva, managing partner, MDP & Partners, a law firm.

Incidentally, the issue of maintainability was raised by senior advocate Abhishek Singhvi, who appeared on behalf of Tata Sons.

He had said the Mistry firms do not own 10% stake.

While the combined stake of Mistry’s firms is pegged at 18.4% of the ordinary equity shares of Tata Sons, it falls below 10% if the preference shares are also taken into account. Tata Sons had said the Mistry firms hold only 2.17% stake in the firm.