In a major setback to Cyrus Mistry, the Mumbai bench of National Company Law Tribunal (NCLT) on Monday dismissed his petition against Tata Group with respect to his removal as Tata Sons chairman and observed that Mr. Mistry’s conduct does not augur well for smooth functioning of Tata Sons.
The two member Bench comprising Justices B.S.V. Prakash Kumar and V. Nallasenapathy rejecting proportional representation for Mistry Group on the Tata Sons board, said that Tata Sons can’t be prevented from becoming a private company, a move opposed by Mr. Mistry as it imposed restrictions on his family’s ability to sell their 18% stake in Tata Sons to outsiders.
In major sigh of relief to Tata Sons, the company court ruled that the board of directors are competent, and that there is no merit in allegations against Ratan Tata, N.A. Soonawala of being super directors. Mr. Mistry had alleged that they were interfering in the governance of Tata Sons.
Disappointed with the judgement, Cyrus Mistry's office in a statement said that the ruling of the NCLT is disappointing although not surprising.
“We will continue to strive for ensuring good governance and protection of interests of minority shareholders and all stakeholders in Tata Sons from the wilful brute rule of the majority,” said the statement from Mr. Mistry’s office adding that the ruling is in line with the earlier position expressed by the Tribunal.
“An appeal on merits will be pursued. Matters like TTSL, Air Asia, recovery of dues from Siva, non-closure of a loss-making Nano, a struggling resolution of Tata Steel Europe, all present serious issues that will be pursued. Not only the facts that were under consideration but also subsequent facts and developments that continue to evidence oppression and mismanagement will be under scrutiny and will be pursued in full earnest,” said the statement.
The company court had also ruled that the Tata Sons board of directors are competent, and that there is no merit in allegations against Ratan Tata, N.A. Soonawala of being super directors. Mr. Mistry had alleged that they were interfering in the governance of Tata Sons.
The key allegation by Mr. Mistry is that his removal as chairman and subsequently as a director on the board of Tata Sons was a result of oppression by Tata Sons promoters (Tata Trusts) as they own over 68% stake in Tata Sons. Mr. Mistry’s investment firms, that filed the petition holds 18% stake in Tata Sons, though holding with voting rights only 4%.
Mr. Mistry had moved to Mumbai bench of NCLT in December 2016 but the bench had dismissed his petition in early 2017 citing eligibility clause, which was challenged in the NCLAT, which asked the bench to hear the matter afresh. The hearing for the case lasted over four months from October 2017 to February 2018.
“Cyrus Mistry firms will now approach the National Company Law Appellate Tribunal (NCLAT) against the judgment,” said a legal source in the know of the development. The key allegation by Mr. Mistry is that his removal as chairman and subsequently as a director on the board of Tata Sons was a result of oppression by Tata Sons promoters (Tata Trusts) as they own over 68% stake in Tata Sons.
In October 2016, Mr. Mistry was ousted as Tata Sons Chairman .
Two months later, he and his family-run investment firm, Cyrus Investments, approached the NCLT as minority shareholders against the corporate monolith and others, including Ratan Tata, alleging oppression and mismanagement.
As per the plea, five months later he was also removed from the post of director of Tata Sons’ board for approaching the NCLT.
“Ours has always been a principled fight to restore the Tata Group to its glorious days of high standards, best practices and most importantly, the best value systems. In this journey, no matter how hard it may seem, as shareholders who have always supported the Tata Group, it remains our duty to protect the Tata Group from those were destroying value and making the Group vulnerable to external forces,” the statement from the office of Cyrus Mistry added.
(With inputs from PTI)
