Cyrus Mistry vs Tata Sons: NCLT dismisses Mistry's waiver application
The petitions were filed by two firms belonging to Cyrus Mistry's family, and sought waiver of an eligibility condition for moving the forum against Tata Sons.
Mumbai: Tata Sons on Monday welcomed the NCLT dismissing the petitions by the Cyrus Mistry camp and said it vindicates the position of the group. "The ruling today by the National Company Law Tribunal (NCLT) dismissing the waiver application of the Shapoorji Pallonji Group companies, on behalf of Cyrus Mistry, represents a vindication of our position. We hope this brings to an end a vexatious campaign against the company, the Tata Trusts and Ratan N Tata. Tata Sons will continue its focus on its future development under the stewardship of our chairman N Chandrasekaran," F N Subedar, chief operating officer of Tata Sons said in a statement late Monday evening.
"We are pleased that Mistrys claims have been dismissed by the NCLT," he added and welcomed the NCLT ruling.
Earlier in the day, the NCLT dismissed the waiver application by the Mistry camp filed against Tata Sons. The petitions were filed by two firms belonging to Cyrus Mistry's family, and sought waiver of an eligibility condition for moving the forum against Tata Sons.
Dismissing the petitions, NCLT bench led by BSV Prakash Kumar and V Nallasenapathy said, "The waiver is dismissed, the company petition dismissed." The reasons for the order will be given out later in the week.
"We interpret the NCLT ruling as demonstrating that the petitioners failed to make a convincing or compelling case that warranted a hearing on alleged mismanagement, oppression or other actions," Subedar said.
Monday's was the fifth such ruling by the company law tribunals, rejecting reliefs requested by the Shapoorji Pallonji Group companies and Mistry.
"Mistry has made many ill-advised and groundless allegations intended to besmirch the name of the Tata Group," Subedar, said, adding, "Todays ruling makes clear that there is no case to be heard. Over the past six months, Mistry has failed demonstrably to build a case. We trust that the NCLTs decision brings this matter to a close," he concluded yesterday.
The two firms -- Cyrus Investments and Sterling Investments -- wanted NCLT to waive the requirement that shareholders hold at least 10 percent of a firm to file a petition alleging mismanagement and oppression.
While the Pallonji Group owns 18.4 per cent of ordinary shares in Tata Sons, their ownership comes down to only about 2.17 per cent when preference shares are counted.
Together, Pallonji Group is the single largest shareholder in the US $105 billion group with 18.4 percent stakes in Tata Trusts, which collectively own 64 percent in the group.
Aryaman Sundaram, counsel for the Mistry family firms, had argued for the waiver citing concerns on voting and veto rights accorded to Tata trustees on the board of Tata Sons.
Mistry, after being ousted from the group as chairman on 24 October last, had alleged that there was mismanagement and oppression of minority shareholders and urged NCLT to use its discretion and waive an eligibility condition for filing such a petition.
The NCLT had on 6 March, 2017 held last month that the plea was not maintainable, because the petitioner firms did not meet one of the eligibility criteria prescribed by Section 244 of the Companies Act of 2013.
Mistry contended that under the Companies Act, the tribunal can waive a requirement that petitioner should hold at least one-tenth of issued share capital of the company, or represent at least one-tenth of minority shareholders.
Tata Sons had argued that if preference capital was also considered, the petitioner firms held only 2.17 percent of the total issued share capital of Tata Sons.
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The Tata group and Mistry are currently fighting it out in the court after last year's bitter board room battle in which the latter was removed from the top post of the over $100-billion salt-to-software conglomerate.
While business spats are not uncommon in India's financial capital Mumbai, the public allegations of malfeasance and the central role of two billionaire Parsis has not gone down well in the community.
It can be noted that in a surprise move, the board of Tata Sons had on 24 October, 2016 sacked Cyrus Mistry as its chairman, barely two years into office.