New Delhi, May 5: The National Company Law Appellate Tribunal (NCLAT) on Thursday heard two cases filed by ousted Tata Son’s chairman Cyrus Mistry’s firms here. A bench headed by Justice S J Mukhopadhyay decided that the case will be heard on July 3 again. Mistry had sought maintainability of the petition alleging “mismanagement and oppression of minority” at Tata Sons, along with a waiver of the shareholding requirement rules.
According to the the Companies Act requirement, the appellant should have at least 10 per cent holding to file a petition of the kind that Mistry did. The Mistry family on the other hand, holds 18.34 per cent of common equity in Tata Sons, which falls to 2.17 per cent when preference shares are taken in consideration. Therefore, the NCLT had rejected both the waiver plea and petition alleging mismanagement on April 17.
However, on March 6, NCLT had set aside the petition on maintainability. During the April 17 hearing, it was informed by Mistry’s counsel to the NCLT that they were going to appeal against the order rejecting the waiver application. Senior lawyer C A Sundaram said that the appeal was in the process of getting filed, following which, presiding judge Justice S J Mukhopadhyay adjourned the matter for May 4. In its order that was made available on April 22, the appellate tribunal had stated that the waiver could only be granted in exceptional cases.
The order said that such a waiver can only be granted in cases of fraud, misappropriation of company assets, breach of trust by directors, fraudulent payout from the company funds and breach of Articles of Association. It said clearly that Mistry’s petition had failed to make a compelling case for any of the above. It also said that Mistry in his petition was not able to prove that the economic interest of his firms was hurt by any action of Tata Sons’. The petition was filed by Cyrus’s firms Cyrus Investments Pvt. Ltd and Sterling Investments Pvt. Ltd.
Livemint quoted the order as stating, “In the situation where the minority shareholders continue in the management, in fact as head of the management, can today raise an allegation that every decision is thrust upon me as fait accompli?” Cyrus Mistry was overthrown as the Chairman of Tata Sons in a board room coup on October 24, last year, setting the stage for a long-drawn between the company patriarch Ratan Tata and its scion Mistry. Most of his allegations pertain to the period when he himself was the Chairman of the company, stated NCLT presiding member B.S.V. Prasad, adding that the firms had not raised any allegations earlier.