National Company Law Tribunal dismisses Cyrus Mistry’s plea against Tata Sons

Tata Sons welcomes verdict, Mistry to appeal against order, fight ‘brute rule of majority’.
Cyrus Mistry (File photo | Reuters)
Cyrus Mistry (File photo | Reuters)

MUMBAI: The National Company Law Tribunal (NCLT) has dismissed the petition filed by Cyrus Mistry’s investment firms against Tata Sons, its chairman emeritus Ratan Tata and some directors and board members.

Tata Sons welcomed the ruling hoping that finality will be given to the NCLT judgement pertaining to the stunning boardroom coup in India Inc’s history. But the verdict could end up as a temporary relief as Mistry and team intend to appeal against the order once again to protect shareholders from the “wilful brute rule of the majority” at Tata Sons.

In a packed court on Monday, the two-judge bench comprising BS V Prakash Kumar and V Nallasenapathy, pronounced an oral order hinting that Mistry’s ouster was due to lack of shareholders’ trust.

“We have not found any purported merit or issues raised by the minority shareholder in his petition under the Section 241 and 242 of The Companies Act, 2013,” the bench said.

Within an hour of the ruling, Mistry said in a statement that the verdict was 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,” he said, adding that an appeal on merits will be pursued.

Expect more action as Mistry vows to dig deeper for dirt on issues related to Tata Teleservices Ltd, Air Asia India, recovery of dues from C Sivasankaran, loss-making Nano and resolution of Tata Steel Europe.

“...the facts that were under consideration and mismanagement will be under scrutiny and will be pursued in full earnest,” it said.

Tata Sons, meanwhile, said the ruling vindicates their position.

“The judgement has only re-affirmed that Tata Sons and its operating companies have always acted in a fair manner and in the best interest of its stakeholders,” said N Chandrasekaran, Chairman, Tata Sons.

The Tata-Mistry legal spat started after the latter was drummed out of office on October 24, 2016, citing underperformance and loss of confidence in him.

He moved NCLT in December 2016, but the bench dismissed the petition citing eligibility clause. Mistry challenged it, moving the NCLAT, which heard the case between October 2017 and February 2018.

Mistry challenged his ouster as chairman and director of the Tata Sons board, terming it a case of oppression by the promoters who have over 68 per cent stake in Tata Sons via Tata Trusts.

According to him, the Tatas made changes to the articles of association to further his dismissal. Mistry and family is the single largest shareholder with about 18 per cent stake in Tata Sons, but have just about 4 per cent voting rights.

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