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.
“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.
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.
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.
(With inputs from PTI)
Mr. Mistry can appeal against this order before the National Company Law Appellate Tribunal.