Former Tata Sons’ chairman Cyrus Mistry on Monday vowed to continue to fight to protect the interests of minority shareholders after the National Company Law Tribunal (NCLT) ruled that his petition alleging mismanagement at Tata Group companies held no merit.
“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,” Mr. Mistry’s office said in a statement. “Matters like TTSL, Air Asia, recovery of dues from Siva [C. Sivasankaran], non-closure of a loss-making Nano, a struggling resolution of Tata Steel Europe, all present serious issues that will be pursued.”
Directors ‘competent’
Earlier, the two-member Mumbai Bench of the NCLT rejected proportional representation for the Mistry Group on the Tata Sons board and said that Tata Sons couldn’t be prevented from becoming a private company, a move that had been opposed by Mr. Mistry as it imposed restrictions on his family’s ability to sell their 18% stake in Tata Sons to outsiders. The tribunal ruled that the company’s directors were competent, and found no merit in Mr. Mistry’s allegations that Ratan Tata and N.A. Soonawala had acted as ‘super directors’ and interfered in the governance of Tata Sons.
Welcoming the judgement, the the conglomerate’s holding company said in a statement that the order vindicated the position of the Tata Trusts and Tata Sons.
“The judgement has only re-affirmed and vindicated that Tata Sons and its operating companies have always acted in a fair manner and in the best interest of its stakeholders,” N. Chandrasekaran, Chairman Tata Sons, was quoted as saying in the statement. “The Tata Group has always been committed and will continue to be committed to transparency and good corporate governance of global standards,” he said, adding that he hoped the ruling would bring finality to the matter and be accepted by all concerned in the larger interest of the shareholders and the public.
‘Vindication’ of ouster
Ratan Tata, chairman of the Tata Trusts said in a statement that the NCLT’s judgement was “a vindication of the actions that Tata Sons felt obliged to take in October 2016.”
Mr. Mistry’s key contention concerns the manner of his removal as chairman and subsequently from the post of director on the board of Tata Sons. He has alleged that the actions were a result of oppression by Tata Sons’ promoters (Tata Trusts) as they own more than 68% stake in Tata Sons. Mr. Mistry’s investment firms, which had collectively filed the petition challenging his ouster, hold 18% stake, though their holding in terms of voting rights represent only 4%.
Mr. Mistry’s firms, which had first moved the Mumbai bench of NCLT in December 2016, had to approach the NCLAT for relief after the bench initially tossed the petition citing issues of eligibility.
The fresh hearing by the NCLT extended over four months from October 2017 to February 2018.
“Natural justice has not been done in this case as NCLT overlooked the fact that minority shareholders have rights in the Companies Act,” said Anil Singhvi, chairman ICAN Investment Advisors. “It’s a much larger issue than Tata versus Mistry. How can the chairman of India’s largest group be sacked without even being given a show cause notice? I am sure, we will hear the final word on this from the Supreme Court.”
“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.