Tribunal Asks Mistry To Provide Evidence To Prove Allegations Against Tata Sons
Decisions are being taken to pamper the ego of Ratan Tata, said Mistry’s counsel.
The National Company Law Tribunal, which took up the suit filed by two investment firms run by Cyrus Mistry’s family, brought up the lack of documented evidence to prove a nexus between the alleged frauds and financial malpractice at Tata Sons Ltd., and Ratan Tata.
Mistry's two private investment companies had on December 21 filed a petition under Sections 241, 242 and 244 of the Companies Act, 2013, arguing oppression and mismanagement by Tata Sons, Ratan Tata and others.
Read: The Eight Instances That Mistry Cites To Make Case For Oppression And Mismanagement By Tata
Senior counsel Aryama Sundaram represented Cyrus Investments Private Ltd. and Sterling Investment Corporation Ltd., through which Shapoorji Pallonji Group holds an 18.4 percent stake in Tata Sons. Senior counsel Abhishek Singhvi appeared for Tata Sons .
Sundaram initially pressed for ad interim relief
- that Tata Sons not be allowed to make any changes to their articles of association
- that they be directed not to remove Mistry from the board of directors
- and that Tata Sons be prevented from any dilution of shareholding
He however withdrew these after the bench indicated its unwillingness to grant any interim relief. It said it would rather the matter be heard fully and finally, given that the outcome had ramifications for the country as a whole. This was consented to by the counsels of all the respondents as well as the petitioner.
The Arguments
Sundaram argued that Tata Son's Articles of Association are being used as “instruments of oppression” against minority shareholders and that the company runs at the whim of Ratan Tata.
Referring to decisions on Nano and AirAsia, Mistry's counsel said that the allegations regarding financial impropriety had not been answered yet. But the Tribunal queried this line of argument and asked for evidence of acts of improper conduct.
"Can you take out your cudgels just because you have been sacked?" questioned the court when Sundaram alleged that various decisions were being taken to "pamper the ego of Ratan Tata".
When the lawyer argued that he represented investment companies holding 18.37 percent minority stake in Tata Sons, the NCLT replied saying the companies are a "shadow."
The Outcome
The two-member bench comprising of Prakash Kumar, judicial member and Nallasenapathy, technical member, directed Mistry to file an affidavit within one week and directed Tata Sons and other respondents to file their replies to both the original petition and Mistry’s affidavit within 15 days. Mistry’s companies will then have 15 days thereafter to file rejoinders.
All parties have also been ordered not to file any interim applications and to stick to the time table set out.
The tribunal will next hear the matter on January 31 and February 1, 2017.