Tata Sons Vs Mistry Battle Continues At NCLT
NCLT resumes hearing in Mistry’s challenge to Tata Sons.
The National Company Law Tribunal today resumed hearing the oppression and mismanagement petition filed by two Cyrus Mistry firms against Tata Sons Ltd.
The plea, rejected by the same bench earlier, is being heard again after the appellate tribunal granted the two Mistry family firms a waiver from the 10 percent shareholding requirement to pursue the matter. The NCLT began hearing the case in November. It stems from Mistry’s removal as Tata Sons chairman in October 2016.
In his arguments, Senior Advocate Aryama Sundaram, representing the Mistry firms, highlighted several alleged instances of oppression against the minority shareholders and acts of mismanagement by the directors representing the majority shareholder— the Tata Trusts.
Among his key arguments were:
- Mistry’s removal as chairman of Tata Sons was without any justifiable reason, in contravention of the law and the procedures laid down under the articles of association of Tata Sons. This left the Mistry companies with no say in the management of Tata Sons.
- Mistry’s removal from the management of the company was in the interest of the Tata Trusts, the single largest shareholder, and not in the interest of the company itself.
- Converting Tata Sons from a public company to a private entity will do away with the requirement of having independent directors on the board and allow the majority shareholders to impose harsher restrictions on transfer of shares, taking away the liquidity of minority shareholders.
- Tata Sons’ constitutional documents restrict free transfer of shares by the minority group—something that is not endorsed by the corporate law for public companies.
- Excessive control is exercised by trustees of the Tata Trusts over managements of Tata Sons and the Tata Group companies. That’s not in line with corporate governance principles.
Over the next few days, Mistry’s lawyers will conclude their arguments, after which Tata Sons’ lawyers will respond. Hearings are expected to continue till Jan. 16.