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Tribunal Reserves Order On Cyrus Mistry’s Contempt Petition Against Tata Sons

Tata Sons’ counsel urged NCLT to dismiss the petition and award costs to the company

The entrance of the Mumbai bench of the National Company Law Tribunal. (Source: BloombergQuint)
The entrance of the Mumbai bench of the National Company Law Tribunal. (Source: BloombergQuint)

The National Company Law Tribunal in Mumbai has reserved its order till Wednesday (January 18) on a contempt petition filed by two Cyrus Mistry companies against Tata Sons.

The two firms had moved the tribunal after Tata Sons called an extraordinary general meeting (EGM) on February 6 to remove Cyrus Mistry from its board. The holding company of the Tata Group had sacked Mistry as its chairman on October 24, 2016, citing loss of trust.

Senior counsel Aryama Sundaram, representing the Mistry companies, told the tribunal that the move by Tata Sons was in direct violation of NCLT’s December 22, 2016 order, which stated that none of the parties would file any interim applications or initiate any action on Mistry’s petition pending final hearing, which is scheduled for January 31.

The contempt petition has urged the tribunal to direct Tata Sons not to remove Mistry from its board of directors. Sundaram said the decision to call the EGM was against the spirit of the December 22 order, which intended to avoid multiplicity of proceedings and unnecessary delays.

Abhishek Manu Singhvi, appearing for Tata Sons, said the contempt petition was an abuse of process, as it was implicit from the December 22 order that no additional filings would be made either at the NCLT or any high court, pending a final hearing, and nothing else.

Singhvi said Tata Sons had given no undertaking on any of the reliefs sought in the earlier petition filed by the Mistry companies, nor was there any explicit direction from the tribunal, so the question of willful disobedience and contempt did not arise. He called Sundaram’s assertion an “ambush argument” and an “attempt to gag by stealth”.

He urged the tribunal to dismiss the contempt petition and award costs to Tata Sons.

Singhvi also explained the reason behind the urgency to remove Mistry from Tata Sons board. With references to the Trojan horse, Vibhishana from the Ramayana and Kaliyuga thrown in, he said that Mistry had started a process of deliberate and targeted leaks intended to damage the Tata Group, which was in clear violation of his fiduciary duties as a director.

Singhvi also made a reference to Mistry’s disclosures to the income tax department regarding the functioning of the Tata Trusts, which was denied by Sundaram and Mistry's counsel Janak Dwarakadas. Both said the disclosures were in response to an income tax notice Mistry had received.

Dwarakadas also said there need not be an undertaking which was violated to constitute contempt. An undertaking need not be express, but could also be implicit, as in this case, he said.

He said the tribunal’s December 22 order was clear that all parties must maintain status quo, which had been agreed to .