Tatas Get The Last Word As Their Battle With Mistry Concludes At NCLT
Tatas’ counsel today defended the contested provisions of Tata Sons’ Articles of Association.
In their last attempt at refuting Mistry firms’ oppression and mismanagement claim, Tata Sons Ltd.’s counsel Abhishek Manu Singhvi defended the contested provisions of the company’s Articles of Association.
Singhvi argued that the challenge against Article 75, which can compel Mistry firms to transfer their shares in the company if the majority shareholders so decide, comes too late in the day since this article, “even if illegal”, has been in the Articles of Association since the time the two firms invested.
An opportunity to object to the article was also presented to the minority when amendments were proposed during Cyrus Mistry’s tenure as Tata Sons’ chairman. Besides, the challenge is premature since the firms are apprehending that the Tatas will use this provision to squeeze them out, Singhvi argued.
The National Company Law Tribunal began hearing this matter in November last year after the appellate tribunal granted the two Mistry firms waiver from 10 percent shareholding requirement to pursue charges. In this dispute the Mistry firms have claimed oppression of minority and mismanagement of affairs of the company. The dispute stems from Mistry’s removal as Tata Sons chairman in October 2016 and later as a director.
Singhvi also defended the retention of Article 121 and 121A, which give Tata Trusts’ nominee directors a veto right over certain important matters. This article was amended during the chairmanship of Mistry, who voted in its favour, thereby allowing the veto only if approved by a majority of the Trusts’ nominee directors rather than all. “It must be shown how presence of this article, which is commonly found in articles of other companies, led to prejudice against minority,” he said.
The alleged bad faith conduct of Cyrus Mistry, the ‘trojan horse who communicated on behalf of and to the detriment of Tata Sons with the income tax department” was also pointed out. “No-one acts like this. This was an act of vendetta,” Singhvi argued.
SN Mukherjee argued on behalf of the trustees of the Tata Trusts, the largest shareholder of Tata Sons who hold approximately an 66 percent stake in the company. The two Mistry firms together hold 18 percent stake.
An 18 percent shareholder cannot reasonably ask to control the affairs of a company, he argued while relying on several judgements for support. There is no underlying basic obligation that entitles the Mistry firms a right over management of the company and in light of this an oppression and mismanagement plea cannot stand, he argued.
Mohan Parasaran concluded the closing arguments by reiterating that Tata Sons has retained its characteristics as a private company throughout and should be allowed to formally convert.
During the course of the hearing today there was some friction between the two sides on whether some oral arguments made by the Mistry firms in the rejoinder were outside the scope of their written pleadings, making them non-admissible. The bench ruled on this and stated that it will go into each and every factual aspect of the rejoinder submission filed by petitioners’ and Cyrus Mistry’s counsel Somashekar Sunderashan. If the bench finds that an argument is not present in the written petition, it will not be considered while deciding the main company petition.
The arguments have come to an end. Both parties now await the order of the NCLT.