NCLAT Reserves Order Over Mistry’s Plea On Tata Sons
The National Company Law Appellate Tribunal reserved its order over a plea of Cyrus Mistry camp seeking a status quo over conversion of Tata Sons into a private company from a public limited firm.
A two-member bench headed by its Chairperson Justice SJ Mukhopadhaya said it would pass an interim order over the conversion and decide the case on merits at a later stage.
Senior advocate CA Sundaram, representing Mistry, questioned the urgency over conversion of status of Tata Sons, the holding company of Tata group of companies. "As late as March 31, 2009, Tata Sons was functioning as a public entity. They continued taking deposits," he said during the proceedings.
He said that they did not bring any article to say that the company shouldn't take public deposits.
NCLAT was hearing the plea filed by Mistry challenging the orders of the National Company Law Tribunal, which had dismissed his plea challenging his removal as chairman of the company.
Tata Sons had received shareholders' nod to convert itself into a private limited company from being a public limited company last September, limiting in effect Mistry’s family's ability to sell their stake to outsiders.
A public limited company allows shareholders to legally sell their stake to anyone but a shareholder of a private limited firm cannot sell the shares to external investors.
The Mistry camp had challenged the July 9 order of the Mumbai bench of the NCLT which dismissed their pleas against his removal as Tata Sons chairman and the allegations of rampant misconduct on part of Ratan Tata and the company's Board.
A special bench of the tribunal had held that the Board of Directors at Tata Sons was "competent" to remove the executive chairperson of the company.
NCLT bench members BSV Prakash Kumar and V Nallasenapathy had also said that Mistry was ousted as chairman because the Tata Sons' Board and its majority shareholders had "lost confidence in him".
Two months after his removal, Mistry's family-run firms Cyrus Investments Pvt Ltd. and Sterling Investments Corp. approached the NCLT as minority shareholders, against Tata Sons, Ratan Tata and some other board members.
He also alleged that Tata Trust chairperson Ratan Tata and trustee N Soonawala interfered with the day-to-day operations of the group companies, they acted as shadow directors, all of which caused a massive revenue loss for the group.