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The National Company Law Tribunal (NCLT) has fixed March 17 as the next date for hearing a petition filed by Cyrus Mistry camp seeking waiver off certain conditions to make him eligible to challenge Tata Sons’ decision to oust him as the Chairman.
On Tuesday, NCLT heard the arguments of Mistry’s counsel and posted the new date to hear Tata Sons’ side.
According to the Companies Act 2013, an individual or party needs to hold at least 10 per cent of issued share capital (equity plus preference shares) in a company to move the tribunal. Tata Sons’ counsel argued that even though the two family firms — Cyrus Investments and Sterling Investment Corporation — hold 18.4 per cent equity stake in Tata Sons, they own only 2.17 per cent of the total share capital of the Tata holding company.
Agreeing with the Tata’s position, the NCLT ruled, “We do not find any merit in the argument of the petitioner counsel saying that since the redeemable preference shares shareholding be shown as debt in the accounting treatment, preference shares cannot be equated with equity shareholding to invoke section 244, because showing in accounting treatment will neither change the concept of company law nor have any bearing on the mandate of the statute.”
The NCLT added that when the language of section is plain and simple there was no point discuss every decision and to arrive to a conclusion to say that they are not applicable to present case. “Therefore this bench is of the opinion that the petitioners side has failed to satisfy the bench that this petition is maintainable,” NCLT stated.
However, the Companies Act also provides for these conditions to be waived by the tribunal. NCLT will take a view on this aspect on March 17.
On December 22, the two Mistry firms had moved NCLT alleging mismanagement of Tata Sons and oppression of minority shareholders.
Earlier in January, NCLT had refused to grant a stay on Tata Sons’ move to oust Cyrus Mistry as its Director through an extraordinary general meeting on February 6. Mistry has sought intervention from various entities, including the Central government, the market regulator SEBI and the National Company Law Appellate Tribunal but so far he has not had much success against Tata Sons.
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