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Ousted Tata Sons Chairman Cyrus Mistry’s petition before the National Company Law Appellate Tribunal (NCLAT) has alleged that the lower court’s judgement is replete with errors of reasoning and errors of law. The plea before NCLAT is slated to come up for hearing on Tuesday.
Mistry has filed the appeal with NCLAT again through two family-run investment firms — Cyrus Investments and Sterling Investments Corp. This is to continue with the fight for the rights of minority shareholders and to uphold the highest standards of governance expected from the House of Tatas, said sources briefed on the matter.
In the petition filed before the appellate tribunal, Mistry accused the NCLT of relying on external information, and said the judgment “liberally quotes from Wikipedia, Britannica and other websites to build a character certificate for the Tata Group and prejudge issues at the threshold”.
It also alleges that the NCLT order “conveniently and selectively” ignores other contemporaneous incidents that judicial cognizance ought to have been taken about (such as the FIRs against entrepreneur C Sivasankaran and the investigation into AirAsia).
According to people briefed on the matter, the petition also stated that the judgment ignored the vital principle that Section 241 to 244 of the Companies Act 2013 was specifically provided to ensure the protection of minority shareholders against the “brute will of the majority”.
Further, the latest petition also accuses the NCLT of stifling the voice of the minority shareholders, which, in turn, results in “corporate dictatorship” rather than “corporate democracy”.
Corporate governance
The petition also alleges that the judgment is in direct conflict with well-settled jurisprudence on corporate governance. This is because the order stated that the majority shareholders, who are not on the board of the company, must have prior information to take an informed decision to advise his nominee director on what is the “right call” to take.
In the cases of AirAsia and Sivasankaran, pleadings and publicly available material reflected in the CBI FIRs against these individuals showcased the “real and material concerns” that the “impugned order failed to take note of”, it added.
On NCLT giving a clean chit to AirAsia India directors, Mistry’s latest petition alleged that their claim — that management control was with Malaysian partner AirAsia Bhd — would render the Indian company to be in violation of FDI regulations.
Mistry’s office declined to comment on the development, stating that the issue was sub-judice.
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