Companies

Mistry files appeal in Supreme Court; wants ‘anomalies’ in NCLAT order corrected

Rajesh Kurup Mumbai | Updated on February 17, 2020 Published on February 17, 2020

Cyrus Mistry

The order refrained from granting certain reliefs that were warranted and necessary, the petition alleged

17The Shapoorji Pallonji Mistry Group has moved the Supreme Court seeking correction in the order passed by the National Company Law Appellate Tribunal (NCLAT) in December 2019. Though the NCLAT had reinstated Cyrus Mistry as executive chairman of Tata Sons, the Mistry camp has flagged certain ‘anomalies’ in the order.

The order “refrained from granting certain reliefs that were warranted and reasonably necessary in the facts and circumstances of the case, particularly since NCLAT is the last forum for findings of fact,” the cross appeal filed through two Mistry family-backed investment firms said.

The appeal was filed on Friday through two Mistry group firms — Cyrus Investments and Sterling Investments Corporation — through which Cyrus Mistry had earlier moved the National Company Law Tribunal (NCLT) and later NCLAT, alleging oppression of minority shareholders and mismanagement by Tata Sons.

In the latest petition, Mistry firms have sought correcting of many “anomalies” in the tribunal’s order, that included alleged oppression of minority shareholders and converting Tata Sons into a private limited company as a post-facto move.

“The direction ought not to have been only against the nominee of Tata Trusts and R-2 (Ratan Tata) but against the trustees of the majority shareholders who even though not on the board of Tata Sons, were interfering with the decision making processes of the board. Therefore, the reliefs should have been granted against all the trustees of Tata Trusts,” the petition, a copy of which was reviewed by BusinessLine, said.

Stating that Mistry had said that he had “no intent to once again take charge” as executive chairman and director of Tata Group companies and considering the “huge stake” that the appellants have in Tata Sons, the appellants had to be granted proportionate representation on the board of Tata Sons, it added.

Mistry family holds 18.32 per cent stake in Tata Sons, the holding company of all Tata Group firms.

Moreover, with the appellant group being an integral part of the company for over 50 years, Article 75 (forcing minority shareholders to sell stake and exit) itself ought to have been struck down and NCLAT was in error in assuming that it did not have the power to strike down an Article. In fact, the power is clearly available in terms of Section 242(5) of the 2013 Act, it said.

PTI adds: According to a PTI report, the 45-page petition said the tribunal, after reviewing the records, has clearly found the prejudicial conduct by Tata Sons.

However, the tribunal “has erred in not granting vital relief, including proportionate representation on the board of Tata Sons, and striking down of certain provisions in the articles of association, which were the tools of oppression that enabled prejudicial conduct by the majority shareholder,” it said.

The petition also contended that the tribunal erroneously said it did not have the powers to alter the Articles of Association even though it had correctly recorded that the relationship between the Tatas and the Mistry family was in the nature of a “quasi-partnership”.

The petition is to secure deletion of certain specific provisions in the Articles of Association (AoA) of Tata Sons, clearly permitted by the special provisions dealing with oppression of minority shareholders under the companies law.

Further, Mistry has sought proportionate representation on the board of Tata Sons to ensure that its interests and investments, now worth over ₹1 lakh crore, are protected in the future.

While the manifest abuse of power and conduct lacking in probity has been explicitly found by NCLAT in removal of Mistry, his reinstatement was not sought, the petition said. “Instead, what was sought was clearly intervention in the form of deletion of provisions in the Articles of Association, which is a measure specifically provided for in Section 242 of the Companies Act, 2013,” it noted.

 

 

Published on February 17, 2020
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