The Mumbai Bench of the National Company Law Tribunal (NCLT) on Monday dismissed Cyrus Mistry’s petition, ruling in favour of Tata Sons, that accused the Tata Group of mismanagement and oppression of minority shareholders' rights.
However, this could be termed only as a “pit stop” in the country’s largest corporate war, as Mistry is readying to move the National Company Law Appellate Tribunal (NCLAT). Mistry, former Tata Sons Chairman, had filed petitions in December 2016, following a boardroom coup that led to his ouster.
NCLT’s Mumbai special Bench of B S V Prakash Kumar and V Nallasenapathy dismissed Cyrus Mistry's petition "without cost". The Tribunal also said that a company’s board was competent enough to remove the Chairman, adding that Mistry was ousted as the Tata Sons' board had lost confidence in him.
Fight to continue
Mistry's camp is now planning to challenge the order at NCLAT in New Delhi, lawyer Somasekhar Sundaresan said, adding, the “fight for ethical corporate governance will continue”. Today’s order comes after a series of hearing at NCLT Mumbai and NCLAT Delhi.
Mistry, who was the sixth Chairman of the salt-to-software Tata Group between 2012 and 2016, was ousted following a boadroom coup on October 24, 2016 .
Later on December 20, 2016, Mistry - through a family-run firms - Cyrus Investments and Sterling Investments Corp – had moved NCLT against Tata Sons and others for oppression and mismanagement. Mistry family is the single largest shareholder in Tata Sons, with an 18.4 per cent stake.
Mistry, who had moved NCLT on December 20, 2016, also accused Tata Sons – the holding company of all Tata Group firms – of governance issues due to intervention by Tata Trusts Chairman Ratan Tata.
During the past 21 months (from October 24, 2016), both the sides – Tata Group and Mistry - had their share of wins. On September 21, 2017, in a breather to Mistry, NCLAT had agreed to waive the condition that requires a minimum 10 per cent shareholding to file a petition before the appellate tribunal.
Statement from Cyrus Mistry's office
“The ruling of NCLT is disappointing, although not surprising. We will continue to strive for ensuring good governance and protection of the interests of minority shareholders and all stakeholders in Tata Sons from the wilful brute rule of the majority,” Cyrus Mistry’s office said in a statement.
“The ruling is in line with the earlier position expressed by the Tribunal. An appeal on merits will be pursued. Matters like Tata TeleServices, AirAsia, recovery of dues from Siva, non-closure of a loss-making Nano, a struggling resolution of Tata Steel Europe, all present serious issues will be pursued. Not only the facts that were under consideration but also subsequent facts and developments that continue to evidence oppression and mismanagement will be under scrutiny and will be pursued in full earnest,'' it said.
“Ours has always been a principled fight to restore the Tata Group to its glorious days of high standards, best practices and most importantly, the best value systems. In this journey, no matter how hard it may seem, as shareholders who have always supported the Tata Group, it remains our duty to protect the Tata Group from those were destroying value and making the Group vulnerable to external forces,” it added.
Tata Sons welcomes NCLT order
Tata Sons has welcomed the NCLT order, stating it vindicated the position of Tata Trusts and Tata Sons.
“The judgment has only re-affirmed and vindicated that Tata Sons and its operating companies have always acted in a fair manner and in the best interest of its stakeholders. The Tata Group has always been committed and will continue to be committed to transparency and good corporate governance of global standards,” said N Chandrasekaran, Chairman, Tata Sons.
“Tata Sons hopes that a finality will be given to the judgment of NCLT, Mumbai by all concerned in the larger interest of companies, the shareholders and the public,” he added.