Cyrus should have been more careful in making allegations against Tatas: NCLT

Mumbai | Updated on July 12, 2018 Published on July 12, 2018

Ratan Tata and Cyrus Mistry (file photo)

The National Company Law Tribunal’s (NCLT) order on the dispute between Cyrus Mistry and Tata Sons has blamed the ousted Chairman of “digging a mountain to get a mole” while dismissing all allegations against various entities including Tata Sons, Ratan Tata and his associates.

The 368-page order, uploaded by the NCLT on Thursday, explains why it found no merit in the allegations made by Mistry.

On allegations of interference by Ratan Tata, the NCLT said that Tata is the Chairman of majority shareholders and as long as his suggestions are not fraught with malafides, it has to be treated as the advice and suggestions for the benefit of the company and not asinterference. “This company has run for more than 100 years; it was headed by Mr. Tata for more than 12 years. Tatas dedicated not only their fortunes but their lives as well for the good of the society by giving everything to the Trusts, Cyrus and the petitioners should have been more careful in making allegations against the Trusts and the people working for it.”

“Whenever any 241-242 (company law) proceedings are initiated, it should not be to dig out mountain to get a mole as to whether any actions are there falling under Section 247 or 242, it must be manifest enough to any bystander to feel that something harm has been done to the economic interest of the aggrieved members,” NCLT added.

On allegations that the company article were changed, the NCLT said that the change may have been required due to change in the status of Ratan Tata, after Mistry took over as Chairman of Tata Sons. Tata was the Executive Chairman of Tata Sons, the person manning Tata Trust and Tata Sons was one and the same. “Therefore, since the man in the driving seat of Tata Sons at that point of time being the man heading Tata Trust, there was no occasion to have any apprehension to the Trusts to contemplate that there would be danger to the rights of the majority, i.e. the Trusts. When the Executive Chairman post went into the hands of the person who does not belong to the Trusts, to protect the rights of the majority, Article 1048, 121 and 127A, l2LB, have been amended and inserted by Tata Sons when it was under the leadership of Cyrus. Protecting the rights of majority in the Articles can never become either oppression against the Petitioners or mismanagement of the affairs of Tata Sons,” it said.

Mistry, the sixth chairman of Tata Sons, from 2012-2016, was ousted following a boardroom coup on October 24, 2016. Later, Mistry, through two firms run by his family — Cyrus Investments and Sterling Investments Corp — had moved the NCLT against Tata Sons and others. The Mistry family is the largest shareholder in Tata Sons, holding 18.4 per cent.

Finally, the Tribunal said that it was highly preposterous on the part of Mistry making such unfound and serious allegations just as a retribution to the heart-burn they had by the removal of Mistry as Executive Chairman.

“In view of the observations we have made, we don't find any material to say that Mr Tata or Trusts Nominee Directors caused the removal of Cyrus as chairman as a retort to the purported legacy issues set out in this company petition.”

Published on July 12, 2018
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