The National Company Law Tribunal (NCLT) on Friday dismissed the plea of ousted Tata Sons chairman Cyrus Mistry, requesting that his case challenging the ouster is transferred to the New Delhi bench from Mumbai. Moreover, principal bench of the Tribunal under Justice Mahesh Mittal Kumar also imposed a cost of Rs 10 lakh on Mistry’s two investment firms, which would be shared by both.
The two investment firms owned by the Mistry family – Cyrus Investments Pvt Ltd and Sterling Investments Corporation Pvt Ltd – that filed the case had argued that the Mumbai bench could have a cause of bias. “We are asked to go before a forum (NCLT Mumbai bench) which has already judged the issue,” senior advocate CA Sundaram had argued on behald of the two investment firms during the proceedings yesterday.
In rebuttal, senior counsel Abhishek Manu Singhvi and Mukul Rohatgi had called it an instance of forum shopping. “This should be dismissed at threshold. They have suppressed the facts. They have already raised twice before the NCLAT to transfer the case to Delhi and hear it,” Singhvi had said, adding that the appellate tribunal did not decide on it. The NCLT principal bench headed by Justice Mahesh Mittal Kumar had reserved its verdict on the matter yesterday.
Last month, the National Company Law Appellate Tribunal (NCLAT) had relaxed the norms for Mistry in the minimum shareholding rule for him, allowing him to file a case of alleged oppression of minority shareholders after observing “exceptional” and “compelling circumstances” in the entire episode. A shareholder is required to have at least 10 per cent stake in a compnay in order to file a case alleging oppresssion of miniority shareholders. The Mistry family owns 18.4 per cent stake in the closely-held Tata Sons. The holding is less than 3 per cent if preferential shares are excluded, not meeting the specidfied criteria.
Following this waiver, the appellate tribunal had directed the NCLT to decide the case in three months. The law tribunal had already dismissed Mistry’s petition against Tata Sons in the past on the grounds of not meeting the minimum shareholding criteria.
This decision has come shortly after Tata Sons – the holding company of the Tata Group – got its shareholders’ approval to list itself as a private limited company at its annual general meeting last month. Mistry family had opposed the move as ‘yet another weapon’ to oppress minority shareholders. After the company becomes a private limited entity, shareholders will not be able to sell their shares to external investors. Tata Group has reasoned that the their status of deemed public compnay is not statutorily recognised undeer the Company Act, 2013.
Mistry has been locked in a legal battle with the Tatas since his unceremonious exit as chairman of Tata Sons – the promoter company of the $105-billion salt-to-software Tata Group – in October last year.
Mistry was ousted as Tata Sons chairman on October 24, 2016, and was also removed as a director on the board of the holding company on February 6, 2017. Cyrus Investments Pvt and Sterling Investments Corporation Pvt had moved the NCLT against Tata Sons after Mistry’s ouster last year alleging oppression of minority shareholders and mismanagement.
However, on April 17, the Mumbai bench of the NCLT had rejected the waiver plea filed by the investment firms while on March 6, it had set aside the one over maintainability. Following that, both the investment firms owned by the Mistry family had moved the appellate tribunal. The NCLAT, however, dismissed another petition filed by these two companies on maintainability, saying the firms do not have more than 10 per cent in Tata Sons.