The National Company Law Tribunal on Thursday refused any temporary relief to ousted Tata Sons Ltd chairman Cyrus Mistry and asked him to prove the allegations he has leveled against the company and its interim chairman Ratan Tata.
Mistry had approached the tribunal on Tuesday, accusing the Tata Sons board of oppressing minority shareholders and mismanaging the company.
The petition had urged the tribunal to either replace the board of Tata Sons or appoint a retired Supreme Court judge as non-executive chairman. It had sought to restrain Tata Sons from removing Mistry from the board, amending the articles of association and issuing new shares to dilute the stake held by the Mistry family, which owns about 18.5% of the company.
The petition came a day after he resigned from six listed companies of the $100-billion conglomerate.
However, during the hearing the tribunal’s Mumbai bench questioned Mistry’s silence prior to his ouster from Tata Sons on 24 October. The bench of Justice BSV Prakash Kumar and V Nallasenapathy also said no documents had been submitted to indicate any malpractice by Ratan Tata and asked Mistry to prove the allegations.
“We will not provide any interim reliefs today and the tribunal will pass (a) final order post detailed arguments,” said Justice Kumar.
The tribunal asked Mistry, who had filed the petition through Cyrus Investment Pvt Ltd, to file a reply within a week. It also asked Tata Sons Ltd to file its reply within 15 days. It restrained both the parties from seeking any further interim reliefs and posted the matter for hearing on 31 January.
Senior counsel Aryama Sundaram, who is representing Cyrus Investment, argued that the act of oppression of minority shareholders and mismanagement in Tata Sons will have a cascading effect on the listed companies as well.
Sundaram argued that, before he took over as Tata Sons’ chairman in 2012, some group companies had made poor business decisions including the acquisition of Anglo-Dutch steelmaker Corus for around $12 billion and launch of the Nano mini car. He alleged that Tata Trusts, which control about two-thirds of Tata Sons, hampered Mistry’s attempts to curb losses in Tata Steel and Tata Motors.
Sundaram also said that Mistry’s removal was not even on the agenda for the 24 October board meeting and that he had raised “ethical concerns” after audit and consulting firm Deloitte submitted a report on irregularities in budget airline AirAsia India in the meeting. Another issue was related to Mehli Mistry as his company got many contracts by Tata Group companies without going through tender process before Mistry became chairman, argued the counsel.
Senior counsel Abhishek Manu Sighvi, who is representing Tata Sons, said that Mistry’s company is an investor in Tata Sons since 1965 and it is only now that it has pointed out issues with the structure of the Tata trusts.
In a statement after the hearing, Tata Sons said it believes the petition is “not maintainable in law” and that the court will hear Tata Sons on this issue at the next hearing. It declined to comment further as the matter is sub-judice.
Senior counsel Aryama Sundaram, Janak Dwarkadas and Somashekhar Sundaresan are representing Mistry in the tribunal. Senior counsels Abhishek Manu Singhvi, Mohan Parasaran, Ravi Kadam, Venkatesh Dhond along with Zal Andhyarujina and Shuva Mandal of Shardul Amarchand Mangaldas are representing Tata Sons and others in the tribunal.
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