NCLAT asks Tata Sons not to force Cyrus Mistry to sell stake
24 Aug 2018
The National Company Law Appellate Tribunal (NCLAT) on Friday asked Tata Sons not to force its ousted chairman to sell stake in the group, but declined to pass any order on Mistry's plea to prevent Tata Sons converting the company into a private firm.
A two-member NCLAT bench headed by chairperson Justice S J Mukhopadhaya admitted Mistry’s appeal and directed Tata Sons and other respondents to file their reply within 10 days.
The appellate tribunal will start hearing on the Mistry firms’ petition from 24 September and a decision on the conversion issue will be made at a later stage. Earlier on 14 August, NCLAT had reserved an order on the interim relief sought by Mistry firms, which form the major shareholder block outside the Tata Trusts.
Tata Sons by converting itself to a private entity is forcing Cyrus Mistry to sell off his family stake of about 18.4 per cent by rendering its stake powerless, as per the Mistry firms petition filed before the NCLT in Mumbai.
Cyrus Mistry had moved NCLAT, citing Article 75 of Articles of Association of Tata Sons, after the NCLT ruled in favour of Tata Sons.
Mistry was represented by senior advocate CA Sundaram who had argued that there was no urgent reason for this conversion and it should be stopped until Mistry’s plea against his removal is decided by the NCLAT.
Senior advocate Abhishek Manu Singhvi, who represented Tata Sons, had informed the court that the Registrar of Companies had recognised Tata Sons as a private limited company on 6 August.
Tata Sons, in September last year, received shareholders' nod to convert itself into a private limited company instead of being counted as a public limited company, limiting in effect Mistry family's ability to sell their stake to outsiders.
A public limited company allows shareholders to legally sell their stake to anyone but a shareholder of a private limited firm cannot sell the shares to external investors.