NCLAT lets Mistry firms file oppression charges against Tata Sons
21 Sep 2017
The National Company Law Appellate Tribunal (NCLAT) has allowed pleas by two firms belonging to ousted Tata Sons Ltd chairman Cyrus Mistry to pursue charges of oppression and mismanagement against the Tata Group.
While the Mistry firms have been granted waiver in filing case of oppression and mismanagement against Tata Sons at the National Company Law Tribunal (NCLT), the appellate body dismissed Mistry's other petition on maintainability saying the firms do not have more than 10 per cent in Tata Sons.
Mistry moved the NCALT after the NCLT denied him relief, which has now directed the Mumbai bench of the National Company Law Tribunal to issue notice to the respondents and proceed in the matter.
A bench headed by Chairperson Justice SJ Mukhopadhaya asked NCLT to dispose of the matter in three months. The tribunal had concluded its hearing on 24 July and reserved its judgement.
The litigation was initiated after Mistry's removal as chairman of Tata Sons on 24 October last year. He was later removed as director from the board of Tata Sons as well as other group companies.
The $103-bn Tata Sons, meanwhile, is moving ahead with plans to change its legal status from a public to a private company, which will restrict the Mistry family's ability to sell its 18.4 per cent stake to external investors.
The Mistry forms hold the shares in Tat Sons through two investment firms - Cyrus Investments Pvt Ltd and Sterling Investments Pvt Ltd - which had filed the case against Tata Sons and Ratan Tata in December 2016.
Under Section 241 of the Companies Act, 2013, the petitioner must have one-tenth of the issued share capital of a company or represent 10 per cent of the total number of members for a case to be maintainable.
The Mistry firms own a combined 18.4 per cent of ordinary equity shares of Tata Sons. However, their holding falls below the required 10 per cent when preference shares are taken into account.
The two firms had argued for a waiver of the eligibility criteria, which the NCLT denied in April.