Mumbai: In a setback to Tata Sons, the National Company Appellate Law Tribunal (NCLAT) has given investment firms linked to Cyrus Mistry a waiver on the 10% minority shareholding limit required to file a complaint of oppression and mismanagement against the group’s holding company.
However, NCLAT has also rejected an appeal by Mistry firms challenging dismissal of their complaint of oppression and mismanagement on grounds of maintainability and sent it back to the Mumbai tribunal for a hearing. The ruling is a setback for Tata Sons since it means that the tribunal in Mumbai will now have to hear the main oppression complaint against the Tata group holding company in three months.
The petition by the two companies was filed last December about two months after Tata Sons removed Mistry as executive chairman. The complaint was that the Tata group holding company had allegedly acted against interest of minority shareholders, its own interest and against public interest. The termination formed one of the 11 acts of oppression mentioned in the petition. The others included investment in Corus, running loss-making Tata Nano, and the AirAsia deal.
The NCLT bench in Mumbai had held that the Mistry firms were disqualified from filing the plea against Tata Sons as they lacked a necessary 10% issued equity shareholding in the $103-billion Tata group. It had declined their waiver plea. Waiver can be granted only in rare and compelling situation, the NCLT had said.
The appellate body NCLAT has held that to qualify for such a plea, as argued by Tata Sons, section 244 of the Companies Act 2013 requires minority shareholders to have 10% of issued share capital, which includes preference shares and not just equity. But the appellate tribunal bench headed by former Supreme Court judge S J Mukhopadhaya accepted a plea for a waiver on the qualifying condition.
The reasoning was that given the shareholding of the company, only Ratan Tata and one more person, Narotam Sekhsaria, former founder of Gujarat Ambuja Cements who is a preference shareholder, can bring a petition of oppression and mismanagement against Tata Sons. “The applicants hold shares which constitute 1/6th of the market value of the company. Therefore, it is an exceptional case which requires hearing.” Signifi- cantly, NCLAT also held that a “civil court is not an alternative remedy”.
A Tata Sons spokesperson reacted to the NCLAT judgment saying, “Tata Sons has taken note of the order of the NCLAT and will examine it. We strongly believe that allegations made by the petitioners are without basis & incorrect. Tata Sons will continue to defend its position at all appropriate legal forums.”
Cyrus Mistry’s office said in a statement, “The NCLAT ruling is a welcome vindication of what we have stood for and the values for which we are pursuing the petition against oppression and mismanagement of Tata Sons Ltd.’’
With the NCLAT order now the battle will be back before the Mumbai bench of NCLT again. But against an order of the NCLAT, the matter can still be taken in appeal to Supreme Court by either side.
No comments:
Post a Comment