The National Company Law Tribunal (NCLT) dismissed Cyrus Mistry’s lawsuit against Tata Sons, saying it didn’t find merit in allegations of mismanagement at the $100 billion conglomerate, delivering a big blow to the former chairman who was fighting the case for over 18 months.
The family firms of Mistry — Cyrus Investments and Sterling Investments — had pressed allegations of mismanagement and oppression of minority shareholder interests at Tata Sons. The legal battle followed an ugly public spat between Mistry and Tata Group after he was sacked on Oct 24, 2016 after being at the helm for 4 years.
The two-member bench – comprising of B.S.V. Prakash Kumar and V. Nallasenapathy – said it found no merit in allegations regarding Tata Trust’s chairman Ratan Tata and trustee N. Soonawala of being super directors of Tata Sons board. Mistry had alleged inappropriate interference from Tata and Soonawala in the affairs of the group.
The bench said Tata Sons board was competent enough to dismiss an executive chairman, and added Mistry’s conduct does not augur well for the functioning of Tata Sons as he went openly against the board. It rejected Mistry’s demand for proportionate representation on the board and said that it can’t stop Tata Sons from converting itself into a private company. NCLT said it did not find merit in allegations against Aircel promoter C. Sivasankaran and Air Asia.
Mistry, in his petition, had sought proportionate representation of SP Group directors on Tata Sons board, no interference of Tata Trusts trustees in the affairs of Tata Sons, stop conversion of Tata Sons into private company and disallow any forceful transfer of shares held by Cyrus Mistry family firms in Tata Sons.
Mistry’s family firms owns about 18.4% of equity shares in Tata Sons though his firms. Tata Trusts, comprising charitable organisations controlled by Ratan Tata and Tata Trustee NA Soonawala in the working of Tata Group’s operating companies.
Mistry’s another contention is that Tata Sons’ Articles of Association are biased against the rights of minority shareholders. The recent amendments to the Articles of Association, he alleged, restricts Mistry’s firms right to freely sell shares in the market.
In a letter to the directors of Tata Sons two weeks ago, Mistry has so sought accountability and information from the board of Tata Sons. He questioned new chairman N Chandrasekaran’s rationale behind the sale of its telecom arm to Airtel, massive debt-driven acquisitions by Tata Steel and its tie-up with ThyssenKrupp, among others.
The two-member NCLT bench started hearing the case on merit in December last year. Earlier, it had dismissed Mistry’s petition, saying that the firms weren’t qualified to file a case against Tata Sons due to insufficient shareholding in the holding company. Mistry, later, won a special permission from National Company Law Appellate Tribunal.