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NCLT reserves order on Mistry family firms’ shareholding waiver plea

LiveMint logoLiveMint 04-04-2017 Bidya Sapam

The National Company Law Tribunal (NCLT) on Tuesday reserved its ruling on a plea by Mistry family firms for a waiver from the shareholding requirement to file a petition alleging mismanagement and oppression of minority shareholders at Tata Sons Ltd.

The NCLT will pronounce the order on 17 April.

On 7 March, the tribunal ruled that the two Mistry family firms —Cyrus Investments Pvt. Ltd and Sterling Investments Pvt. Ltd—were not qualified to file a petition.

Under the new Companies Act, shareholders are required to hold 10% equity to be qualified to file such a petition.

The two firms own a combined 18.4% of ordinary equity shares in the Tata group holding firm, but when preference shares are taken into account, their holding falls below 2.17%.

Arguing on behalf of Cyrus Mistry, the ousted chairman of Tata Sons, lawyer Janak Dwarkadas asked the two-member bench to look into the facts and allegations placed before it in deciding on the waiver plea.

“It (Tata Group) is not a professionally managed company. This is a promoter-controlled company and the Articles of Associations are structured in such a way that the power to take decisions is vested in the majority-nominated directors,” he said.

He added that there are only two groups in the company. “One holding 18% and the other (i.e., the trusts) which holds 67%... In a company such as this, where the minority feels oppressed if the power of waiver is not exercised, there will never be any other case where it could be exercised,” he said.

Spokespersons for Tata Sons and Cyrus Mistry declined to comment.

Aryama Sundaram, counsel for the Mistry family firms, said they had every right to ask for a waiver.

“I’m a relevant shareholder of the Tata group. My issues are about voting rights and veto rights. These concern equity shareholders and not preference shareholders,” he argued. He said his allegations against the Tata Group should be taken as “gospel truth”.

Tata Sons’ legal counsel Abhishek Manu Singhvi said Mistry’s petition for a waiver should be granted only if it is of national or public interest and where the petitioners do not have any other remedy.

“Not even one instance has been established,” Singhvi argued.

The spat between the Mistry firms and the Tatas started on 24 October when Mistry was removed as chairman of Tata Sons.

He was later ousted from its board.

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