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Cyrus Mistry takes Tata Group to court, moves Company Law Tribunal claiming oppression
Posted by : Anonymous on Dec 21,2016 08:45 AM
has moved the
National Company Law Tribunal
board, its directors including interim chairman Ratan Tata, two of the Tata Trusts and its trustees for “oppressing” minority shareholders and “mismanagement”.
The 344-page petition, which was filed in the evening just before the closing hours of the tribunal by two firms — Cyrus Investments and Sterling Investments — was served on 23 people that includes industrialists Ajay Piramal, Venu Srinivasan, Harvard Business School dean Nitin Nohria, country head of private equity fund Bain Capital Amit Chandra, retired bureaucrat Vijay Singh and former Tata veteran NA Soonawala.
The first hearing is slotted for December 22. With the exception of Soonawala, the others are members of the Tata Sons board that ousted Mistry on October 24 from chairmanship.
The petition filed under Sections 241 and 242 of the Companies Act sought rectification of the oppressive acts. The petition also seeks to correct the alleged breakdown of governance at Tata Sons. The breakdown, according to Mistry, is partly on account on the alleged intervention by Ratan Tata and Soonawala in the working of Tata Group’s operating companies. Mistry has also referred to imprudent business decisions and actions at various Tata firms.
Mistry, who has been fighting his ouster as Tata Sons chairman, told ET on Monday that he will switch to a more effective forum where all the issues he has been raising over the past weeks will be formally and officially dealt with.
Tata Sons said it is in consultation with its lawyers and will contest the allegations. “Tata Sons reiterates that it has followed the highest standards of corporate governance in its operations and views the petition as an unfortunate outcome of the situation arising from Mistry’s complete disregard of the ethos of the
and Jamsetji Tata,” the group’s spokesperson said. “Despite Mistry’s recent assertions that it is not a personal issue, it is evident that it always has been for him a personal issue which reflects his deep animosity towards Ratan N Tata.” Mistry’s fresh move to take his case to court is also seen as an attempt to make the Tata Group respond to his allegations on oath under the law of the land.
LEGALITY OF MISTRY’S REMOVAL
Some lawyers said the most serious charge to be faced by Tata Sons would be the legality of Mistry’s removal. “In our opinion, the most serious charges to be faced by Tata Sons would be the legality of Mistry’s removal which may be time-consuming, and interim orders may affect functioning to some extent in the short term,” said Ranjit Prakash, chief executive partner of law firm Archeus Law.
“In the long term, however, there may not be any major adverse effect on Tata Group companies as things stand now, unless there are subsequent unknown revelations or unanticipated developments.”
Mistry had earlier said the rights of the minority shareholders had not been spoken about and addressed until now in spirit and the voices of independent directors and shareholders have been suppressed by Tata Sons.
The two firms which filed the petition together own 18.5% in Tata Sons, the holding company of the salt-to-software conglomerate, while the rest is owned by Tata Trusts and group companies.
Mistry had earlier asked the government to intervene in the functioning of the trusts, alleging misgovernance and opacity in their functioning.
However, the government has taken a neutral stand so far. Mistry had earlier accused the trustees of Tata Trusts, Ratan Tata and Soonawala, who had retired from Tata Sons, of refusing to give up participation in key decisions involving Tata Sons and the operating companies, including those listed in India and abroad.
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