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Published: Wed, March 08, 2017
Economy | By Melissa Porter

Tribunal says Mistry plea against Tata Sons not maintainable

Tribunal says Mistry plea against Tata Sons not maintainable

Mumbai: The National Company Law Tribunal (NCLT) on Monday held that a petition filed against Tata Sons by two of its minority shareholders - family firms of its ousted chairman Cyrus Mistry - was not maintainable under provisions of the Companies Act that requires them to have at least one-tenth of issued shares.

It also ruled that the two companies instrumental in bringing out the contempt petition were not eligible to allege mismanagement and shareholder oppression at Tata Sons.

The legal battle between the SP Group and Tata Sons ensued after Cyrus Mistry, the son of Pallonji Mistry, patriarch of the SP Group, was suddenly removed as the $103 billion-conglomerate's chairman on October 24, 2016. "It will be back to business for the Tata Group as this ruling will allow the Tata group to focus its resources and management bandwidth on more pressing business issues". The firms together own 18.4% equity shares of the Tata Group's holding firm.

"In January, Mistry camp said in an affidavit filed through an authorised representative, ".Assuming whilst denying that the petition as filed is not maintainable under section 244 (1) of the Act, the petitioners are making this application seeking a waiver or exemption from the requirements of Section 244 (1)", PTI had reported.
He had later sought one when the issue was raised by the lawyers of Tata Sons in the course of the hearings stating that if it was not granted, "the grave issues raised in the petition would go entirely uninvestigated".

However, the Companies Act also provides for these conditions to be waived by the tribunal.

In case NCLT waives the requirement, Tata Sons could challenge it in National Company Law Appellate Tribunal (NCLAT), because by law, this kind of waiver has to be sought before a petition is filed.

A person close to Tata Sons said that Mistry firms are presenting their interpretation of the AoA, which may not be correct.

A detailed order is yet to be released by NCLT. It "differed" with the Mistry team counsel who had said that the waiver clause in the act made the minimum 10% eligibility clause "directory", "not mandatory". This includes both equity share capital and preference share capital. But Singhvi had, in turn, said the Mistry plea of a "separate class of Shareholders" would lead to rewriting the law, which the NCLT was not empowered to do. Hence, they are not eligible to seek relief for oppression.

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