The National Company Law Tribunal (NCLT) on Tuesday adjourned to February 13 the hearing on Cyrus Mistry’s petition alleging oppression of minority shareholders and mismanagement at Tata Sons but after expressing displeasure at his counsel’s stance, which it termed as “disobedience”. It said that if the petitioner does not argue its case on February 13, its plea would be dismissed.
“Though we believe it is disobedience, we restrain our self from proceeding further on the issue,” the two-member bench stated after Mistry’s counsel Aryama Sundaram refused to argue on the main petition despite repeated directions from the bench.
The bench also once again categorically refused to stay the extraordinary general meeting convened by Tata Sons on February 6 to remove Mistry from its board, stating that this was made clear through its December 22 order as well as rejection of a contempt plea on January 18.
However, the main issue on which the hearings were adjourned to February 13 was Mistry’s counsel’s insistence that first the bench declare whether it has given it a waiver from the clause that disallows stakeholders with less than 10% stake (equity plus preference shares) from approaching the tribunal, and whether its petition in this regard is maintainable.
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Since the Tata Group had in its reply to Mistry’s original petition cited that the latter does not have the locus standi to move the tribunal with its grievance since he lacked the required 10% stake, Mistry had moved a waiver petition from this clause later in January. The discretion to waive the clause lies with the tribunal.
Mistry’s counsel’s argument was that the clause is to check frivolous complaints but in the current case there were only two sets of investors — Mistry’s firms and the Tatas — so the clause should be waived.
Though Mistry’s family has 18.4% stake in Tata Sons through two firms, if preference shares are taken into account it falls to 2.17%.
While the bench kept insisting that Mistry’s counsel argue the main petition and not bother about the waiver, the latter stuck to the line that first a decision on waiver be given. It was at this point that the bench adjourned the hearing on Mistry’s counsel’s request that they needed time to go through Tuesday’s order, but at the same time termed the approach as “disobedience” and expressed its displeasure. It even said that if the petitioners failed to argue their case on February 13, “the petition will stand dismissed”.
“All of you heard the order. The order records an unprecedented, unheard of sequence of events, which transpired inside the court today. For two and half hours, the petitioners refused to argue their case on merits. At least 12 to 18 times, the bench insisted, requested, asked, directed and virtually begged the petitioners to open their case on the merits. Not once was it argued,” Abhishek Manu Singhvi, who was representing Tata Sons, told reporters, adding that Mistry wants his own petition to be dismissed.
Tuesday marked the Tata-Mistry legal battle starting in right earnest after Mistry resigned from the boards of all listed Tata Group companies and vowing to take the fight to a higher platform in a bid to restore corporate governance and ethics to the group. On December 22, the case was just mentioned at the NCLT with the tribunal asking both sides to file affidavits and rejoinders while also asking all parties to not “initiate any action or proceedings over this subject matter pending disposal of this company petition”. However, a fortnight after this order, Tata Sons called for an EGM on February 6 to remove Mistry from the company’s board, which Mistry responded to by filing a contempt petition contending that it amounted to contempt of court. The NCLT, however, dismissed the contempt petition stating that it had not given any consent order against Tata Sons to restrain in dealing with the affairs of the company and its management.