The National Company Law Appellate Tribunal (NCLAT) on Thursday said it will hear on July 3 the two appeals filed by family firms of Cyrus Mistry alleging “mismanagement and oppression of minority shareholders” at Tata Sons. A bench headed by Justice SJ Mukhopadhyay while adjourning the matter till July 3 clarified that it will hear both the issues – maintainability and grant of waiver – together but will decide them separately.
Challenging the NCLT’s March 6 and April 17 order that dismissed both the pleas on maintainability and grant of waiver to the Mistry’s family investment arms – Cyrus Investments and Sterling Investment Corporation, senior lawyer CA Sundaram argued that the effect of the tribunal’s judgment is that only preferential share holders can raise “mismanagement and oppression of minority shareholders” issue against Tata Sons since no shareholder has more than 10% shareholding cumulatively.
He argued that under the new provisions of the Companies Act, 2013, equity shareholders and preference shareholders are two distinct classes which were mutually exclusive. The new amendments could not be interpreted literally or independently and this particular instance should be put to use for their rightful interpretation, Sundaram said, adding that if there is something detrimental to equity shareholders to which preferential shareholders have no concern, howsoever oppressive it may be, no action can be brought before the tribunal.
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He further argued that the purposes of incorporating Section 241 was to protect a class of shareholders. “If the statute itself had recognised a special class of shareholders and allowed for a complaint not only regarding oppression of a company but also its members, it could not have been its intent to leave that class remedy less,” he submitted.
He also contended that the tribunal has not gone into merits at all and if the conclusion is right, the other party can’t get unfair advantage of the language used in the judgment. “And if a case like this is not fit for waiver then which case would be,” he asked.