While dismissing the plea of Mistry’s firms — Cyrus Investments and Sterling Investments Corporation, the NCLT principal bench headed by president justice MM Kumar also imposed a cost of Rs 10 lakh to be paid by both the companies “in equal share”.
“… we are of the considered view that this application is devoid of merit and thus liable to be dismissed… We find that directing the transfer of the petition would attract a unsavoury tendency of seeking transfer on minor excuses which needs to be discouraged,” the bench said.
In fact, during the hearing on Thursday itself, the bench had observed that “if we start transferring the petitions, it will affect propriety of the bench… We don’t do it unless there is a compelling reason to do so… We don’t want to encourage this practice. NCLT has to work independently.”
However, sources said that the companies may move the appellate tribunal against the order next week.
Meanwhile, the NCLT Mumbai bench heard the case on Friday and posted the matter for further hearing on November 3.
The two family firms had argued that since the NCLT Mumbai bench had earlier decided the case on the merit, the same bench cannot be expected to deliver “the judgment on merits uninfluenced by its own earlier firm and conclusive assessment of merits”.
Even while the petition was not being heard on merit but on waiver (from the minimum shareholding requirement to raise the issue), the Mumbai bench comprising judicial member BSV Prakash Kumar and technical member V Nallasenapathy had given “findings on the merits of each allegation and categorically ruled that there was no cause of action at all and that the petition was without merit”, the firms had pointed out.
However, Tata Sons had opposed any transfer, saying it was a case of “bench hunting” and “forum shopping” and the transfer plea should be rejected at the threshold.
The National Company Law Appellate Tribunal (NCLAT) on September 21 had granted the firms a waiver from the minimum shareholding requirement of 10% for filing a case against Tata Sons for alleged mismanagement and oppression of minority shareholders. Setting aside the NCLT’s April 17 order that had rejected the waiver plea of Mistry’s firms, the appellate tribunal had directed the Mumbai bench of the NCLT to allow the firms to present their case and decide on it on merits within three months.
The NCLAT ruling had come as a big reprieve for Mistry, whose firms own 18.4% in Tata Sons, the holding company for the Tata Group.
Mistry’s family firms had moved NCLAT when in March-April the Mumbai bench of the NCLT had dismissed two of their petitions — one alleging mismanagement and oppression of minority shareholders’ at Tata Sons and the other which sought a waiver from the minimum shareholding clause to present their case.
On March 6, NCLT Mumbai had held the petition of the two firms as not maintainable. It noted that since the combined shareholding did not add up to the required minimum of 10% of the issued share capital of Tata Sons, they did not fulfil the eligibility criteria for approaching the tribunals.
The legal battle between Mistry and the Tatas is a fallout of the ouster of the former by the Tata Sons board on October 24, 2016. Subsequently, Mistry was removed as director/chairman of all the group firms leaving him with no option but to take the legal route.