In big blow to Cyrus Mistry’s war against Ratan Tata, NCLT trashes contempt petition against Tata Sons

By: | Updated: January 19, 2017 4:40 PM

In a setback for Cyrus Mistry, the National Company Law Tribunal (NCLT) on Wednesday dismissed his contempt petition against Tata Sons for convening an extraordinary general meeting on February 6 to remove him as a director from the board.

Cyrus MistryWhile dismissing the plea but giving him three days’ time to file a separate affidavit challenging his removal, NCLT also gave Tata Sons three days’ time to file a rejoinder to Mistry’s affidavit if it wanted to. (Reuters)

In a setback for Cyrus Mistry, the National Company Law Tribunal (NCLT) on Wednesday dismissed his contempt petition against Tata Sons for convening an extraordinary general meeting on February 6 to remove him as a director from the board.

However, the tribunal gave Mistry three days to file a separate affidavit petitioning the move be stayed. But Wednesday’s order dismissing the contempt petition does not have any bearing on the main petition of Mistry against Tata Sons which alleges mismanagement and oppression of minority shareholders at the firm. That petition, which was moved in December, will be heard on January 31 and February 1.

While hearing Mistry’s petition on December 22 and fixing the next date of hearing, NCLT had directed both parties not to initiate any action or proceedings over the matter till the disposal of the petition. However, a fortnight later Tata Sons sent notices convening an EGM on February 6 to remove Mistry as director from its board. Mistry’s legal team construed this as violation of NCLT’s initial order and moved a contempt petition, which was heard on January 16.

While dismissing the plea but giving him three days’ time to file a separate affidavit challenging his removal, NCLT also gave Tata Sons three days’ time to file a rejoinder to Mistry’s affidavit if it wanted to.

On the contempt plea, Abhishek Manu Singhvi, who represented Tata Sons at the January 16 hearing, had contended that the December 22 order of the tribunal restrained both parties from taking any fresh legal actions and nowhere did it stop Tata Sons from carrying out its regular duties, which included convening the EGM.Mistry’s family investment firms have a 18.38% stake in Tata Sons. The Tatas in their reply to Mistry’s original petition have claimed that as per company law, a shareholder can only move NCLT if its shareholding including equity and preferential shares is 10%. In the case of Mistry’s firms, while the equity shareholding is 18.38%, it falls to around 2.17% if preferential shares are taken into account.

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