The National Company Law Tribunal (NCLT) on Monday will announce its judgement on a petition filed by Cyrus Mistry challenging his ouster as the chairman of the Tata Sons.
The National Company Law Tribunal (NCLT) on Monday will announce its judgement on a petition filed by Cyrus Mistry challenging his ouster as the chairman of the Tata Sons. The Mumbai bench of NCLT will deliver the verdict after four-month of hearing on the case. The hearing lasted from October 2017 to February 2018. On Friday the bench had adjourned the verdict to Monday saying that certain corrections have to be made before final judgement comes out on July 9. Here are the 5 key things:
The major allegation levelled by camp of Cyrus Mistry, former chairman of Tata Sons, is that his removal from the post was a result of oppression by the promoters who are in turn owned by Tata Trusts that owns over 68 percent in Tata Sons.
The petition also said that mismanagement by Tata Sons board and Ratan Tata which resulted in the group losing on revenue. He has also termed the changes to the articles of the association since his dismissal from office as “arbitrary”.
The Cyrus Mistry family owns 18.6 percent in Tata Sons, though holding with voting rights is only under 4 percent. The over 18 percent stake makes the Mistry group as the single largest shareholder in country’s largest corporate entity, though.
In December 2016, Cyrus Mistry moved NCLT. The NCLT bench had dismissed his petition early 2017 citing eligibility clause. It was challenged at the NCLT in New Delhi, which had asked the bench to hear the matter afresh, saying the waiver to the Cyrus Mistry camp on principle and not on the merit. Mistry’s petition against Tata Sons started getting heard on November 2017.
The petition was dismissed on eligibility clause as Mistry and family did not have the required 10 percent equity share in the group that is mandatory for filing a mismanagement and oppression case under sections 241, 242 and 244, by any minority shareholder.
At the crux of the plaint is Mistry’s contention that the articles of association of Tata Sons by structure are biased against the rights of minority shareholders and thereby oppressive, a charge that the Tatas dismissed saying he has been on the board since 2006 and had never mentioned this till he was shown the door on October 24, 2016.
(With PTI inputs)