The Mumbai bench of the National Company Law Tribunal (NCLT) on Monday dismissed a petition by Cyrus Mistry and his family firms alleging mismanagement in the Nano project of Tata Motors and the Mehli Mistry matter in Tata Power.
The Mumbai bench of the National Company Law Tribunal (NCLT) on Monday dismissed a petition by Cyrus Mistry and his family firms alleging mismanagement in the Nano project of Tata Motors and the Mehli Mistry matter in Tata Power. A bench of the tribunal headed by Justice BSV Prakash Kumar and Justice V Nallasenapathy said it did not find any merit in the purported legacy issues such as the Nano issue, the Mehli Mistry issue and others to state that those issues fall within the ambit of Section 241 and 242 of the Companies Act 2013. During the marathon hearings that lasted for a month, Mistry’s lawyers pointed out mismanagement issues in Tata Motors with regards to the Nano project. It was pointed out that a director in Ratan Tata’s personal investment vehicle and managing trustee of Tata Trusts sought and obtained commercially sensitive information from Tata Motors which had the potential to benefit Jayem Auto, a company in which Ratan Tata had made a significant personal investment, and which was directly involved in a transaction with Tata Motors.
“Ratan Tata’s conflict of interest in loss making Tata Nano has created a substantial loss to Tata Motors,” C Aryama Sundaram, Mistry’s counsel, had said. He also told the bench that the board of Tata Motors in October 2016 had recommended stopping the Nano project. “The continuation of the Nano project for “emotional reasons” post the removal of Cyrus Mistry is an example of ongoing mismanagement of Tata Motors, and through it of Tata Sons,” he said.
In another instance of mismanagement, the senior counsels also pointed out that Mehli Mistry, a close associate of Ratan Tata, secured lucrative long-term commercial contracts at the expense of Tata Power. There were documents presented on record to allege the manner in which the interests of Tata Sons were compromised through award of several long-term lucrative commercial contracts not conforming to industry standards.
“Several such contracts were awarded despite Mehli Mistry not having any prior experience in the contracted job scope. The scale of benefits that were accruing to Mehli Mistry when the prices of Mehli’s contracts were re-negotiated, fell by more than 50%, which resulted in a cost saving of over Rs 200 crore per annum for Tata Power,” Sundaram said.