Setback for Cyrus Mistry in war against Ratan Tata; NCLT says pleas against Tata Sons not maintainable

By: | Updated: March 6, 2017 11:40 AM

The National Company Law Tribunal (NCLT) has ruled Cyrus Mistry plea against Tata Sons as not maintainable.

National Company Law Tribunal, NCLT, TataSonsVsMistry, TataSonsVsCyrusMistry, Waiver plea, Cyrus Mistry, Tata SonsFormer Chairman of Tata Group, Cyrus Mistry. (Reuters)

TataSonsVsCyrusMistry: The National Company Law Tribunal (NCLT) has ruled Cyrus Mistry plea against Tata Sons as not maintainable. According to a report on ET Now, NCLT will take up the waiver plea tomorrow. In a statement, the Law Tribunal said, “Mistry cos not eligible to allege mismanagement & shareholder oppression.” Earlier in the month, the Mumbai bench of the National Company Law Tribunal (NCLT) finished hearing the arguments of ousted Tata Sons chairman Cyrus Mistry’s and Tata Sons’ lawyers on whether or not the former’s allegations of oppression of minority shareholders by the latter are maintainable. However, orders were reserved for March 6, and the hearing was to start from March 7.

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According to Section 244 (a) of the Companies Act, to seek relief under sections 241 and 242, the petitioner(s) need to comprise “not less than one hundred members of the company or not less than one-tenth of the total number of its members, whichever is less, or any member or members holding not less than one-tenth of the issued share capital of the company”.

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Tata Sons has argued that since Cyrus Investments and Sterling Investment Corporation, Mistry’s family investment arm via which he has filed the petition, are just two of the 51 members of the company and hold just 2.17% of its paid-up share capital, their petition is not maintainable on either of the counts. It has alleged that although the two Mistry firms hold 18.4% of the ordinary shares of the company, they hold just 2.17% of the issued share capital when even preference shares are considered.

The Tata Sons’ Extraordinary General Metting called to oust Cyrus Mistry from the post of Chairman in the month of February. The EGM passed a resolution with the requisite majority to remove Cyrus Mistry as a Director of Tata Sons. The sacking of Cyrus Mistry came after four years of him at the helm of the Tata Sons. Ratan Tata, whom Mistry had replaced on December 29, 2012, held the interim chairman post four months. Although no initial reasons were given for Mistry’s removal, it was reported that Tata Sons was unhappy with Mistry’s approach of shedding non-profit business and concentrating only on cash cows.

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