Law tribunal deals big blow to Mistry

NCLT says petition not maintainable

In a blow to ousted Tata Sons chief Cyrus Mistry, the National Company Law Tribunal (NCLT) said that Mistry’s family firms are not qualified to file a petition alleging mismanagement of Tata Sons and oppression of minority shareholders.

“The petitioners have failed to convince the court that the application is maintainable,” NCLT presiding member B S V Kumar said.

As per the Companies Act, the petitioner needs to have 10% equity, including equity and preferential shares, in the company to file such a petition. Cyrus Investments and Sterling Investments have a total of 18.4% ordinary equity shares in Tata Sons.

However, these firms hold only around 2.17% equity after taking into account preference shares, due to which they are not qualified to file the petition.

Tata Trusts, on the other hand, holds a 66% stake in Tata Sons. However, all is not lost for the Mistry camp as NCLT will hear a waiver petition on March 7. If the waiver is granted by NCLT, the Tatas can move the National Company Law Appellate Tribunal (NCLAT). If the waiver is rejected, Mistry can challenge Monday’s ruling as well as the waiver ruling in courts.

 Mistry was ousted as the chairman of Tata Sons on October 24 following which both parties have been engaged in a courtroom battle.

The NCLT had dismissed a contempt plea filed by Cyrus Mistry’s family firms in January. But it had allowed Mistry to file a separate petition challenging the move by Tata Sons to convene an extraordinary general meeting (EGM) to oust him as a director.

However, despite all the petitions and pleas, Tata Sons was allowed to go ahead with the EGM which decided to oust Cyrus Mistry as a director of Tata Sons.