Mumbai: Tata Trust trustees have asked the National Company Law Tribunal (NCLT) to dismiss the petition filed against them by Cyrus Mistry’s family firms saying it breached provisions of the law. They also sought to establish the role as of the Trusts as dominant decision makers because of their majority shareholding in Tata Sons Ltd.
An affidavit filed by R. Venkataramanan, managing trustee of the Tata Trusts on behalf of the trustees of Sir Ratan Tata Trust and Sir Dorabji Tata Trust, said that filing any suit against public trusts requires the permission of the charity commissioner under the Mumbai Public Trust (MPT) Act.
Cyrus Investments Pvt. Ltd and Sterling Investment Corp. Ltd, the family investment firms of Mistry, had filed a suit in NCLT alleging mismanagement of Tata Sons and oppression of minority shareholders.
The petition sought to limit the role of the trustees in Tata Sons. The Tata Trusts are majority shareholders with equity holding of 65.3%.
According to the affidavit filed on 6 January, the MPT Act requires written consent from the charity commissioner before filing any suit against or relating to public trusts or trustees. The commissioner is also required to be party to such suit.
Considering that petitioners have neither obtained such consent nor have they included the commissioner as a party to the case, “maintainability” of the petition is questionable, said the affidavit.
The office of Cyrus Mistry declined to comment.
“Cyrus Mistry accepted the offer to become the chairman of Tata Sons on being assured by Mr. Ratan N. Tata that he would be given a “free hand”,” said the affidavit. However, in law, there is no concept of ‘free hand’, the affidavit said.
“They (the petitioners) expected the Trusts, the majority shareholders of Tata Sons, to merely have a passive role and wanted to make the governance structure and the charter documents that clearly identified rights of the Trusts, a mere formalism. This was not to be,” said the trustees in the affidavit.
The trustees also added that the petition has not provided evidence supporting the allegations that the trustees were oppressing the minority shareholders, Shapoorji Pallonji Mistry.
In the petition, the Mistry family controlled firms had alleged that the articles of association were being used as a tool for oppression.
The trustees replied to that allegation, saying the alterations in the articles were done “with the express consent” of the petitioners at shareholder meetings.
“The petitioners and the promoter family of the petitioners have been aware of and acquiesced to the majority shareholding of the Trusts for last several decades,” said the court document.
They have never complained earlier about their rights being oppressed or that Tata Sons was being mismanaged because of interference by the Trustees, it said.
Allegations of mis-governance were levelled against Tata Sons after Cyrus Misty was removed as the chairman of its board on 24 October. In the NCLT plea filed in December, the Mistry firms had alleged that nominee directors on the board of Tata Sons were acting as “puppets”, “hand maidens” or “postmen”.
“(These allegations) are grossly incorrect and have been made by the Petitioners at the behest of Mr. Cyrus Mistry to deliberately besmirch the reputation of the Nominee Directors,” said the affidavit.
Another allegation in the NCLT plea pertained to the trustees’ violation of Securities and Exchange Board of India (Sebi) insider trading rules by obtaining unpublished price-sensitive information related to Tata group’s listed firms.
The trustees denied these allegations and said that the authority to rule in this matter or call for an investigation was Sebi’s and not the NCLT.