MUMBAI: In a big blow to Cyrus Mistry the National Company Law Tribunal (NCLT) on Monday said that the former chairman’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,” said B.S.V. Kumar, presiding member of NCLT. Shareholder needs at least 10% to file a petition in the NCLT, according to Companies Act, 2013. The quasi-judicial body will decide on whether it can waive this requirement on 7 March.
Tata Sons argued that Mistry’s family firms – Cyrus Investments Pvt Ltd and Sterling Investments Pvt Ltd – hold only 2.17% shares of the total share capital (equity + preference shares) of Tata Sons, which makes them unqualified to allege any charges. Mistry’s office declined to comment.
In December, last year, alleged oppression of minority shareholder rights and mismanagement at the Tata Group in the main petition.
Mistry’s firms hold 18.4% equity stake in Tata Sons while Tata Trusts, a group of charitable organisations controlled by Ratan Tata, hold a 66% stake. The rest is owned by Tata group companies and some Tata family members, including Ratan Tata.
If NCLT rules granting a waiver on Tuesday, Tata Sons could challenge it in National Company Law Appellate Tribunal (NCLAT) since rules say such a waiver should be sought before filing a petition. If it rules against a waiver, Mistry could go to court against today’s ruling and also on the waiver petition.
Mistry was removed as the chairman of Tata Sons on October 24 last year after the board lost confidence in his leadership. The unexpected ouster led to public spat between Mistry and Tata Group, where both the warring sides accused the each other of poor corporate governance practices and business decisions.
In his 344-page petition, Mistry shared the minutes of several board meetings, details of business deals and emails.
Tata Sons recently filed a complaint against Mistry with the Securities and Exchange Board of India (SEBI) for allegedly making ‘confidential and sensitive’ information public through his legal petition at NCLT.
The confidential information, according to Tata Sons, includes business strategies, financial information and unpublished price sensitive information related to eight listed entities of Tata Group companies.