CLT rules Mistry family plea not maintainable

Waiver plea in this regard to be heard Tuesday

Published: Mar 6, 2017

Life is not a template and neither is mine. Like several who have worked as journalists, I am a generalist in my over two decade experience across print, global news wires and dotcom firms. But there has been one underlying theme in each phase; life gave me the chance to observe and tell a story -- from early days tracking a securities scam to terror attacks and some of India's most significant court trials. Besides writing, I have jumped fences to become an entrepreneur, as an investment advisor -- and also taught the finer aspects of business journalism to young minds. At Forbes India, I also keep an eye on some of its proprietary specials like the Rich list, GenNext and Celebrity lists. An alumnus of Xavier Institute of Communications and H.R College of Commerce and Economics in Mumbai, I have worked for organisations such as Agence France-Presse, Business Standard, The Financial Express and The Times of India prior to this.

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Image: Vivek Prakash / Reuters

The Mumbai bench of the National Company Law Tribunal (NCLT) on Monday said that Cyrus Mistry’s family firms’ plea against Tata Sons was not maintainable. Last month, the bench had heard both the firms on the issue of maintainability of a petition, in which the Mistry family firms had alleged oppression of minority shareholders’ rights and mismanagement at the Tata group.

As per the provisions of the Companies Act, a shareholder needs to hold at least 10 percent in a company to file such a petition before the NCLT. Shapoorji Pallonji (SP) Group firms, Cyrus Investments and Sterling Investment, hold 2.17 percent of the total share capital of Tata Sons (including ordinary and preference shares). If only the ordinary shares are taken into consideration, then the Mistry family’s stake in the main holding company of the salt-to-software conglomerate stands at 18.4 percent.

The petitioners have sought a waiver of the minimum shareholding criteria from the NCLT for the court to adjudicate on the case, on the grounds of larger shareholders’ interest. The tribunal will decide on the waiver plea on Tuesday, March 7.

The legal battle between the SP Group and Tata Sons ensued after Cyrus Mistry, the son of Pallonji Mistry, patriarch of the SP Group, was suddenly removed as the $103 billion-conglomerate’s chairman on October 24, 2016. Mistry had succeeded Tata Sons’ former chairman and current chairman of the Tata Trusts, Ratan Tata in December 2012. A trust deficit and breakdown of ties between Mistry on one side, and the other directors of Tata Sons and trustees of Tata Trusts (which owns 66 percent of Tata Sons) on the other, led to Mistry’s sacking.

Even after being sacked as Tata Sons chairman, Mistry continued on the boards of the individual operating companies of the 144-year-old conglomerate, till December last year, when he decided to step down from the boards of these companies and approach the legal forum for justice.

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