Cyrus Mistry moves SC seeking changes to NCLT order
18 February 2020
Cyrus Mistry’s family concern, the Shapoorji Pallonji Mistry Group, has moved the Supreme Court seeking changes to the 19 December 2019 order of the National Company Law Appellate Tribunal (NCLAT) that, according to the petitioner, refrained from granting certain reliefs that were warranted and necessary.
While the NCLAT had ordered reinstatment of Cyrus Mistry as executive chairman of Tata Sons, the Mistry family group said the order had certain ‘anomalies’ with regards to rights of the Shaporji Pallonji Group firms, which had an 18.32 per cent share in Tata Group holding company.
The order “refrained from granting certain reliefs that were warranted and reasonably necessary in the facts and circumstances of the case, particularly since NCLAT is the last forum for findings of fact,” the cross appeal filed through two Mistry family-backed investment firms said.
The appeal, filed on Friday through Cyrus Investments and Sterling Investments Corporation, has sought corrections of the many “anomalies” in the tribunal’s order, including alleged oppression of minority shareholders and converting Tata Sons into a private limited company as a post-facto move.
Cyrus Mistry had earlier used the two firms to move the National Company Law Tribunal (NCLT) and later NCLAT, alleging oppression of minority shareholders and mismanagement by Tata Sons.
“The direction ought not to have been only against the nominee of Tata Trusts and R-2 (Ratan Tata) but against the trustees of the majority shareholders who even though not on the board of Tata Sons, were interfering with the decision making processes of the board. Therefore, the reliefs should have been granted against all the trustees of Tata Trusts,” according to the petition.
Instead of the role of executive chairman for Mistry, the petition seeks proportionate representation for the Shapoorji Pallonji firms in Tata Group companies, considering the “huge stake” that the appellants have in Tata Sons.
Moreover, with the appellant group being an integral part of the company for over 50 years, Article 75 (forcing minority shareholders to sell stake and exit) itself ought to have been struck down and NCLAT was in error in assuming that it did not have the power to strike down an Article. In fact, the power is clearly available in terms of Section 242(5) of the 2013 Act, it said.
The petition also said the tribunal, after reviewing the records, has clearly found the prejudicial conduct by Tata Sons. However, it “has erred in not granting vital relief, including proportionate representation on the board of Tata Sons, and striking down of certain provisions in the articles of association, which were the tools of oppression that enabled prejudicial conduct by the majority shareholder.”
The petition also contended that the tribunal erroneously said it did not have the powers to alter the Articles of Association even though it had correctly recorded that the relationship between the Tatas and the Mistry family was in the nature of a “quasi-partnership”.