Tribunal dismisses Mistry's allegations

NCLT has termed the petition filed as "proxy litigation" alleging mismanagement by the Tata group

Former Tata group chairman Cyrus Mistry’s family firms Cyrus Investments and Sterling Investment failed to produce enough evidence against Tata Sons, said the National Company Law Tribunal (NCLT).  NCLT has termed the petition filed as “proxy litigation” alleging oppression and mismanagement by the Tata group.

In the 48-page detailed order, the tribunal disagreed with almost all the allegations Mistry firms have made in the petition including his removal as chairman, violation of Articles of Association, losses incurred in the Nano project, Tata Steel’s investments in Corus and chairman Ratan Tata being responsible for them. “Majority rule cannot be obliterated on the ground some business is doing losses. In business, it is not that head of management, in this case Ratan Tata, will have the magic of Midas touch, that he can turn any and every venture profitable. At least, we don’t think he has any such magic in his hands. One thing is true that Ratan Tata is instrumental in making Tata Group into $100 billion group,” reads NCLT detailed order. 

Tata Sons executive chairman N Chandrasekaran said, “The Tata group has always been committed to the highest ethical standards and principles of governance. We welcome the NCLT’s order, and it is an endorsement of these values and principles.” He added Tata Sons and the operating companies were focused on growth to deliver value to its shareholders, and thanked all stakeholders for their continued support. 

On April 17, NCLT had dismissed the waiver application filed by former Tata Sons chairman Mistry’s family firms on the eligibility criteria of 10 per cent shareholding, required under the Companies Act for moving its petition. With the NCLT refusing to grant the waiver, Mistry family’s petition for alleged mismanagement and oppression of minority shareholders was automatically rejected.

The tribunal in the detailed order explained that rejection of the plea on account of Mistry companies failed to satisfy the bench that there was a cause for action which is required to make a case under prevention of oppression and mismanagement. The tribunal said that waiver could be granted if there was clear proof that national interest and economic interest of the petitioner had been affected; however the two companies were unable to prove the same.