Furnish proof of allegations in a week: NCLT to Mistry

Tribunal directs Mistry to file a reply within a week; to hear the matter on January 31

It was not a routine hearing by the National Company Law Tribunal (NCLT) on Thursday as it was the first court room encounter of India’s largest conglomerate, Tata group, with ousted chairman Cyrus Mistry.

Unlike the usual court rooms, NCLT is more an office with a large conference room at the Fountain Telecom Building, Mumbai. The tribunal room, known for its sophisticated hearings, sounded quite noisy on Thursday. It was jam-packed with lawyers, media personnel and shareholders.

The case was so unusual that the tribunal said, “This case not only concerns the reputation of Tatas, but also of the country. It is a case involving all of us. It will have international implications.”

 

After a 90-minute debate, NCLT directed Mistry to file a reply within a week on the alleged oppression of minority shareholders and mismanagement by Tata Sons, its directors and Ratan Tata, as claimed by the ousted chairman’s family-controlled firms. The case was adjourned till January 31.

Shapoorji Pallonji group investment firms Cyrus Investments and Sterling Investment Corporation had moved NCLT against Tata Sons on Tuesday. A petition was filed under sections 241, 242, 244 of the Companies Act. The tribunal, headed by B S V Prakash Kumar and V Nallasenapathy, had asked Tata Sons to file a response within two weeks to the petition. Thereafter, another 15 days were given to all parties to file additional affidavits and rejoinders. The tribunal had also directed both the parties not to violate the time schedule, issued on Thursday.

Mistry’s counsel Aryama Sundaram questioned Tata group’s investments in “legacy hotspots” such as “overpriced and bleeding Corus acquisition, doomed Nano car project”. Besides, the counsel also claimed that Tata Sons was in the danger of violation of securities regulation that mandated a need-to-know treatment of such information.

The tribunal was reportedly not satisfied with the allegations against Tata Sons and its directors, Tata Trusts and its trustees and Ratan Tata made by Mistry’s counsel. It asked him to present documented proof to support them. It said the decision and losses related to projects like Corus and Nano, as mentioned by the petitioners, could not be argued under Section 241 of the Companies Act.

In a reply to the questions raised by the judges, Sundaram said: “My petition is against the trustees of Tata Trusts, oppressing Mistry’s firms’ interests as a shareholder. He seeks limited interim relief in the company petition. He urges the tribunal to refrain Tata Sons from issuing fresh securities, which will result in dilution of present equity paid-up capital of 18.37%, held by Mistry’s firm. He also requests the tribunal to direct Tata Sons not to remove Mistry from its board and also to restrain them from making any changes in the Article of Association, unless such changes have been made with the leave of this tribunal.”

However, the tribunal did not grant relief to Mistry and ordered that no further applications for interim relief would be allowed in any court or forum until the matter was disposed by the NCLT. Senior advocate Abhishek Manu Singhvi, who was representing Tata Sons, said the petition should be dismissed immediately, while agreeing to submit his reply within the time period stipulated by the court.

“Tata Sons believes the petition is not maintainable in law and the Court will hear Tata Sons on this issue at the outset at the next hearing. It does not wish to state any further since the matter is sub-judice,” Tata Sons stated.