 "Cyrus Mistry")
Ousted Tata Sons chairman Cyrus Mistry's counsel on Monday argued before the National Company Law Tribunal (NCLT) for introduction of certain "safeguards" within the Tata Group to protect the interests of minority shareholders.
Mistry's counsel C Arya Sundaram told the tribunal's Mumbai bench that such safeguards would ensure the diversified conglomerate works like a "board-managed" entity.
Tata Sons Ltd is the holding company of the Tata Group and holds the bulk of shareholding in its companies, whose activities range from making salt to software export.
Sundaram, who represents all the companies where Mistry is a stakeholder, told the bench that his ouster from Tata Sons was also a "consequence of the company's rampant practice of allowing the nominee trustee directors of Tata Trusts to override the opinions of the minority shareholders and even the company board".
"Increasingly, all decisions for Tata Sons as well as other group companies were being taken or approved by the two nominee trustee directors of the Tata Trust, who superseded the decisions of even the Tata Sons board," he argued.
He said the articles of association of Tata Group, that deal with powers of the Trust and the company's board, had several provisions that were often "misused" to undermine the sanctity of the Tata Sons board and the minority shareholders.
Sundaram said the opinions of the majority shareholders of the company always superseded those of the minority ones and there "was a constant interference from the nominated trustees of the Tata Trust in the functioning of Tata Sons as well as that of the smaller group companies".
"The articles enable the trustees to reduce the company board to a dummy board," Sundaram claimed.
"One of these articles allows the Tata Trusts to nominate one-third of the directors of Tata Sons. Another article permits the majority shareholders to force the minority shareholders to sell their shares or to allow transfer of shares," Sundaram argued.
He said these articles were not in consonance with the Companies Act and dubbed them as "oppressive".
"They are oppressive to the interest of the minority shareholders and defeat the purpose of having a board-run/ managed company. All that Mistry is seeking is that these articles be struck down or that some essential safeguards be introduced."
Sundaram said the reason Mistry had approached the NCLT was to seek protection for the minority shareholders through safeguards such as bringing in place a "transparent corporate governance" for Tata Sons and its decisions vis-a-vis the group companies.
Mistry has been locked in a legal battle with the Tatas since his unceremonious exit as chairman of Tata Sonsthe promoter company of the USD 105 billion car-to-software group in October 2016.
Mistry's arguments will continue tomorrow.
Mistry was ousted as Tata Sons Chairman on October 24, 2016, and also removed as a director on the board of the holding company on February 6, 2017.
Cyrus Investments Pvt Ltd and Sterling Investments Corporation Pvt Ltd had moved the NCLT against Tata Sons after Mistry's ouster alleging oppression of minority shareholders and mismanagement.
