Cyrus Mistry to take his fight with Tata Sons to NCLAT
NCLT on Monday said Cyrus Mistry's petition against his removal as Tata Sons' chairman two years ago has no merit.
After losing his first round of legal battle against Ratan Tata, the ousted chairman of Tata Group, Cyrus Mistry will go ahead challenging the verdict of National Company Law Tribunal (NCLT) in the appellate tribunal, majorly for protecting the minority stakeholder interests of his family in the $100 billion conglomerate. Tata Sons, the holding company of Tata group in which the Mistry family holds 18.4 per cent stake, is in the process of becoming private company after its shareholders --- which is largely Tata trusts and five listed Tata group companies Tata Steel, Tata Motors, Tata Chemicals, Tata Power, and Indian Hotels --- voted for it in the annual general meeting (AGM) on September 21 last year. The move will curb the minority shareholder rights of the Mistry family in the holding company and even force them for an exit, say legal sources.
In January during the hearing, Tata Trust's senior counsel told NCLT that the trusts want Tata Sons to look at buying out Shapoorji Pallonji (SP) Group's shareholding. "It would be in the best interest of Tata Sons to consider buying out the SP Group shareholding, since the SP Group have been exercising their rights in a disruptive manner which is not in the best interest of the Company."
According to the documents submitted by Tata Sons in NCLT, the majority of the Mistry family's stake in the holding company was acquired from JRD Tata's three siblings in the 70s (the earlier version was that the Mistrys acquired the stake in 30s). JRD was aware of the first two transactions of Pallonji Mistry, but not the last and it angered him. However, the issue was sorted out and the Mistrys were invited to the board of Tata Sons. Cyrus was the director of Tata Sons from September 2006, a year after his father retired from it, and he was entrusted with the job of chairman in 2012. It was on 24 October 2016, the board of Tata Sons in its shocking decision, voted to remove Mistry and it later appointed the head of TCS N Chandrasekaran as the new chairman.
The earlier reports valued the Mistry family's holding in Tata Sons above $10 billion. So buying them out may not be an easy task. "It is quite obvious that Tata wants to see Mistry family's exit from the board of holding company. But its not clear whether it can be achieved in the near future," say legal sources.
NCLT on Monday said Cyrus Mistry's petition against his removal as Tata Sons' chairman two years ago has no merit. The tribunal said "...majority of the board members had lost confidence in him (Mistry) after he sent out certain crucial information to the Income Tax department, leaked details to the media and came out openly in public against the company's shareholders and its board."
In response Mistry said that he was disappointed but not surprised with the NCLT verdict. "The ruling of the National Company Law Tribunal is disappointing although not surprising. We will continue to strive for ensuring good governance and protection of interests of minority shareholders and all stakeholders in Tata Sons from the wilful brute rule of the majority... An appeal on merits will be pursued," read a statement released from Mr Mistry's office.