New Delhi, July 9: The National Company Law Tribunal on Monday rejected a petition filed by Cyrus Mistry against Tata Sons over his dismissal as chairman of the company.
The NCLT ruled that the Tata Sons Board of Directors was competent to remove the Executive Chairman and that Mistry was ejected as the board members had lost confidence in him.
Rejecting Mistry’s petition, to reinstate him on the Board of Tata Sons, the NCLT pointed out that he (Mistry) had openly gone against the Board, and hence against the firm.
“The judgement has only re-affirmed and vindicated that Tata Sons and its operating companies have always acted in a fair manner and in the best interest of its stakeholders. The Tata Group has always been committed and will continue to be committed to transparency and good corporate governance of global standards,” said Tata Sons Chairman N. Chandrasekaran.
“Tata Sons hopes that a finality will be given to the judgement of NCLT, Mumbai by all concerned in the larger interest of companies, the shareholders and the public,” Chandrasekaran added.
“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,” IANS quoted citing office of Cyrus Mistry said in a statement.
The much-awaited verdict came on a petition filed by Mistry after he was dismissed as the Tata Sons Chairman on October 24, 2016 , creating an upheaval in the Indian corporate world.
Following this, Mistry later stepped down from the board of other six Tata Group companies but challenged the Group and his successor, former Interim Chairman Ratan Tata’s decisions, before the NCLT.
The petitioners, Cyrus Investments Pvt. Ltd and Sterling Investments Group of the Shapoorji Pallonji Group had filed the plea against the Tata Sons directors and trustees of Tata Trusts, alleging among other things, abuse of articles of association by outsiders, breakdown of governance and loss of ethical values.
“The ruling is in line with the earlier position expressed by the Tribunal. An appeal on merits will be pursued. Matters like TTSL, Air Asia, recovery of dues from Siva, non-closure of a loss-making Nano, a struggling resolution of Tata Steel Europe, all present serious issues that will be pursued. Not only the facts that were under consideration but also subsequent facts and developments that continue to evidence oppression and mismanagement will be under scrutiny and will be pursued in full earnest,” the official statement from Mistry’s office stated.
The plea also listed how the Articles of Association were violated and misused “to give powers to the majority shareholders to subvert the interests of the minority shareholders and interests of the company.”
Alleging huge revenue losses for the company owing to the alleged mismanagement by Tata Sons board and Ratan Tata, the petition pointed to Ratan Tata’s relationship with C. Sivasankaran and his companies, provided them aex-gratia favours’ without there being any aquid pro quo’ for the Tata shareholders or their group companies, and demanded a forensic audit into such dealings.
Accusing Tata Trusts trustees, Ratan Tata and Lord Kumar Bhattacharya reviewing the operations of various Tata Group companies at the regualr intervals though not being directors in any, the petition said violation of Insider Trading Rules by giving them access to price sensitive information.
However, the tribunal dismissed all the allegations and rejected Mistry’s plea to reinstate him on the Tata Sons Board.
Arguing for the Tata Group, its advocate Abhishek Manu Singhvi told the NCLT that Mistry was appointed at the behest of Tata Trusts and his removal cannot be questioned by minority shareholders and he was ousted according to provisions of the law by seven out of nine directors in which Mistry did not vote for his removal and one director abstained.
Singhvi argued that Mistry was dismissed because the Tata Sons Board had lost confidence in him, as he had intentionally and in bad faith, “leaked sensitive and confidential information” which affected Tata Group’s market value.