Cyrus Mistry firms can’t seek waiver of rules, Tata Sons tells NCLT
Mistry firms’ plea for waiver from shareholding requirement based on possible future impact of veto powers given to Tata Trusts in articles of association , Tata Sons tells NCLT
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Mumbai: Tata Sons Ltd on Friday contended that family firms of ousted chairman Cyrus Mistry don’t have sufficient grounds to seek a waiver from the shareholding requirement to file a petition alleging mismanagement and oppression of minority shareholders at the Tata group holding company.
Tata Sons’ lawyer Abhishek Manu Singhvi told the National Company Law Tribunal (NCLT) that the Mistry firms’ plea for a waiver is based merely on the possible future impact of the veto powers given to Tata Trusts in the articles of association (AoA) of Tata Sons.
The law does not allow arguments to be based on mere possibilities of future impact, and that too on subsidiaries, because of any clause in the AoA, said Singhvi.
He also pointed out that the Mistry firms didn’t challenge the amendments to the articles when they were effected in 2000 and 2014. The AoA give Tata Trusts, which hold two-thirds of Tata Sons, the right to nominate one-third of directors; they also say certain resolutions can be passed only if majority of Tata Trusts’ nominated directors agree.
Cyrus Investments Pvt Ltd and Sterling Investments Pvt Ltd are asking the NCLT to waive the requirement that shareholders hold at least 10% of a firm to file a petition of mismanagement and oppression. They are pleading this after the NCLT on 7 March ruled that their petition was not maintainable because of this technical requirement. Although these firms hold 18.4% of ordinary shares in Tata Sons, when preference shares are counted, their ownership is only 2.17%.
Spokespersons for Tata Sons and Mistry, who was ousted as chairman on 24 October, declined to comment.
In the court, Singhvi said that there were no grounds to allege that activities of the Tata Sons board would have any effect on national interest or public interest, as claimed by the Mistry counsel.
“Waiver argument cannot merely be documents by a respondent (Cyrus Mistry). The petitioner claims that the possibilities itself are a reason for the waiver. Waiver application should be dismissed because no ground of waiver is shown in the petition,” said Singhvi.
Earlier, arguing on behalf of the Mistry firms, Aryama Sundaram said the way the affairs of the company are conducted have a “bearing on public interest… and the articles run afoul of letter and spirit of Companies Act”.
Sundaram asked the court to examine the nature of the grievances in the light of issues relating to the running of Tata Sons and whether it affects public shareholders or not.
The next hearing will be on 4 April.