Mumbai: The National Company Law Tribunal (NCLT) on Wednesday dismissed a contempt of court petition filed by two Mistry family firms against Tata Sons Ltd over a shareholder meeting called by the latter to eject him from the board.
The tribunal said Tata Sons’ action didn’t amount to contempt of court and asked the Mistry family firms to file an affidavit to support an earlier petition they filed alleging mismanagement and oppression of minority shareholders by the Tata group holding company.
The first petition’s hearing is scheduled for 31 January, ahead of the 6 February date set by Tata Sons for a shareholders’ meeting to oust Mistry as a director from its board.
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The contempt petition filed by Cyrus Investments Pvt. Ltd and Sterling Investment Corporation Pvt Ltd sought to restrain Tata Sons from going ahead with the extraordinary general meeting (EGM).
Mistry was ousted as chairman of Tata Sons on 24 October. On 12 January, Tata Sons named Tata Consultancy Services Ltd’s chief executive officer N. Chandrasekaran as its new chairman.
The contempt petition claimed that Tata Sons, by calling the EGM, had violated an undertaking given by its lawyers when the NCLT heard an earlier petition filed by the investment firms on 22 December.
The tribunal told the Mistry family firms to address their concerns about the Tata Sons shareholder meeting and club it with the first petition. They have been allowed to file the affidavit in the next three days.
“The petitioners have the liberty to file an affidavit on the matter," said B.S.V. Prasad Kumar, member-judicial at NCLT, part of the two-member bench that heard the case.
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The two Mistry family firms had approached the NCLT against Tata Sons and Tata trustees on 20 December alleging mismanagement and oppression of minority shareholders. They requested the NCLT to dismiss the board of Tata Sons and bar interim chairman Ratan Tata from attending board meetings.
Cyrus Investments and Sterling Investment own about an 18.4% stake in Tata Sons, the holding company of the salt-to-steel conglomerate, and are its largest minority shareholders.
“Judgement is on expected lines that there was no contempt. The court’s direction on 22 December was limited to consent on not filing multiple proceedings and escalating the matter further," said J.N. Gupta, co-founder and managing director of Stakeholders Empowerment Services, a proxy advisory firm.
“Mistry firms have been rightly given the right to question the EGMs via an affidavit and that will be heard on merit," he added.
According to a person close to the Tatas who didn’t want to be named, the group may file a caveat in the National Company Law Appellate tribunal (NCLAT) in case the Mistry firms challenge the NCLT order. A caveat is a prayer to be heard by a court before it passes an order.
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According to a report in The Economic Times on Wednesday, Mistry has written to the Tata Sons board questioning Chandrasekaran’s appointment and said that he might challenge it legally.
A spokesperson for Mistry declined to comment.
The focus now shifts to the 31 January hearing of the first petition, where the first question will be that of admissibility.
In its reply to the petition, Tata Sons has claimed that the Mistry family firms didn’t have enough shareholding under company law to file such a case if preference shares are considered. Tata Trusts, which own almost 66% of Tata Sons, said that the Mistry firms should have sought the permission of the charity commissioner to file a case.