NCLT reserves order on contempt plea by Cyrus Mistry’s family firms
The contempt plea sought to restrain Tata Sons from going ahead with a meeting of shareholders to eject Cyrus Mistry as a director from its board
Mumbai: The National Company Law Tribunal (NCLT) reserved on Monday its order on a contempt petition filed by family firms of Cyrus Mistry against Tata Sons Ltd.
The contempt petition, filed by Cyrus Investments Pvt. Ltd and Sterling Investments Pvt. Ltd, sought to restrain Tata Sons from going ahead with a February meeting of shareholders to eject Mistry as a director from its board. Mistry was ousted as chairman of Tata Sons on 24 October.
The petition claims that Tata Sons calling the extraordinary general meeting (EGM) violates the undertaking given by its lawyers when the NCLT heard an earlier petition filed by the investment firms on 22 December.
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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.
Lawyers for the Mistry family firms argued that Tata Sons and Tata Trusts agreed that they won’t take any incremental action till the original petition is heard by the NCLT on 31 January.
The counsel for Cyrus Mistry termed the extraordinary general meeting, called to oust him on 6 February, a violation of NCLT’s directives.
“There is no hurry for Tata Sons to remove Cyrus Mistry as director of Tata Sons," said Janak Dwarkadas, senior counsel representing Mistry, adding that not honouring an undertaking will set a dangerous precedence.
Abhishek Manu Singhvi, who appeared on behalf of Tata Sons, said the tribunal’s directives on 22 December just meant that no legal action or proceedings can be undertaken by Tata Sons, Tata Trusts or the Mistry family firms. However, they were allowed to take company decisions, he said.
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He said Tata Sons was seeking Cyrus Mistry’s removal as a director as he was acting in a manner detrimental to the company.
In support, he presented a 12 January letter written by Mistry to the income tax department where the ousted chairman alleged that Tata trustees were interfering in the functioning of Tata Sons in violation of provisions of the income tax act.
The IT department had asked Tata Sons to explain whether the trusts, which control a two-thirds stake in the group holding company, were involved in activities other than charitable purposes.
Singhvi added that Mistry replying to income tax letters was just one of the reasons why Tata Sons is seeking his removal from the board of the company.
“The income tax summons for information sent in the month of November were addressed to principal officer of Tata Sons," said Singhvi adding that by then Mistry was no longer the principal officer.
Mistry’s counsel argued that replying to the tax summons would be detrimental only to the trustees and not the company.
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