Business Today

NCLAT to hear Cyrus Mistry's appeal today against NCLT order on Tata Sons

Cyrus Mistry, the ousted Tata Sons chairman, may have lost the boardroom battle against the conglomerate at NCLT last month, but he will certainly be hoping for better luck with the National Company Law Appellate Tribunal (NCLAT).

twitter-logo BusinessToday.In        Last Updated: August 8, 2018  | 12:31 IST
NCLAT to hear Cyrus Mistry's appeal today against NCLT order on Tata Sons

Cyrus Mistry, the ousted Tata Sons chairman, may have lost the boardroom battle against the conglomerate at NCLT last month, but he will certainly be hoping for better luck with the National Company Law Appellate Tribunal (NCLAT). The NCLAT is scheduled to hear an appeal on the NCLT order regarding his dismissal today.

The hearing was supposed to have happened yesterday but given the absence of Abhishek Manu Singhvi, the counsel for Tata Sons, the two-member NCLAT postponed it by a day.

To remind you, on July 9, the National Company Law Tribunal (NCLT) Mumbai had dismissed Mistry's pleas challenging his abrupt ouster as well as his allegations of rampant misconduct in the top echelons of Tata Sons, the holding company of the software-to-steel conglomerate.

Mistry, who was the sixth chairman of Tata Sons, was sacked in October 2016 after a nearly four-year reign. Incidentally, his was the shortest stint in the hot seat in the Tata Group's 150-year history. Two months after his removal, Mistry's family-run firms Cyrus Investments Pvt Ltd and Sterling Investments Corp approached the NCLT as minority shareholders against the company.

In his pleas, Mistry primarily argued that his removal was not in accordance with the Companies Act and that there was rampant mismanagement of affairs across Tata Sons. He had further alleged that Tata Trust chairperson Ratan Tata - who had retired as the company's chairman in 2012 and was succeeded by Mistry - and trustee N Soonawala interfered with the day-to-day operations of the group companies, acting as shadow directors, and all of the above had caused massive revenue loss for the group.

The Tata Group had denied all charges, saying that Mistry had been removed because the Board had lost confidence in him. The group patriarch felt vindicated when the NCLT's Mumbai bench eventually ruled that the Tata Sons' Board was "competent" to remove the executive chairperson of the company. The bench members, BSV Prakash Kumar and V Nallasenapathy, had added that Mistry was ousted as chairman because the Tata Sons' Board and its majority shareholders had "lost confidence in him".

Mistry then approached NCLAT last week against the NCLT's ruling. The appellate tribunal today will reportedly also decide whether a stay on Tata Sons' conversion into a private limited company will be granted. Mistry had filed the petition seeking a stay on the conversion while challenging the NCLT order.

Last September, Tata Sons had won the approval of its shareholders to convert itself into a private limited company. The switch from being a public limited company to a private entity was not only expected to usher in a quicker decision making process in the company, but also limit the Mistry family's scope to sell their stake to outsiders. A public limited company allows shareholders to legally sell their stake to anyone. But a shareholder of a private limited firm cannot sell the shares to outside investors.

The Mistry family, in turn, had launched an aggressive campaign ahead of the annual general meeting to prevent the Tata Group from getting the three-fourths majority for the approval of the proposal, terming the move as oppression of minority interests.

The NCLAT's verdict will determine whether Tata Sons' plans can come into effect. So a lot is riding on the hearing today.

With PTI inputs

Edited By Sushmita Choudhury Agarwal

Youtube
  • Print

  • COMMENT
BT-Story-Page-B.gif
A    A   A
close