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Tata Battle: NCLAT Grants Shareholding Waiver To Mistry
Mistry has been locked in a legal battle with the Tatas since his unceremonious exit as chairman of Tata Sons -- the promoter company of the USD 105-billion car-to-software Tata group in October last year
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Ousted Tata Sons chairman Cyrus Mistry on Thursday got a boost in his fight against Tata Sons when the National Company Law Appellate Tribunal (NCLAT) waived the minimum shareholding rule for him to file a case of alleged oppression of minority shareholders.
The Mistry family owns 18.4 per cent stake in the closely-held Tata Sons. The holding is less than 3 per cent if preferential shares are excluded, not meeting the criteria of at least 10 per cent ownership in a company for filing of a case of alleged oppression of minority shareholders.
Mistry has been locked in a legal battle with the Tatas since his unceremonious exit as chairman of Tata Sons -- the promoter company of the USD 105-billion car-to-software Tata group in October last year.
The appellate tribunal said that although the Mistry companies did not meet the minimum shareholding norm, there are exceptional circumstances for waiver of the statutory requirements.
It directed the National Company Law Tribunal (NCLT), which had previously dismissed Mistry's petition against Tata Sons on the ground of not meeting the minimum shareholding criteria, to decide the case in three months.
The NCLAT bench, headed by Justice S J Mukhopadhaya, however, dismissed another petition filed by Mistry family's investment firms -- Cyrus Investments Pvt Ltd and Sterling Investments Corporation Pvt Ltd -- on maintainability, saying the firms do not have more than 10 per cent in Tata Sons.
The NCLAT granted the waiver to the entities in the filing criteria of having 10 per cent shares of Tata Sons.
While the Mistry camp has welcomed the judgement, the Tatas said they would continue to defend their legal position.
"The ruling of the NCLAT is a welcome vindication of what we have stood for and the values for which we are pursuing the petition against oppression and mismanagement of Tata Sons Ltd," said a statement issued by Mistry's office.
A Tata Sons spokesperson said: "We strongly believe that the allegations made by the petitioners are without basis and incorrect. Tata Sons will continue to defend its position at all appropriate legal forums."
The appellate tribunal has also directed the Mumbai bench of the NCLT to issue a notice to the respondents and proceed on the matter. The NCLT is further directed to dispose of the matter in three months.
The NCLAT had concluded its hearing on July 24 and reserved its judgement.
The script of the full order is still awaited and it was not uploaded on NCLAT's website at the time of filing of the story.
The two investment firms had moved the NCLAT over maintainability of their petitions filed against the Tata group and waiver required for it under the Companies Act, 2013.
The appellate tribunal had heard both pleas together.
Earlier, on April 17, the Mumbai bench of the NCLT had rejected the waiver plea filed by the investment firms while on March 6, it had set aside the one over maintainability.
Following that, both the investment firms had moved the appellate tribunal.
The Companies Act mandates that a petitioner should hold at least one-tenth of the issued share capital of a company or represent 10 per cent of the total number of members to file cases alleging mismanagement and oppression of minority shareholders.
Mistry was ousted as Tata Sons chairman on October 24, 2016, and was also removed subsequently as a director on the board of the holding company on February 6, 2017.
Tata Sons said it has taken note of the order of the NCLAT and will examine so.
The statement issued by Mistry's office further said: "We will continue to pursue the highest standards of corporate governance and demand complete transparency of the group for the benefit of all the millions of shareholders, and indeed, the employees of the Tata Group companies."
These are proceedings to "protect and reinforce the values for which the founders of the Tata Group have given us the legacy that we should strive never to lose".