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NCLT quashes Mistry's waiver petition

17 Apr 2017 | Written by Vaneet Randhawa; Edited by Gaurav Jeyaraman
Mistry and his losing battle against Tata Sons

Cyrus Mistry's petition that alleged mismanagement and oppression of minority shareholder interests suffered badly as the National Company Law Tribunal declined to grant "waiver to Cyrus Mistry's family firms on the minimum shareholding requirement to petition" against Tata Sons.

A petition is required to hold 1/10th of the share capital or factor 10% of the members and Mistry failed to fulfill these requirements.

In context: Mistry and his losing battle against Tata Sons

03 Feb 2017Petition filed against oppression and mismanagement by Cyrus Mistry

Tata Sons' sacked chairman Cyrus Mistry submitted a petition to the National Company Law Appellate Tribunal (NCLAT) seeking that Tata Sons be stopped from displacing him from the board.

Mistry's family firms Cyrus Investments Pvt Ltd and Sterling Investments Pvt Ltd asked NCLAT to decide on the petition of oppression of minority shareholder rights and mismanagement at the Tata Group.

DetailsWhat is the mismanagement and oppression of minority shareholders?

Under the Companies Act, if the members can prove that the business is being conducted in "a manner oppressive to any member or members" then the members can seek this petition.

However, a director sacked under Section-284 cannot claim relief under Sec-397 as no wrong has been done to him as a member.

There is no oppression if shareholders have voted for the ouster.

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NCLT dismisses Mistry plea over insufficient shareholding

March 2017NCLT dismisses Mistry plea over insufficient shareholding

The NCLT tribunal directed that the Mistry family firms didn't satisfy the requirements to file for a mismanagement and oppression petition.

Mistry said he'll seek a waiver because of the nature of the allegations.

Disqualifying the petition on grounds of inadequate shareholding, NCLT said: "Tata Group was going through a harrowing time because of the boardroom battle but will make it through the turbulence."

What are Mistry's grounds for a waiver?

Mistry sought a waiver claiming that otherwise 'the grave issues raised in the petition would go entirely uninvestigated'. He said Tata Sons' preference shares didn't carry voting rights at general meetings, nor the power to get bonus shares can be redeemed in 20 years.

17 Apr 2017NCLT quashes Mistry's waiver petition

Mistry's share value

Mistry's family firms- Cyrus Investments Pvt Ltd and Sterling Investment Corporation Pvt Ltd only have 2.17% of the complete share capital in the "form of equity and preference shares of Tata Sons even though their equity shareholding stands at 18.4% in the holding company."
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18 Apr 2017Relief for the Tatas

Hailing the NCLT order Tata Sons said it hopes that the decision will finally put the matter to rest.

FN Subedar, chief operating officer of Tata Sons said that hopefully now the "vexatious campaign against the company, the Tata Trusts and Ratan Tata," is over.

He also critiqued Mistry for making many "ill-advised and groundless allegations" intended to tarnish the company.

24 Apr 2017Tribunal says Mistry makes no case against Tatas

The National Company Law Tribunal stated that petitions filed by shareholders linked to Cyrus Mistry, have made no case against the Tata group.

The Tribunal said the cases filed by the Mistry camp could not substantiate any of the allegations that they leveled against the parent company.

The Tribunal also held that many of the allegations were "very old."