The National Company Law Appellate Tribunal (NCLAT) on Wednesday, 29 August, admitted a petition moved by outsted Tata Sons Chairman Cyrus P Mistry seeking to set aside an earlier order of a Mumbai-bench of the company law tribunal, which had upholded his removal.
In the 9 July order, a bench of NCLT Mumbai had dismissed Mistry's plea challenging his removal as Chairman of Tata Sons.
Hearing the matter, the two members of the appellate tribunal, headed by its Chairman Justice S J Mukhopadhaya admitted Mistry's petition, which he filed in his personal capacity.
The NCLAT also issued notices to Tata Sons and other respondents and asked them to reply within ten days. The matter will now be heard on 24 September along with the original plea filed by Cyrus Investments challenging Mistry's removal from Tata Sons.
Matter Will be Heard on 24 September
In his plea, Mistry also sought the expunging of remarks and some words used in the July 9 order.
Mistry had, on 28 August, filed the petition in his personal capacity, requesting the appellate tribunal to set aside the impugned 9 July order of the National Company Law Tribunal.
On 24 August , NCLAT passed an order over the petitions filed by the investments firm of the Mistry family and directed Tata Sons not to force the companies to sell their shares in the Tata group firm.
The appellate tribunal had admitted the petitions of Mistry’s family-run firms and posted the matter for hearing on 24 September.
It has also said that issues related to conversion of Tata Sons' into a private company from a public limited company would be decided by it at later stage.
Besides change to a private company, the investment firms had in NCLAT challenged the move by the company to restrict shareholders from freely selling their stake and the Article 75 of the articles of association that can be used by the board to force a shareholder to sell out.
Taking into consideration the facts and that the appeal is pending and if the Appellants (investment firms) are forced to sell their shares which may affect the merits of the appeal, as they will cease to be member(s) of the company (Tata Sons). We direct the Respondents (Tata) not take any step in terms of Article 75 for transfer of shares of minority shareholders like Appellants (Mistry) and others during the pendency of the appeal.Appellate Tribunal
Background
The Mistry family, which derives almost USD 17 billion of their fortune from the 18.4 per cent stake in Tata Sons, had filed several lawsuits challenging ouster of Cyrus.
The Mistry camp had challenged the 9 July order of the Mumbai bench of the NCLT , which dismissed their pleas against his removal as Tata Sons chairman, as also the allegations of rampant misconduct on part of Ratan Tata and the company's Board.
A special bench of the tribunal had held that the board of directors at Tata Sons was “competent” to remove the executive chairperson of the company.
NCLT bench members B S V Prakash Kumar and V Nallasenapathy had also said that Mistry was ousted as chairman because the Tata Sons' Board and its majority shareholders had "lost confidence in him”.
Under the Companies Act 2013, an order of NCLT can be challenged before the National Company Law Appellate Tribunal (NCLAT). Mistry, who was the sixth chairman of Tata Sons, was ousted from the position in October 2016.
He had taken over as the chairman in 2012 after Ratan Tata announced his retirement.
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 Tata Sons, Ratan Tata, and some other board members.
The investment firms in their plea, supporting 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.
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