In a new twist to the Tata Sons’ row, ousted chairman Cyrus Mistry has filed an appeal with the Supreme Court against alleged anomalies in the National Company Law Appellate Tribunal dispute.
Mistry, the scion of the 154-year old Shapoorji Pallonji Mistry Group, whose family owns more than 18% in Tata Group, has filed a cross-appeal in the senior court, the Press Trust of India says. Generally, this means an appeal made against certain facets of a judgment.
The tribunal, in its order dated December 18, reinstated Mistry as Tata Sons chairman, nearly three years after he was ousted. Tata Sons approached the Supreme Court on January 25 and it put a stay on the National Company Law Appellate Tribunal order.
Mistry’s fresh petition, filed on February 14, describes the group’s relationship with the Tatas as “a quasi-partnership relationship of a vintage of over 60 years, holding 18.37% in the equity share capital of Tata Sons and whose stake is now worth over 1.5 trillion rupees”.
The petition seeks remedies for alleged anomalies in the tribunal’s order, including that it did not look at alleged oppression of minority shareholders, as well as converting Tata Sons into a private limited company in a post-facto move.
The conversion happened after Mistry was removed as chairman on October 24, 2016. As per the petition, the tribunal order clearly and unequivocally found prejudicial conduct by Tata Sons. But it failed to provide “important reliefs” that would put an end to the alleged “oppressive conduct” of the majority shareholder.
While reinstating Mistry as the chairman, the tribunal had also termed the action of the Registrar of Companies to allow conversion of Tata Sons into a private limited company as illegal. After the tribunal’s ruling, Mistry had said that he was not interested in any executive position at the Tatas but wants only to uphold corporate governance norms and also protect his family’s investment in the Tatas.
The 45-page petition said the tribunal, after reviewing voluminous records, has clearly found the prejudicial conduct by Tata Sons. However, the tribunal “has erred in not granting vital reliefs, including proportionate representation on the board of Tata Sons, and striking down of certain provisions in the articles of association, which were the tools of oppression that enabled prejudicial conduct by the majority shareholder,” it said.
The petition also claimed that the tribunal erroneously said it did not have the power to alter the Articles of Association even though it correctly recorded that the relationship between the Tatas and the Mistry family as being a “quasi-partnership”. It wants certain provisions in the Articles of Association of Tata Sons deleted, and claims they are clearly permitted by special provisions dealing with the oppression of minority shareholders under the companies’ law.
In addition, Mistry wants proportionate representation on the board of Tata Sons to ensure that its interests and investments – worth over one trillion rupees – are protected in the future.
While the “manifest abuse of power and conduct lacking in probity” had been explicitly found by the NCLAT in the removal of Mistry, his reinstatement was not sought, the petition said.
“Instead, what was sought was clearly intervention in the form of deletion of provisions in the Articles of Association, which is a measure specifically provided for in Section 242 of the Companies Act, 2013,” it noted.
Shapoorji Pallonji Mistry Group has increased its holding in the Tatas since the 1920s and now owns a 18.37% stake. Handwritten letters of Ratan Tata to Pallonji Mistry have also been attached along with the petition.
As the largest minority shareholder in Tata Sons, which is worth over US$100 billion today, Pallonji Mistry and his children Shapoor and Cyrus, served as directors of 20 Tata Group companies. Pallonji Mistry was on the board of Tata Sons from June 1980 to 2004.
Cyrus Mistry became a director in Tata Sons in August 2006, a directorship he held till he was removed in February 2017.
Mistry and Ratan Tata reportedly had a difference of opinion over key investment decisions, including manufacturing of the world’s cheapest car, the Nano. Despite the low cost, car buyers in India did not warm to this small car and sales remained lackluster.
Mistry was appointed after a long, drawn-out selection process. When he took over, he was 44, the youngest to occupy the corner office of Bombay House, the headquarters of Tata group.
Tata Sons Private Ltd is the principal holding company of the Tata Group and is the majority shareholder and promoter of most Tata Group companies including Tata Motors, Tata Steel and Titan.
Philanthropic trusts, including the two primary ones – Sir Dorabji Tata Trust and Sir Ratan Tata Trust – hold 66% of the equity share capital of Tata Sons.