Mistry investment firms file contempt petition against Tatas

Tatas said that there is no contempt and they would make their submissions to NCLT

The two investment companies of the Mistry family, Cyrus Investments and Sterling Investment Corporation, on Wednesday, filed a contempt petition against Tata Sons, Tata Trusts and their officials in the National Company Law Tribunal for violation of the NCLT order.

The contempt petition said despite assurances by Tata lawyers that they would not take any action against Mistry, pending the hearing of a petition, Tata Sons has called an extraordinary general meeting of its shareholders on February 6 to remove Mistry from its board.

This action, the petition said, was against the NCLT consent order dated December 22 in which the Tatas had promised they wouldn’t initiate any action on Mistry’s removal from the Tata Sons board.

But according to a special notice dated January 3, 2017 — received from four Tata trusts, which own 13.66% stake in Tata Sons, and signed by its executive trustee R Venkataramanan — the trusts asked Tata Sons to convene a shareholders meeting to remove Mistry. Following the notice, Tata Sons sent a notice dated January 5 to its shareholders to call an EGM on February 6 to remove Mistry as director.

In response to the contempt petition filed by Mistry at the NCLT, a Tata Sons group spokesperson said, “There is no contempt. We will make our submissions to NCLT.”

In the petition filed on December 20, Mistry’s investment firms had asked NCLT to "supersede the existing board of directors" of Tata Sons and appoint an administrator to look after its day-to-day affairs. The petition sought the appointment of a retired Supreme Court judge as the non-executive chairman and wanted to restrain interim chairman Ratan Tata from attending board meetings and interfering in the affairs.

The two Mistry firms had also sought an investigation into the roles of the trustees of Tata Trusts in operations of Tata Sons and the group companies. The petition also wanted Tata Sons’ search committee to stop looking for Mistry's replacement. It sought a new panel be appointed and no candidate selected by the existing search committee be appointed without the quasi-judicial body's approval.

The petition had alleged that Mistry was removed as executive chairman of Tata Sons without any notice and without any explanation at the behest of Ratan Tata.  

In a reply to Mistry’s petition, Tata Sons denied all the allegations and asked NCLT to reject the petition. The Tatas said Mistry’s investment companies only own 2.17% of the total share capital (ordinary and preference shares combined) in Tata Sons and, hence, cannot file the petition of oppression and mismanagement under the Companies Act. NCLT will hear the petition on January 31.