NCLT dismisses Mistry firms' waiver petition against Tata Sons

Mistry alleged mismanagement and oppression of minority shareholders at Tata Sons Ltd

The National Company Law Tribunal (NCLT) on Monday dismissed the waiver application filed by former Tata Sons chairman Cyrus Mistry’s family firms on the eligibility criteria of 10% shareholding, required under the Companies Act for moving its petition. 

Since the NCLT Bench refused to grant the waiver, the company’s petition for alleged mismanagement and oppression of minority shareholders was automatically rejected.

The NCLT said the detailed order copy would be made available on April 21. 

Now, the Mistry firms, Cyrus Investment and Sterling Investments, can challenge the order in the National Company Law Appellate Tribunal. They did not reveal their further course of action.

Tata Sons said the ruling would end the campaign against the company. 

“We hope this brings to an end a vexatious campaign against the company, the Tata Trusts and Ratan Tata. Tata Sons will continue its focus on its future development under the stewardship of our Executive Chairman N Chandrasekaran,” said F N Subedar, chief operating officer, Tata Sons.

He added, “The NCLT order makes clear there is no case to be heard. Over the past six months, Mistry has failed demonstrably to build a case. We trust that the NCLT’s decision brings this matter to a close.” 

Mistry firms had sought waiver from the NCLT after its March 7 order. 

The NCLT division Bench of B S V Prakash Kumar (member-judicial) and V Nallasenapathy (member-technical) in the order said, “Mistry’s companies have failed to satisfy us on the minimum 10% shareholding eligibility criteria under the Companies Act and hence, these petitions are not maintainable.”

Mistry’s firms pleaded that under the Act, the NCLT could waive the requirement that a petitioner should hold at least a 10th of the issued share capital of the company or represent at least one-tenth of the minority shareholders.

During the argument on March 7, Tata Sons had said if preference capital was also considered, the two petitioner firms hold only 2.17% of the issued share capital. The lawyers of Tats Sons argued the petitioners did not seek waiver at the time of filing the petition.

Cyrus Investment and Sterling Investments hold 2.17% of the total share capital in the form of ordinary and preference shares of Tata Sons even though their shareholding in ordinary equity stands at 18.4% in the holding company. 

In December 2016, the two Mistry firms had challenged before the NCLT the unprecedented removal of Mistry by Tata Sons.