NCLT refuses to stay Tata Sons' EGM

Disobedience of judicial orders on Mistry's part, said court

The National Company Law Tribunal (NCLT) refused to grant a stay on Tata Sons’ decision to call an extraordinary general meeting (EGM) on February 6, the aim being to remove ex-head Cyrus Mistry as a director from its board.

Shapoorji Pallonji group firms Cyrus Investments and Sterling Investment Corporation had sought interim relief in the contempt petition against Tata Sons, already dismissed by the tribunal on January 18. However, while dismissing the contempt plea, NCLT had allowed the Mistry firms to file an affidavit on the issue. Accordingly, the latter on Tuesday asked for interim relief, seeking a stay on the EGM.

Nothing doing, we've already said the EGM may proceed, said an NCLT bench of B S V Prasad Kumar and V Nallasenapathy.

Nor did they seem to approve of the stand taken by Mistry’s lawyer, who wanted the tribunal to first hear the contempt petition. The tribunal apparently said he was not cooperating, that it was a case of disobedience of judicial orders, said lawyers close to Tata.

The bench, though, has given a final chance for Mistry’s counsel to argue on the merits of the petition at the next hearing on February 13-14. The Mistry companies have challenged the removal of Cyrus Mistry as Tata Sons chairman and have made allegations of oppression and mismanagement in the holding company.

Aryama Sundaram, appearing on Tuesday on behalf of the Mistry companies, was also pressing on the maintainability of the petition and then on the merits. The issue was triggered by Tata Sons, which had challenged the maintainability of the petition on grounds of the petitioners actually holding only 2.17 per cent of the issued share capital, far less than the statutory requirement of 10 per cent in the Companies Act.

On this, NCLT said, “We again made it clear that this bench has not prevented the main petition because we held in our order dated December 22, 2016 that ‘maintainability’ would be taken up as part of the arguments of the respondent.”

It also said that the respondent (Tata Sons) had refused to argue on maintainability before completion on merits of the main petition.

Tata's counsels said after Tuesday's developments that it had \"established the unprecedented and frivolous nature of the petition filed by Mistry, that he has no case to argue and that all his allegations are towards a personal vendetta to try and damage the Tata brand\".

Mistry counsel Aryama Sundaram said, “We have to consider what we want to do further in this matter. The bench made it very clear that they are not deciding on the issue of maintainability at this juncture separately but will only decide the main matter.”