Tata Sons, in its appeal to the Supreme Court, has taken a strong objection to the National Company Appellate Tribunal (NCLAT) order, which, among other things, justifies the “winding up” of the holding company of the Tata group. It points out that the whole issue has been blown into a case of oppression and mismanagement when it could have been dealt with as a directorial complaint.
According to a copy of the draft appeal submitted by the holding company in the apex court, there are “no cogent reasons” assigned for the conclusions arrived at in the "Impugned Judgment."
In his 172-page order last month, NCLAT Chairperson S.J. Mukhopadhaya wrote:
“We shall first take up the case under s. 397 of the Act and proceed on the assumption that a case has been made out to wind up the Company on just and equitable grounds.
The Tata Sons’ appeal, which runs into 303 pages, alleges that “in a mechanical fashion and without an iota of reasoning, the impugned judgment” holds it would be “just and equitable to wind up Tata Sons”, but the same would unfairly prejudice "the members.”
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“In other words, a directorial complaint, at best, has been blown up into a case of oppression and mismanagement of Tata Sons including a finding that it is just and equitable to wind up a 150-year-old company.
Ramesh K Vaidyanathan , founder and managing partner at Advaya Legal points out: “The test as to whether there is merit in winding up Tata Sons will have to be examined based on the factual scenario that the NCLAT has considered. NCLAT has concluded that the facts justify the order of winding up.”
According to Vaidyanathan, in all likelihood, the chairmanship and directorship of Cyrus Mistry would be stayed and an interim order is likely to be worked out. Going forward as the case proceeds, the Supreme Court will want to look at larger issues such as shareholders sovereignty, corporate governance and create certain provisions in the articles that confer extraordinary powers on one particular shareholder.