Mistry files appeal in SC; says his family deserved more relief from NCLAT

Less than a month after the Supreme Court stayed an order reinstating him as Tata Sons chairman, Cyrus Mistry has moved the apex court seeking removal of many anomalies in the NCLAT order, saying his family deserved more relief from the tribunal.

Mistry, whose family owns 18.37 per cent stake in Tata Sons, has filed a cross appeal in the court.

Generally, a cross appeal refers to an appeal made against certain facets of a judgement.

On January 25, a three-judge bench headed by Chief Justice Arvind Bobde stayed the National Company Law Appellate Tribunal (NCLAT) order, dated December 18, wherein Mistry was reinstated as Tata Sons chairman. The stay came on an appeal filed by Tata Group.

In the petition, Mistry has described the group's relationship with Tatas as "a quasi-partnership relationship of a vintage of over 60 years, holding 18.37 per cent in the equity share capital of Tata Sons and whose stake is now worth over Rs 1.5 lakh crore".

According to the petition, which has been accessed by PTI, the Mistry camp has sought remedies for many anomalies in the NCLAT order, including about not looking at alleged oppression of minority shareholders as well as converting Tata Sons into a private limited company as a post-facto move.

The conversion happened after Mistry was removed as chairman on October 24, 2016.

As per the petition, filed on February 14, the tribunal order clearly and unequivocally found the prejudicial conduct by Tata Sons, but failed to provide certain important reliefs that would have put an end to the oppressive conduct of the majority shareholder.

Reinstating Mistry as the chairman, NCLAT had also termed the action of the Registrar of Companies to allow conversion of Tata Sons into a private limited company 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, filed before the Supreme Court on February 14, 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 contended that the tribunal erroneously said it did not have the powers to alter the Articles of Association even though it had correctly recorded that the relationship between the Tatas and the Mistry family was in the nature of a "quasi-partnership".

The petition is to secure deletion of certain specific provisions in the Articles of Association (AoA) of Tata Sons, clearly permitted by the special provisions dealing with oppression of minority shareholders under the companies law.

Further, Mistry has sought proportionate representation on the board of Tata Sons to ensure that its interests and investments now worth over Rs 1 lakh crore are protected in the future.

While the manifest abuse of power and conduct lacking in probity has been explicitly found by NCLAT in 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.

Since the 1920s, the 154-year old Shapoorji Pallonji Mistry Group, has been increasing its ownership in the Tatas, and now owns 18.37 per cent stake.

Handwritten letters of Ratan Tata to Pallonji Mistry have also been attached along with the petition.

In a letter written to Pallonji Mistry on March 27, 1991 -- two days after taking over as Tata Sons chairman -- Tata said he would never hurt him or his family.

"... our common agreement and mutual faith will foster a true and lasting relationship without any misunderstanding-- and in the best interest of Tata Sons as a company," the letter said.

"Our standing together will also be a matter of strength Let me reiterate that I will never do anything consciously to hurt you or your family" it added.

PTI has seen a copy of the letter.

As the largest minority shareholder in Tata Sons which is worth over USD 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.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel