The final hearing(s) for one of the biggest corporate battles in Indian history is lined up at the Mumbai Bench of the National Company Law Tribunal (NCLT) for today and tomorrow..After nearly two months of being sacked as the Chairman of Tata Sons, Cyrus Mistry moved the NCLT claiming relief under Sections 241, 242 and 244 of the Companies Act, 2013 (Act) alleging oppression and mismanagement in the functioning of Tata Sons..Mistry approached NCLT with a strong bench strength with Aryama Sundaram, Janak Dwarkadas, Milind Sathe, Somasekhar Sundaresan, briefed by law firm Desai and Diwanji..Tata got Dr. Abhishek Manu Singhvi and Ravi Kadam on the bench, briefed by law firm Shardul Amarchand Mangaldas..Here is a brief timeline of the events as they transpired:.October 2016.24 October: Cyrus Mistry is, ‘to his shock’, removed from the Chairmanship of Tata Sons..25 October: Tata Sons file caveats in the Bombay & Delhi High Courts, and the NCLT..December 2016.The NCLT proceedings are, however, not the only litigation that Tata is currently facing. Before Mistry filed his petition with the NCLT, there were two suits filed in the Bombay High Court:.7 December: Six shareholders of the Tata Group had filed a 400-page petition claiming damages for losses suffered due to fall in share prices following Mistry’s ouster. The loss has been estimated at over ₹ 81,000 crore – beginning October 24, when Mistry was ousted, to December 6, a day before the suit was filed. The suit has been filed against Tata Sons, and 29 others, including Ratan Tata..13 December: The second petition before the Bombay High Court was filed by four Tata Sons minority shareholders against the special notice issued on November 11 by Tata Sons. This notice had sought the removal of Nusli Wadia as an independent director from three Tata entities – Tata Chemicals, Tata Motors and Tata Steel. This petition seeks to ‘restrict promotors’ from voting at the resolutions proposing to remove Wadia as an independent director..The Bombay High Court allowed Tata group companies’ proposed extraordinary general meetings (EGMs) to go ahead as per schedule but with the caveat that if the EGMs resulted in the ouster of independent director Nusli Wadia, then the seat should be kept vacant till a final order was passed in the matter..This one is expected to come up for hearing on 6 February, 2017..16 December: Meanwhile, Nusli Wadia has himself filed a ₹3000 crore defamation suit in the court of the Additional Chief Metropolitan Magistrate at Ballard Pier in Mumbai. Following the serving of Tata’s special notice, Wadia served three legal notices on November 21, 22 and 23, threatening to initiate criminal proceedings against Tata Sons and its directors, on grounds of it being defamatory in nature. He also issued a rather comprehensive 13-page letter to Tata Steel’s shareholders alleging several governance lapses in the functioning of Tata Sons..20 December: Mistry filed a petition in the NCLT under Sections 241, 242 and 244 of the Act, alleging oppression and mismanagement in the functioning of Tata Sons..December 22: First hearing at the NCLT.Aryama Sundaram appearing on behalf of Mistry presents his arguments before the NCLT, requesting three interim reliefs:.Tata to not issue any further securities which will result in dilution of present paid-up equity capital held by petitioners;An order restraining all respondents (apart from Mistry) from removing Mistry from his position of directorship and;Making any changes to the articles without the consent of the NCLT..Abhishek Manu Singhvi, appearing on behalf of Tata Sons and, Sundaram, both ‘consented’ to not ‘filing any interim application or initiating any action or proceedings’ until the final hearing of the matter, scheduled on 31 January and 1 February of 2017. This also meant Sundaram had to forego his interim reliefs..27 December: Tata Sons issues a legal notice to Mistry alleging ‘criminal breach of trust’ and a breach of a breach of ‘confidentiality undertakings’ for having shared in the NCLT petition, information which is confidential in nature and wholly irrelevant to the case in hand..29 December: Tata Sons issues a second legal notice to Mistry demanding that the ousted chairperson return all confidential data and documents in his possession that pertain to the conglomerate and not retain any copies either . It also demanded that Mistry sign an undertaking within 48 hours that he would not disclose such information in future.. January 2017 .During the first week of the new year, Tata Sons issued a notice under Section 169 of the Act for convening an EGM for removal of Mistry as director from the Board of Tata Sons..6 January: Two responses were filed for Mistry’s petition filed on 20 December; one on behalf of Tata Sons and the other behalf of Tata Trusts. Both the replies sought to crush Mistry’ petition at the very outset on grounds of maintainability..Tata sons in their affidavit said that the petition is not maintainable under law since it doesn’t qualify the basic requirement for filing such a petition i.e. 10% of the ‘issued share capital’ and, it further attracts provisions of the Limitation Act, 1963 for several alleged acts of oppression..Tata Trusts, attacked the petition also on maintainability since any suit against public trusts requires the permission of the charity commissioner under the Mumbai Public Trust Act, 1950..11 January: Mistry files contempt petition against Tata Sons for issuing a notice under section 169 of the Act for conducting an EGM for Mistry’s removal as director from Tata Sons, alleging that such an act is in violation of the order passed by the NCLT on 22nd December, 2016..16 January: Hearing for the contempt petition at the NCLT.Arguments from both sides (collectively) extended for nearly 3 hours. Sundaram argued that issuance of notice for EGM was in violation of the interim order dated 22nd December, 2016 which restrained either party from ‘filing any interim application or initiating any action or proceedings’ and that the NCLT had not denied the three interim measures but merely deferred it for consideration..Singhvi argued that an action of such nature does not fall within the confines of the order and there is nothing prohibiting Tata from sacking Mistry as a director..Order was stayed for 18 January..January 18: Ironically, the very words relied on by Mistry for filing the contempt petition i.e ‘filing any interim application or initiating any action or proceedings’ backfired as being interpreted to mean an action of this very nature, an action in the nature of a contempt petition. Contempt petition was therefore dismissed, giving Mistry liberty to file a fresh affidavit which will be heard along with the main petition..21 January: Mistry files affidavit with the NCLT, justifying maintainability. The affidavit counters the apparently hyper-technical view taken by Tata by claiming that Mistry doesn’t have the requisite ‘10%’. The affidavit says that including preference shareholders is not the right interpretation since, barring dividend preference, they hold no real rights. It, nonetheless, prays for waiver from the strict requirements, considering the large impact this will have on the large mass of public shareholders of various group entities..No matter the final outcome, the only obvious prediction is that appeals will follow.
The final hearing(s) for one of the biggest corporate battles in Indian history is lined up at the Mumbai Bench of the National Company Law Tribunal (NCLT) for today and tomorrow..After nearly two months of being sacked as the Chairman of Tata Sons, Cyrus Mistry moved the NCLT claiming relief under Sections 241, 242 and 244 of the Companies Act, 2013 (Act) alleging oppression and mismanagement in the functioning of Tata Sons..Mistry approached NCLT with a strong bench strength with Aryama Sundaram, Janak Dwarkadas, Milind Sathe, Somasekhar Sundaresan, briefed by law firm Desai and Diwanji..Tata got Dr. Abhishek Manu Singhvi and Ravi Kadam on the bench, briefed by law firm Shardul Amarchand Mangaldas..Here is a brief timeline of the events as they transpired:.October 2016.24 October: Cyrus Mistry is, ‘to his shock’, removed from the Chairmanship of Tata Sons..25 October: Tata Sons file caveats in the Bombay & Delhi High Courts, and the NCLT..December 2016.The NCLT proceedings are, however, not the only litigation that Tata is currently facing. Before Mistry filed his petition with the NCLT, there were two suits filed in the Bombay High Court:.7 December: Six shareholders of the Tata Group had filed a 400-page petition claiming damages for losses suffered due to fall in share prices following Mistry’s ouster. The loss has been estimated at over ₹ 81,000 crore – beginning October 24, when Mistry was ousted, to December 6, a day before the suit was filed. The suit has been filed against Tata Sons, and 29 others, including Ratan Tata..13 December: The second petition before the Bombay High Court was filed by four Tata Sons minority shareholders against the special notice issued on November 11 by Tata Sons. This notice had sought the removal of Nusli Wadia as an independent director from three Tata entities – Tata Chemicals, Tata Motors and Tata Steel. This petition seeks to ‘restrict promotors’ from voting at the resolutions proposing to remove Wadia as an independent director..The Bombay High Court allowed Tata group companies’ proposed extraordinary general meetings (EGMs) to go ahead as per schedule but with the caveat that if the EGMs resulted in the ouster of independent director Nusli Wadia, then the seat should be kept vacant till a final order was passed in the matter..This one is expected to come up for hearing on 6 February, 2017..16 December: Meanwhile, Nusli Wadia has himself filed a ₹3000 crore defamation suit in the court of the Additional Chief Metropolitan Magistrate at Ballard Pier in Mumbai. Following the serving of Tata’s special notice, Wadia served three legal notices on November 21, 22 and 23, threatening to initiate criminal proceedings against Tata Sons and its directors, on grounds of it being defamatory in nature. He also issued a rather comprehensive 13-page letter to Tata Steel’s shareholders alleging several governance lapses in the functioning of Tata Sons..20 December: Mistry filed a petition in the NCLT under Sections 241, 242 and 244 of the Act, alleging oppression and mismanagement in the functioning of Tata Sons..December 22: First hearing at the NCLT.Aryama Sundaram appearing on behalf of Mistry presents his arguments before the NCLT, requesting three interim reliefs:.Tata to not issue any further securities which will result in dilution of present paid-up equity capital held by petitioners;An order restraining all respondents (apart from Mistry) from removing Mistry from his position of directorship and;Making any changes to the articles without the consent of the NCLT..Abhishek Manu Singhvi, appearing on behalf of Tata Sons and, Sundaram, both ‘consented’ to not ‘filing any interim application or initiating any action or proceedings’ until the final hearing of the matter, scheduled on 31 January and 1 February of 2017. This also meant Sundaram had to forego his interim reliefs..27 December: Tata Sons issues a legal notice to Mistry alleging ‘criminal breach of trust’ and a breach of a breach of ‘confidentiality undertakings’ for having shared in the NCLT petition, information which is confidential in nature and wholly irrelevant to the case in hand..29 December: Tata Sons issues a second legal notice to Mistry demanding that the ousted chairperson return all confidential data and documents in his possession that pertain to the conglomerate and not retain any copies either . It also demanded that Mistry sign an undertaking within 48 hours that he would not disclose such information in future.. January 2017 .During the first week of the new year, Tata Sons issued a notice under Section 169 of the Act for convening an EGM for removal of Mistry as director from the Board of Tata Sons..6 January: Two responses were filed for Mistry’s petition filed on 20 December; one on behalf of Tata Sons and the other behalf of Tata Trusts. Both the replies sought to crush Mistry’ petition at the very outset on grounds of maintainability..Tata sons in their affidavit said that the petition is not maintainable under law since it doesn’t qualify the basic requirement for filing such a petition i.e. 10% of the ‘issued share capital’ and, it further attracts provisions of the Limitation Act, 1963 for several alleged acts of oppression..Tata Trusts, attacked the petition also on maintainability since any suit against public trusts requires the permission of the charity commissioner under the Mumbai Public Trust Act, 1950..11 January: Mistry files contempt petition against Tata Sons for issuing a notice under section 169 of the Act for conducting an EGM for Mistry’s removal as director from Tata Sons, alleging that such an act is in violation of the order passed by the NCLT on 22nd December, 2016..16 January: Hearing for the contempt petition at the NCLT.Arguments from both sides (collectively) extended for nearly 3 hours. Sundaram argued that issuance of notice for EGM was in violation of the interim order dated 22nd December, 2016 which restrained either party from ‘filing any interim application or initiating any action or proceedings’ and that the NCLT had not denied the three interim measures but merely deferred it for consideration..Singhvi argued that an action of such nature does not fall within the confines of the order and there is nothing prohibiting Tata from sacking Mistry as a director..Order was stayed for 18 January..January 18: Ironically, the very words relied on by Mistry for filing the contempt petition i.e ‘filing any interim application or initiating any action or proceedings’ backfired as being interpreted to mean an action of this very nature, an action in the nature of a contempt petition. Contempt petition was therefore dismissed, giving Mistry liberty to file a fresh affidavit which will be heard along with the main petition..21 January: Mistry files affidavit with the NCLT, justifying maintainability. The affidavit counters the apparently hyper-technical view taken by Tata by claiming that Mistry doesn’t have the requisite ‘10%’. The affidavit says that including preference shareholders is not the right interpretation since, barring dividend preference, they hold no real rights. It, nonetheless, prays for waiver from the strict requirements, considering the large impact this will have on the large mass of public shareholders of various group entities..No matter the final outcome, the only obvious prediction is that appeals will follow.