In it’s reply filed on January 6 this year, Tata Sons has left no stone unturned at crushing Cyrus Mistry’s petition, issue by issue, at the National Companies Law Tribunal (NCLT).
The rather harshly worded affidavit, filed by Shardul Amarchand Mangaldas, not only defends the respondents but goes on to attack Mistry for various acts of his, including his behaviour prior to, and following his removal from the post of Chairman.
The affidavit filed by Tata Sons presses on the issue which Judicial Member B.S.V. Prakash Kumar was keen on addressing the most i.e. maintainability of the petition filed by Mistry; or rather as the affidavit refers to it- Mistry’s ‘alter ego’, being the petitioner companies.
Referring to the instant proceedings as ‘benami litigation’, the affidavit says,
“On a true and meaningful reading of the Petition it is apparent that the petition has been sponsored by Mr. Cyrus Mistry the Respondent No.11, to pursue an agenda of personal vendetta against Respondent Nos. 2 and 14 and to adopt a ‘scorched earth’ policy of tarnishing the reputation of the Tata Group on being removed as Chairman of the Board of Directors of Tata Sons and on being removed as Non-Executive Chairman of several Tata Group Companies.”
During his brief appearance on the date of the first hearing before the NCLT, Abhishek Manu Singhvi, who appeared for Tata Sons, had pointed out that the petitioners in this case, do not actually hold more than 10% of the ‘issued share capital’ of Tata Sons, which is the minimum shareholding an applicant must have under Section 244 of the Companies Act, 2013 to file a suit under Section 241.
The affidavit reiterates this ‘fact’ by stating that the petitioners actually hold 18.40% of the ‘paid up share capital’ and 2.17% of the ‘issued share capital’. And thus, the petitioner in fact do not meet the criteria stipulated under Section 244 of the Companies Act, 2013. In this regard, the petition reads,
“The necessary consequence of the above is that the Petition ought to be dismissed in limine as being not maintainable under the provisions of Sections 241 and 244 of the Act.”
That however, is not the only ground on which Tata Sons have sought to challenge the maintainability of the petition. Other grounds include the legality of Mr. Vinay Karve’s authorization to file the suit in the first place and; delay and laches in filing the petition given that various issues raised in the petition are over two decades old. Additionally, the Affidavit states that matters relating to violation of Insider Trading Regulations and Foreign Exchange Laws are outside the jurisdiction of the NCLT.
And of course, in pursuance of the notice which was served to Mistry earlier, the issue of breach of confidentiality obligations has also been highlighted.
Further, there are several instances in the affidavit which question the ‘cause of action’ of this suit, since the petition fails to establish any acts of ‘oppression and mismanagement’ and instead goes on to highlight the ‘bad commercial decisions’ taken by the erstwhile Chairman, which are not matters for a court of law to adjudicate upon. This also, resonates with Prakash’s observations during the first hearing of the matter.
The affidavit reads,
“In this regard, it is first pertinent to mention that the crux of the Petitioners’ case is built on the replacement of Mr. Cyrus Mistry as Executive Chairman of Tata Sons.
This is in the nature of dispute for a loss of office and it is a settled law that such disputes cannot be the subject matter of a petition under Sections 241 and 242 of the Act.”
As far as the issues of articles and interference by Ratan Tata are concerned, the affidavit narrates instances pointing out to Mistry’s acquiescence to all the activities which are allegedly ‘oppressive’ in nature.
On the point of Mistry’s removal being sudden in nature, the affidavit clarifies this act was in fact not sudden, but was due to a growing trust deficit between Mistry and the management which was, among other things, due to his failure to implement the vision for the Tata Group based on which he was selected in the first place.
The affidavit not only defends the Tata’s position well, but also sharply attacks Mistry on several grounds,
“It was in fact Mr. Cyrus Mistry who failed to live up to the governance standards enshrined in the Articles of Association, which is now sought to be camouflaged through frivolous allegations.”
The final hearings for this matter are scheduled for January 31 and February 1, 2017.
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