Cyrus Mistry asks NCLAT to stay Tata Sons’ conversion into a private company

Cyrus Mistry, today, asked the National Company Law Appellate Tribunal (NCLAT) to stay the conversion of Tata Sons, Tata Group’s holding company, from a public company to a private company.

A two-judge bench of the NCLAT headed by Justice S.J Mukhopadhyaya was hearing Mistry’s appeal against the order of the National Company Law Tribunal, Mumbai Bench which dismissed his plea challenging his removal as the Executive Chairperson of Tata Group’s holding company in October 2016.

Senior Advocate CA Sundaram, appearing for Mistry, urged the appellate tribunal to stall the process of conversion of Tata Sons legal status, which is before the Registrar of Companies, as a matter of interim relief.

“Tata Sons conversion into a private company is a fraud on me. The RoC is changing the legal status, pursuant to the NCLT order, without going into Section 14 of the Companies Act, 2013”, Sundaram said.

Posting the matter for hearing tomorrow due to unavailability of Tata Sons’ counsel, Senior Advocate Abhishek Manu Singhvi, the bench stated that it would examine whether the NCLT’s direction to RoC to give effect to the conversion could be sustained in law.

“There can be no jurisdiction to pass any order if no case under Section 241 of the Companies Act, 2013 is made out.”

The appellate tribunal also expressed its displeasure over Ratan N. Tata’s tweet “praising” the Judge of the National Company Law Tribunal Mumbai Bench on social media.

On April 22, Ratan Tata had expressed his “appreciation to all those involved in the NCLT, and particularly the high integrity of the judicial process” through his Twitter account.

Justice Mukhopadhyaya also remarked,

“There are four pages of praise for a person (in the judgment). Why was a character certificate given?

Mistry’s petition challenging his sacking from the Tata Sons was dismissed by the NCLT on July 9.

Rejecting all allegations made by Mistry and his family companies, the NCLT held that the Board of Directors were competent to remove him from the post and that no selection committee was required to remove the Executive Chairman.

The NCLT also ruled Tata Sons can’t be prevented from becoming a private company and found no merit in arguments relating to mismanagement or oppression in Tata Group companies.

Mistry had filed a suit against Tata Sons, Ratan Tata, and several others under Sections 241 and 244 of the Companies Act, 2013 alleging oppression and mismanagement in Tata Sons. Mistry had alleged several irregularities in dealings with Tata Teleservices and violation of Insider Trading Rules in the Tata Group companies by Ratan Tata and other trustees of the Tata Trust.

Mistry also claimed the existence of fraudulent transactions to the tune of Rs. 22 crores entered into by Air Asia India with non-existent parties in India and Singapore.

Mistry’s removal was also argued to be in violation of the Articles of Associations of the Company.