Will not adjudicate on the merit of Cyrus Mistry’s removal as Chairman of Tata Sons, NCLAT

The National Company Law Appellate Tribunal today said that it would not adjudicate on the merit of Cyrus Mistry’s removal from the Chairmanship of Tata Sons by its Board, but only decide the issue of oppression and mismanagement in Tata Sons..“No question of whether the decision (to remove Mistry from the post of Chairman of Tata Sons) was good or bad. We will only look into the question of oppression or mismanagement.”, Chairperson Justice SJ Mukhopadhyaya said..A Division Bench of the Appellate Tribunal comprising Justice Mukhopadhyaya and Justice Bansi Lal Bhat was hearing Mistry’s appeal against the dismissal of his oppression and mismanagement suit against Tata Sons, Ratan Tata, and several others by National Company Law Tribunal, Mumbai. NCLT had also upheld the removal of Mistry’s removal from the post of Chairman of Tata Sons..Senior Advocate Janak Dwakadas, appearing for Mistry, argued that Mistry’s removal as Chairman sets a “dangerous precedent”..“It (the removal) lays down that the wishes of the majority prevail over the Board.”, he said..He argued that Mistry could have been removed from the post only by the General Body through a General Body Resolution, after serving a six-months’ notice period, and not by the Board. The Board, he stated, only had the power to re-designate him..He also alleged that the Board “did not apply its mind” while taking the decision to remove Mistry..Senior Advocate Harish Salve, appearing for Ratan Tata, also began his submissions in the appeal today. Defending Ratan Tata, Salve argued that no acts of oppression or mismanagement could be attributed to him..He also objected to the claim that it was Ratan Tata’s “illegal influence” which resulted in Mistry’s removal..“Majority shareholders had lost confidence in him (Mistry)“, Salve submitted while explaining the reason for Mistry’s removal..In his plea before NCLT under Sections 241 and 244 of the Companies Act, 2013, Mistry had alleged oppression and mismanagement in Tata Sons. He 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 had 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. He had also asserted that the company’s conversion into a private company was a fraud on him and was legally impermissible..In August 2018, NCLAT had admitted Mistry’s appeal against the dismissal of his plea by the NCLT..Mistry’s removal was also argued to be in violation of the Articles of Associations of the Company..Mistry is represented by Senior Advocates CA Sundaram, KG Raghavan, Janak Dwarkadas and Arun Kathpalia..Tata Sons is represented by Senior Advocate Abhishek Manu Singhvi..Ratan Tata is represented by Senior Advocate Harish Salve. .The arguments will continue on January 10.