NCLAT admits Cyrus Mistry’s appeal, Tata Sons cannot force Mistry to sell his shares

The National Company Law Appellate Tribunal (NCLAT) today admitted Cyrus Mistry’s appeal against his removal from the post of Chairman of Tata Sons.

The NCLAT also directed that Mistry cannot be “forced to sell” his shares in Tata while the appeal is pending as such a transfer would affect the outcome of the appeal.

Further, the NCLAT will decide on the issue of Tata Sons’ conversion from a public to a private company being an act of oppression and mismanagement at a later stage. It declined to pass any order on this aspect at the stage of admission.

The company has been directed to file its reply to Mistry’s plea within 10 days.

The matter will next be heard on September 24.

The order was passed by a two-judge bench of the NCLAT headed by Justice SJ Mukhopadhyaya. 

Mistry had appealed against the order of the National Company Law Tribunal (NCLT), Mumbai Bench, which dismissed his plea challenging his removal as the Executive Chairperson of Tata Group’s holding company in October 2016.

Mistry had also sought a stay on process of conversion of Tata Sons‘ legal status, which is before the Registrar of Companies, on the first day of hearing in the appeal.

It was Mistry’s case that the company’s conversion into a private company was a fraud on him and was legally impermissible.

On the other hand, Tata Sons argued that it has been functioning like a private firm since its inception. Therefore, the proceedings before the Registrar of Companies were only to update the records and not for “conversion” from public to private.

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

Apart from ruling that the Board of Directors was competent to remove Mistry from the post of Executive Chairman, the NCLT also held that Tata Sons cannot be prevented from becoming a private company.

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 was represented by Senior Advocates CA Sundaram, KG Raghavan and Arun Kathpalia.

Tata Sons was represented by Senior Advocate Abhishek Manu Singhvi.

Read the order: