#TataMistry: (ambushed) final hearings at the NCLT

Yesterday’s arguments at the Mumbai Bench of National Company Law Tribunal (NCLT) were nothing short of a ‘cliché courtroom scene’, similar to an expectation by someone not familiar with court proceedings..What everyone hoped to be Day 1 of the final hearing of this matter, at least at the NCLT, did not turn out to be so. The main petition did not even reach the merits stage..Aryama Sundaram, arguing Counsel for Cyrus Misty, commenced his arguments by trying to deal with the issue raised in the contempt petition, since the order passed on January 18, 2017 provided Mistry the ‘liberty to file an affidavit within three days from the date of this order’. Judicial Member B.S.V Prakash Kumar allowed Sundaram to deal with this issue as well, so long as he argues the case on merits. It was Sundaram’s stubbornness to deal with the issues in his sequence, which somewhat irked B.S.V Prakash Kumar..This resulted in an hour-long debate between counsels from both sides and B.S.V Prakash Kumar, which was, in all honesty, ‘wasted time’..Sundaram repeatedly kept arguing the merits of the ‘contempt petition’ for which a hearing was already given. But he was rightly allowed to do so as per Paragraph 25 of the contempt dismissal order passed on January 18, which reads,.“….the petitioners and [Cyrus Mistry] are given the liberty to file an affidavit limiting it to the proposal for removal of [Cyrus Mistry] from the board within three days from the day this order made available to the parties….”.Only not in a manner which was being seen as disrespectful to the Bench, and repetitive to everyone..It was Sundaram’s contention that he requires a final order from the NCLT with respect to the contempt petition, because the dismissal order passed on January 18 was ambiguous to that extent. Accordingly, he could not have filed an appeal from the said order. The Bench, although in a different context, clarified that he very well had the option to, if he was aggrieved..At this juncture, Abhishek Manu Singhvi was quick to point out that the Paragraph 25, that Sundaram refers to, cannot be read in isolation without reading Paragraph 24 which clearly expressed NCLT’s stance on interference with the democratic rights of the shareholders,.“….leaving it open to exercise the democratic rights of the Shareholders, this Bench does not and will not want to curtail the liberty conferred upon them by the Statute.”.After a hour-long debate, Sundaram finally moved on to arguing on maintainability of the petition. As reported before, maintainability of this petition has been a grave issue which Mistry sought to cure, by filing an affidavit with the NCLT..Maintainability.This was the only point of law that was actually argued yesterday..To justify maintainability, several Supreme Court precedents were presented, none of which related to oppression/mismanagement, as recorded in the order passed yesterday. An order [pdf] passed by the NCLT Chennai Bench in November 2016 was also presented, which dealt with the issue of granting a waiver for not meeting the prescribed requirements. The Chennai Bench held that the requirements laid under Clause (a)/(b) [as the case may be] of Section 244(1) of the Companies Act, 2013 (Act) can be waived at the NCLT’s discretion if a detailed inquiry into the matter complained is necessary..Sundaram also pointed out to an important change introduced in the Act with respect to oppression/mismanagement principles..Section 241 of the Act has added a class of ‘members’ that may file this petition if subjected to acts prejudicial to their interests. On the other hand, the corresponding Section 398 of the Companies Act, 1956 seemed to not have these words..It was his contention that Section 244 of the Act is not mandatory but merely directory, and that the substance of the petition must be considered and not the form..Refusal to obey.After finishing his arguments for maintainability, Sundaram insisted that the NCLT pass an order for maintainability, without which he ‘cannot’ move on to merits, despite the Bench having passed an ‘order’ in open court to do so..As Singhvi also pointed out, this is the first time he had ever seen a counsel instruct the Bench the manner in which proceedings will be conducted. Following a heated debate between both parties and B.S.V. Prakash Kumar, Sundaram sought an adjournment of the matter..Both sides were asked to come at 2.30 pm when the Judicial Member adjourned the matter to 13th & 14th February (dates for Mistry) as well as 20th & 21st February (dates for Tata) for final hearings, failing which the petition would be ‘dismissed’..Comments.One would imagine that such a chain of events would frustrate any counsel on the other side; but surprisingly, Singhvi was calm, almost as if he expected this to happen..On being asked whether such a move was anticipated, Singhvi said,.“I anticipated each and every move of theirs.”.With all due respect to Sundaram, it would be not be incorrect to say that he was being unreasonable and blatantly ‘disobedient’ to the directions of the NCLT. But, lawyers are bound by the instructions of their clients. Sundaram was, obviously, prepared to argue on merits, but he did not do so and asked for an adjournment instead..What was noteworthy was that, the Bench passed an order adjourning the matter without demanding/assigning any reasons for seeking/granting such an adjournment, to the party that wilfully disobeyed its orders in open court..Either which way, it can only be assumed that Mistry is most likely to shift the party to the NCL(Appellate)T.