The National Company Law Tribunal today began hearing on maintainability of petitions filed by two firms controlled by Cyrus Mistry’s family against his ouster from Tata Sons, the holding company of Tata Group. Tata Sons opposed the petitions filed by Cyrus Mistry Investment and Sterling Investment Corporation, saying as per a Supreme Court order on Companies Act, the petitioners could not seek a relief against alleged violation of their rights as ‘minority shareholders’.
Watch what else is in the news
Mistry’s counsel said the issue called for “fresh interpretation of provisions of the new Companies Act”, and therefore the petitions were maintainable.
Last December, the two Mistry firms challenged before NCLT Cyrus Mistry’s unceremonious removal by Tata Sons as its chairman and also as a director of its board on October 24.
The NCLT bench of BSV Prakash Kumar and V Nallasenapathy allowed both the parties to argue on the maintainability and waiver applications. The waiver plea by two Mistry firms seeks a direction to drop the requirement of minimum 10 per cent shareholding by a minority shareholder under the Companies Act of 2013 for filing such a petition.
As per the Act, minority shareholder should be holding at least one-tenth of the “issued share capital” or should represent at least one-tenth of the total number of minority shareholders. The term ‘issued share capital’ covers not only the issued equity capital but also the issued preference capital.
Tata Sons argued that if preference capital is also considered, the two petitioner firms hold only 2.17 per cent of the total issued share capital of Tata Sons, while the Pallonji Mistry Group holds 18.4 per cent of ordinary share capital.
Though the Companies Act also says these conditions can be waived if an application is made, the Tatas said as the petitioners did not seek any waiver at the time of filing the petitions, any leave sought later was not maintainable.