In a reprieve for the Tata group, the Bombay High Court on Monday overturned its order and ruled it cannot hear a suit filed by minority shareholders of the group seeking Rs 41,000 crore in damages as a representative suit on behalf of all non-promoter shareholders.
The suit, filed by shareholders Pramod Shah and five others, challenged Cyrus Mistry’s removal as chairman of the Tata group, terming it “illegal, motivated and malafide”. The shareholders demanded over Rs 41,000 crore in damages for themselves and all similarly placed non-promoter shareholders of the listed group companies for “losses suffered as a result”.
The damages sought are for losses due to a drop in the share prices of eight Tata group companies since the market closing on October 24 last year, when Mistry was ousted, to December 6, 2016.
Shah and the other appellants filed an application along with the suit seeking permission under order 1, rule 8 of the Civil Procedure Code, a provision that says that one or more persons may, with the permission of court, sue or defend on behalf of all interested individuals.
In December last year, Justice S J Kathawalla had passed an order permitting the suit to be filed in a representative capacity. The permission was today revoked by Justice S C Gupte, who said a suit filed by few minority shareholders cannot be treated as a representative suit on behalf of all the non-promoter shareholders.