Cyrus Investments, the investment firm of Shapoorji Pallonji (SP) Group, on Tuesday contended that Cyrus Mistry was removed as Tata Sons chairman against the company’s Articles of Association (AoA) as his removal was not on the agenda of the board meeting on October 24, 2016.
Arguing before the National Company Law Appellate Tribunal (NCLAT) on behalf of Cyrus Investments, senior advocate CA Sundaram said Article 118 of the AoA stipulates that a selection committee should be formed for appointing or dismissing a chairman which was not followed when Mistry was removed.
“The board removed him just like that. The board did not have anything in relation to the removal of the chairman on its agenda on that day. He can’t be removed as he displeases the majority shareholders,” Sundaram said. The removal, he said, amounts to an act of oppression of the minority shareholders. The SP Group holds an 18 per cent stake in Tata Sons.
Pleading its case in the NCLAT, where the SP Group has challenged Mistry’s ouster, Sundaram also urged modification in Tata Sons’ AoA, particularly Article 75, which empowers it to ask minority shareholders to transfer their shares.
The SP Group had also earlier requested the NCLAT to order amending Article 121 of the Tata Group’s Articles of Association, alleging that the article was helping Dorabji Tata Trust and Ratan Tata Trust, part of the Tata Trust, to govern the whole Group even as they are the minority shareholders.
According to the Mistry camp, Article 121 was introduced in the articles of the company in 2000 on the pretext that it would safeguard the majority shareholder group’s interests with regard to vital issues.
However, it was being interpreted and used as a means of requiring prior consent even on deciding whether matters could be brought before the board of directors of not just Tata Sons, but for other group of companies.
Article 121 provides a veto on every decision to be taken by the Board of Tata Sons to trustee nominee directors. It is also repugnant to the scheme of Companies Act, which requires the Board of certain large unlisted public companies to comprise independent directors, SP Group had alleged. —FE