It looks like the ongoing tussle between Tata Sons and Cyrus Mistry is not coming to an end anytime soon. In a recent development, Cyrus Mistry and his investment firms have filed a fresh petition in the Supreme Court, pleading that they are granted directorship in Tata Sons Ltd.
In the petition, dated 13 February 2020, firms backed by Mistry – Cyrus Investments Pvt Ltd. and Sterling Investments Pvt Ltd, which together own 18.4% of ordinary shares in Tata Sons, stated that the NCLAT (National Company Law Appellate Tribunal) order did not grant them the reliefs they had sought.
The NCLAT order of December 13, 2019, had highlighted faults in Tata Sons’ conduct, finding them oppressive towards minority shareholders. The tribunal had termed the appointment of N. Chandrasekaran as Tata Sons’ Chairman succeeding Cyrus Mistry as illegal. The tribunal had also reinstated Mistry’s directorship in Tata Consultancy Services, Tata Teleservices (Maharashtra) and Tata Industries Ltd, but it was only for the remainder of his tenure, i.e. just five months.
According to the petition, “Given the nature of Tata Sons being that of a two-group company and the huge stake that the appellants (Mistry firms) have in Tata Sons, the relief that ought to have been granted was that the appellants be granted proportionate representation on the board of directors of Tata Sons and representation on all committees formed by the Board of Directors of Tata Sons.”
The firms are also seeking that the controversial Article 75 present in Articles of Association of Tata Sons be struck down. They claimed that the Article ‘is draconian and confiscatory in nature’.
Under the above-mentioned Article, Tata Sons have the power to ask shareholders to sell their holdings by passing a special resolution, a rule that can be potentially used to force the Mistry family firms to exit the holding company of the Tata group.
“Trustees of the majority shareholders who even though not on the board of Tata Sons were interfering with the decision making processes of the board of directors,” Mistry firms alleged in the petition.
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