Twitter
Advertisement

End of the road for Cyrus Mistry's legal battle with the Tatas? It seems likely

On Monday, the National Company Law Tribunal ruled that a petition filed by Cyrus Mistry's firms against Tata Sons was 'non maintainable'; on Tuesday it will decide whether their waiver request stands or not. Either way, a report says today's ruling limits their options against the Tatas.

Latest News
article-main
Former chairman of Tata Sons Cyrus Mistry exiting the Bombay House.
FacebookTwitterWhatsappLinkedin

While the Tata Group seems to have moved on with its business, literally, after its dirty laundry was put out for all to see, the Mistry camp's attempt at a legal recourse to get some relief and redressal on the "shocked beyond words" treatment meted to its front-runner Cyrus Mistry has been termed 'not maintainable' on Monday. Will this mean the end of the road for Mistry, the now ex-Chairman of Tata Sons, to fight a legal battle against the 108-year-old salt-to-hospitality conglomerate? It looks like it.

First some background. Unless you have stayed away from the newspapers and the digital media since late October last year or don't care about indulging in corporate news at all, the chances that you haven't heard about the Tata Group and Cyrus Mistry's battle are very few. But let's assume you haven't. Here's a quick recap of all that happened. 

On October 24, Tata Sons in a board meeting, unceremoniously removed Mistry as its chairman in a move that he later - in an open letter to the Tata Board, nonetheless - called invalid and illegal. Tata Group Chairman Emeritus and Chairman of the Tata Trusts Ratan Tata quickly took over as the interim chairman. The events that transpired next were in full public view and woke up corporate governance watchers from their slumber. There were some fast exits of executives of the pro-Mistry camp and new ones were brought in to fill their place. 

The barrage of open letters kept the media busy and Bombay House watchers intrigued. To keep it precise, it wasn't long before both the sides had filed lawsuits. 

On Monday, the National Company Law Tribunal (NCLT) where the Mistry camp - namely, Cyrus Investments Pvt Ltd and Sterling Investments Pvt Ltd - had filed a petition against Tata Sons citing governance lapses, and compromise and oppression of minority shareholders' interests, ruled that it was 'non-maintainable'.

What does this mean? It means that although Mistry's family may be one of the biggest shareholders of Tata Sons, holding 18% equity, Tata Sons had said that it (Mistry family's firms) owned only 2.17% shares of the total share capital (equity plus preference shares) of Tata Sons, according to a PTI report. 

Under the New Companies Act, a shareholder needs to have at least 10% holding to file a petition with the NCLT. This means, under the terms, the petition doesn't meet the criteria for application.  

Mistry's lawyers had earlier sought a waiver from the rule for its petition but on Monday, the NCLT upheld the Tata's interpretation of Mistry's shareholding on this ground. The NCLT is still scheduled to consider the wavier application on Tuesday, but report by Angel Broking dated March 6, said:

Vaibhav Agarwal - Head of Research and ARQ, Angel Broking 

While the Mistry camp may still have legal options open, from a strategic point of view, this NCLT ruling largely limits the options for the Mistry family. ​ 

"It will be back to business for the Tata Group as this ruling will allow it to focus its resources and management bandwidth on more pressing business issues," the report continued. 

And the Tata camp seems like it has already moved on from the ugly break-up. It has a new chairman on board, now-former TCS chief N Chandrasekaran who took over on February 21 with five promises to its shareholders, including bringing the group together, disciplined shareholder returns, and more. 

Find your daily dose of news & explainers in your WhatsApp. Stay updated, Stay informed-  Follow DNA on WhatsApp.
Advertisement

Live tv

Advertisement
Advertisement