The two Cyrus Mistry family-promoted companies will know on April 17 if their suit alleging oppression and mismanagement against Tata Sons Ltd. will have its day in court. The Mumbai bench of the National Company Law Tribunal (NCLT ) heard both sides in a final round of arguments on Tuesday before reserving its order.
Mistry's Arguments
Aryama Sundaram, appearing for the two Mistry companies, and Janak Dwarakadas, appearing for Cyrus Mistry, argued that their case was deserving of a waiver of the threshold laid down in company law.
Section 241 of the Companies Act, 2013 permits only a party or group of parties who own ten percent or more of the total shareholding to bring a case of oppression and mismanagement.
The NCLT has already concluded that the two Mistry companies do not meet that threshold.
Sundaram argued that the proviso under Section 244 (4) of the Companies Act, 2013, that grants the tribunal discretionary power to allow parties with less than 10 percent of the total shareholding to bring a case, should not be strictly interpreted as a proviso which can be invoked only in exceptional circumstances.
Dwarakadas added that there were only two real groups with a sizeable chunk of equity shareholding in Tata Sons; the Mistrys who constituted the minority with an 18 percent stake and Tata Trusts that owned 67 percent. Given this and the fact that the allegations of mismanagement and oppression made by the Mistrys are of a serious nature, a waiver is warranted, he argued.
Also Read: Tata-Mistry Dispute: Five Key Arguments At Company Law Tribunal
Tata Sons' Arguments
Senior lawyers Abhishek Manu Singhvi and Ravi Kadam arguing for Tata Sons urged the tribunal not to grant a waiver. Kadam argued that a proviso is subordinate to the main enactment and that it must not be used to defeat the purpose of the enactment, which looks to prevent unnecessary litigation. He added that a proviso was to be applied only under exceptional circumstances and that a compelling case had to be made out for the same.
Singhvi told the NCLT that apart from the complainant (Mistry) having to establish a prima facie credible case at least one of two other conditions have to be fulfilled, to warrant a waiver . Either the complainant had to satisfy the tribunal that that it had no other remedy in law, or establish there is an element of national or public interest in the matter. He argued that neither criteria has been met. The Mistry petition mentioned national and public interest but did not contain a single word to substantiate it, said Singhvi. He also pointed out that the Mistry camp had amended their petition on Tuesday to say that the NCLT was the most appropriate jurisdiction, which means that there are other legal options available to them.
Also Read: Autonomy Versus Protection: A Delicate Balance For NCLT In The Tata-Mistry Battle
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
