Cyrus Mistry is running out of options. The Mumbai bench of the National Company Law Tribunal (NCLT) has dismissed a plea filed by two Mistry group companies seeking a waiver of the eligibility criteria to bring a suit of oppression and mismanagement against Tata Sons Ltd, the holding company of the Tata Group.
Section 244 of the Companies Act 2013 lays down the threshold to bring a case of oppression and mismanagement under Section 241. The law gives the tribunal discretion to allow a shareholder or group of shareholders to bring a case of oppression and mismanagement even if they represent less than 10 percent of the total shareholding or one tenth of all shareholders.
In December 2016, two firms owned by Cyrus Mistry's family had filed a case of oppression and mismanagement against Tata Sons and 20 others including Ratan Tata. In March the NCLT ruled that the Mistry firms do not have the required shareholding to pursue the allegations.
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The Mistry firms had thereafter argued for a waiver of the eligibility criteria in order to pursue the oppression and mismanagement case. But that waiver was denied by the tribunal today. The specific reasons will only be known when the detailed order is made available on Friday.
Tata Sons welcomed the NCLT order. A media statement issued by the company quoted its Chief Operating Officer FN Subedar as saying that they hope this brings an end to the “vexatious campaign” carried out by former chairman Cyrus Mistry.
Mr Mistry hasmade many ill-advised and groundless allegations intended to besmirch the nameof the Tata Group. Today's ruling by theNCLT makes clear that there is no case to be heard. Over the past six months,Mr Mistry has failed demonstrably to build a case. We trust that the NCLT'sdecision brings this matter to a close.FN Subedar, ChiefOperating Officer, Tata Sons
No comment was forthcoming from Cyrus Mistry's team. Mistry now has the option of challenging the ruling in the National Company Law Appellate Tribunal (NCLAT).
Reacting to the NCLT decision, independent lawyer Rajat Sethi, a partner at law firm S&R Associates, said he was surprised at the tribunal's denial of a waiver.
In my view, there was a reasonable case for a waiver on the basisthat the minority shareholder held 18 percent of the equity share capital. I wouldhave thought that given the nature of the multiple issues raised by an 18 percent equity shareholder, the tribunal could have considered a waiver so that itcould deal with the issues raised on a substantive basis (even if it ultimatelydid not find merit in them) rather than rejecting the petition on technicalgrounds. However, it must be noted that the grant of waiver from the technicalstanding requirement is a discretionary power of the NCLT. It would beinteresting to see the detailed order which will include the reasons for the NCLT'sdecision.Rajat Sethi, Partner, S&R Associates
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