News By/Courtesy: Pushpit Singh | 05 Jan 2020 13:32pm IST

HIGHLIGHTS

  • The Trustees of Tata Trusts have added to the litigation before the Supreme Court assailing the judgment delivered by the NCLAT, which had directed the reinstatement of Cyrus Mistry as the Executive
  • The Trustees of Sir Dorabji Tata Trust and Sir Ratan Tata Trust have approached the Apex Court terming the findings of the Appellate Tribunal factually and conceptually wrong
  • The NCLAT's findings on “oppressive” and “prejudicial” acts has also come under challenge in this appeal

The Trustees of Tata Trusts have added to the litigation before the Supreme Court assailing the judgment delivered by the National Company Law Appellate Tribunal (NCLAT), which had directed the reinstatement of Cyrus Mistry as the Executive Director of Tata Sons.

The Trustees of Sir Dorabji Tata Trust and Sir Ratan Tata Trust have approached the Apex Court terming the findings of the Appellate Tribunal factually and conceptually wrong. They have sought for the December 18 judgment to be set aside.

Assailing the NCLAT judgment on similar grounds as taken by Tata Sons and Ratan Tata in their separate petitions, the Trustees have also alleged that the Appellate Tribunal did not deal with the arguments advanced by the appellants, and arrived at its conclusion based on an erroneous premise.

The findings of the National Company Law Tribunal (NCLT) were in accordance with and in consonance with the provisions of the Companies Act, 2013, the Trustees submit. Those findings have been overlooked and “given a complete go by” by the NCLAT, the petition states. It is argued that while the NCLAT made certain findings against Ratan Tata and NA Soonawala, it failed to address the detailed affidavits that were submitted on their behalf.

The NCLAT's findings on “oppressive” and “prejudicial” acts has also come under challenge in this appeal. The NCLAT gave its findings on oppressive and prejudicial acts without answering what the legal test for the same is, the petitioners contend. The petition states,"

 "This question being one of the issues framed for determination in the Impugned Judgment, and being the very starting point of the legal case of Respodent Nos. 1 and 2, it was imperative for the Hon’ble NCLAT to give a reasoned finding on the issue. There is, however, an eloquent silence in the Impugned Judgment on this foundational aspect of the entire case."

 This appeal also points out that the NCLAT proceeded on the premise that there are two groups of shareholders in Tata Sons, namely, Tata Group and SP Group. This premise is factually incorrect and erroneous given that there are several other entities and individuals, in addition to other Tata Trusts and Tata companies that form part of the shareholders of Tata Sons. The appeal also underlines other errors in facts, on the basis of which the Appellate Tribunal proceeded in the case.

Similar to the petitions filed by Ratan Tata and Tata Sons, this appeal also assails the December 18 judgment on the grounds that the relief granted to Mistry for his reinstatement as Executive Director is not a relief that was prayed for.

The appellants in this case have also invoked the rights of the shareholders and shareholder democracy to buttress their case. It is stated that the fundamental principles of corporate law dictate that the decision to appoint or remove directors of a company lies within the realm of shareholder democracy and the decision as such vests with the shareholders.

It is the right of the shareholders to decide either by unanimity or by majority on questions of appointment and removal. However, this global principle has been ignored by the NCLAT in its direction to reinstate Mistry as Executive Head of Tata Sons, the appeal says,

 "This makes the Hon’ble NCLAT’s order of reinstatement of Mr. Cyrus Mistry directorship in the teeth of a valid shareholders’ resolution and the provisions of the Companies Act, 2013."

Seeking for the NCLAT judgment to be set aside, the Trustees have submitted that this decision has far reaching consequences and may have an adverse impact on the rights of shareholders and investors. The NCLAT judgment, if not stayed, will create a sense of uncertainty and unpredictability, the appeal says.

The Tata Sonsas well as the Chairman Emeritus of the Tata Group, Ratan Tata, have also moved the Supreme Court challenging the NCLAT decision.

Section Editor: Prithvijit Mukherjee | 05 Jan 2020 22:56pm IST


Tags : #NCLAT #TataTrustees #SC

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