NCLT clears way for Tata Sons to hold EGM on February 6

File picture of Cyrus Mistry and Ratan Tata

Mumbai: The National Company Law Tribunal (NCLT) today refused to grant a stay on the extraordinary general meeting (EGM) called by Tata Sons on February 6 to consider removal of Cyrus Mistry from the Board of Tata Group's holding company.

A Sundaram, counsel for Cyrus Mistry family companies, pressed for interim relief in contempt petition (against Tata Sons) which had sought a stay on EGM slated for February 6.

"This issue was already decided in the last hearing when the contempt petition filed by two Mistry family companies was dismissed. There are no road blocks for Tata Sons to hold the EGM. It can go ahead with the forthcoming EGM," said a division bench of NCLT comprising B S V Prasad Kumar (Member-Judicial) and V Nallasenapathy (Member-Technical).

Lawyer for Mistry companies today sought adjournment and NCLT deferred the hearing till February 13.

Outside the Tribunal, the counsel for Mistry companies said he would seek instructions from his client but the option to file an appeal against the Tribunal's order passed today was under their consideration.

The appeal can be filed by Mistry group companies either in the Appellate National Company Law Tribunal or in the Supreme Court, legal sources said.

On January 18, NCLT had dismissed contempt plea filed by Mistry group companies alleging violation of NCLB directives in taking steps to remove Mistry from the Board of Tata Sons.

However, while dismissing contempt plea, NCLT had allowed Mistry companies to file an affidavit on the issue of Tata Sons holding EGM on February 6.

Accordingly the affidavit was filed and Mistry companies today pleaded for interim relief in the contempt petition seeking a stay on the EGM. But the Tribunal refused to grant a stay saying that the issue was decided in the last hearing when the contempt plea of Mistry companies was dismissed.

NCLT, today, asked Mistry companies to argue on merits on their main petition challenging the removal of Cyrus Mistry as the Chairman of Tata Sons alleging bad practices, oppression and mismanagement in the holding company.

However, Sundaram, Counsel for Mistry Companies, insisted that he would first argue on the maintainability of the petition and then on the merits.NCLT, however, expressed its displeasure over the lawyer's stand, saying that he was not cooperating with the proceedings in the case.

The bench, however, has given a last chance to him to argue on merits of the petition on next occasion, February 13, or else it would dismiss it. The contempt plea had alleged that Tata Sons and its directors have "committed a breach" of an NCLT order of December 22 last year by giving a special notice on January 3, 2017, for removal of Mistry as a director of the board of Tata Sons, "in clear violation of the order."

It sought punishment for Tata, other directors of Tata Sons and trustees of Sir Ratan Tata Trust and Sir Dorabjee Trust -- N A Soonawala, R K Krishnakumar and R Venkatramana -- under the Contempt of Court Act which provides for simple imprisonment for a term which may extend to six months or fine of Rs 2,000 or both.

The contempt petition argued that the removal of Cyrus Mistry as a director of Tata Sons could have waited.

By calling an EGM to remove Mistry as a Director of the Company, Tata Sons and others had committed direct violation of the December 22 Tribunal order and its action amounted to "wilful disobedience" of NCLT's order in an earlier petition filed by Mistry's family owned companies against Tata Sons, it contended.

The petition said that the move to remove Mistry was against the spirit of the NCLT order which had earlier stated that the respondents will not "initiate any action or proceedings over this subject matter pending disposal of the company petition."

The contempt petition contended that the move of Tata Sons to call an extraordinary general meeting (EGM) on February 6 to remove Mistry as a Director violates the undertaking given by its lawyers to NCLT which heard an earlier petition filed by the investment firms on December 22.

The lawyers had assured the Tribunal that no further action would be taken in this matter until the petition was finally heard and disposed of, said the contempt petition.

Tata Sons had abruptly removed Mistry as its Chairman on October 24 last year and sought his ouster from operating companies like Tata Motors and TCS. Mistry had subsequently resigned from the board of six companies, but dragged Tata Sons and his interim successor Ratan Tata to NCLT.