Ratan Tata and Cyrus Mistry
Bracing themselves for the next round of battle with Tata Sons, two Cyrus Mistry investment firms, Cyrus Investments and Sterling Investment, in their appeal against the July 9 order of National Company Law Tribunal (NCLT), have alleged that the verdict has “errors of law and errors in reasoning”.
They said the order relied on “external information,” according to a petition filed by the firms at the National Company Law Appellate Tribunal (NCLAT) in Delhi.
The NCLT’s Mumbai Bench had said it did not find merit in allegations of mismanagement in Tata group companies. The NCLAT will begin hearing the Mistry family’s appeal against the order on Tuesday.
“This appeal is to continue the fight for the rights of the minority shareholders and to uphold highest standards of governance expected from the House of Tatas,” according to the petition.
The Mistry firms had filed the petition under Section 241 and Section 242 of the Companies Act, which deal with oppression and mismanagement of shareholders.
In their appeal, the NCLT judgment quotes from Wikipedia, Britannica and other websites to “build a character certificate for the Tata group and prejudge issues at the threshold”, said the petition.
The NCLT order also “conveniently and selectively ignores other contemporaneous incidents that judicial cognizance ought to have been taken,” it said.
The petition alleges that the order “stifles the voice of the minority”, and turned the concept of “corporate Democracy into one of Corporate Dictatorship”.
The petitioner’s prayers for a representation on the board were only to give a legitimate voice to the minority shareholders, and in no way “impedes the exercise of the rights of the majority”, it added.
The NCLT order, which justifies majority shareholders (who are not on the board) getting prior information, is in direct conflict with well-settled jurisprudence on corporate governance, the petition says.
It also alleges that the order is erroneous inasmuch as it states that one has to prove trading on UPSI (unpublished price sensitive information) for any offence to be made out. It points out that the view of the NCLT is contrary to “the law of the land wherein the very sharing of UPSI is explicitly prohibited and any provision of information would need to involve demonstration of a legitimate purpose for such provision”.