press trust of india
Mumbai, Jan 30: Tata Group’s ousted chairman Cyrus Mistry today questioned the legality of the provisions in the Tata Sons’ charter that vest “unbridled” powers with itself to take away a shareholder’s right to own shares.
Mistry’s counsel Aryama Sundram told the National Company Law Tribunal (NCLT) that provisions in the Tata Sons’ charter that give unbridled powers to take out a shareholder’s right to own shares has to be declared “void”.
Sundram said even if courts were to hold that such provisions are not void, that would, in itself, be oppressive to the shareholders, as even legally valid provisions can be inequitable, warranting intervention by the court.
Sundram said under the new Companies Act, which came into effect in September 2013, there is no concept of any hybrid company.
“Which is why, Tata Sons, which is now clearly a public company, is seeking to convert itself into a private company so that it can escape the rigours of governance standards which is a retrograde step,” Sundaram said.
He argued that in the case of Tata Sons and its companies, it is clear where the seat of power lies and one hardly needs to lift the veil to know it.
He said Tata Sons’ articles involve dealing with the affairs of the Tata Group companies, and well after the Tatas sacked Mistry without a notice, their argument was that the Group is drifting away from Tata Sons’ values during Mistry’s term.
“It is not logical or fair for them to now say that Tata Sons can have an existence without Tata Group companies,” he said.
Later arguing for the Shapoorji Pallonji Group, owned by the Mistry family, advocate Somashekar Sunderashan said in less than five weeks of retirement, Ratan Tata started making deep inroads into his successor’s office to handle problems in the group companies.
Sundaresan said the only reasonable way to read the material on record would be to see that the interventions, however sought to be explained as well-intentioned, were hurting the interests of the group.
The NCLT will continue to hear the arguments Wednesday.
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