A two-judge National Company Law Appellate Tribunal (NCLAT) headed by Justice SJ Mukhopadhyay on Friday refused to stay the conversion of Tata Sons into a private limited company from a deemed public company. The bench said that it would decide on the conversion after hearing final arguments next month.
The NCLAT said that pending the litigation here, the Cyrus Mistry, who was seeking a status quo over it, cannot be ‘forced to sell shares’. Notably, the matter will be heard next on 24 September by the NCLAT.
The tribunal said that Tata Sons could not ‘force’ Cyrus Mistry to sell his shares in the company while admitting a petition filed by Cyrus Investments Pvt. Ltd seeking an interim stay on the conversion.
Notably, the appeal was in challenge to the 9 July order passed by the Mumbai bench of the National Company Law Tribunal (NCLT).
It must be mentioned here that a public limited company allows shareholders to legally sell their stake to anyone, but a shareholder of a private limited firm cannot sell the shares to external investors.
The tribunal, in its last hearing, had reserved its judgment on the conversion of Tata Sons and had said the question of interim relief would come up once the plea filed by Cyrus Investments was admitted.
Notably, shareholders of Tata Sons, holding company of the $103 billion Tata group, had last September voted in favour of turning it into a private limited company despite opposition from ousted chairman Cyrus Mistry’s family firms that own a minority stake in the holding company. Hence, Mistry had filed the appeal with the NCLAT through two family-run investment firms, Cyrus Investments and Sterling Investments Corp.
In his petition before the NCLAT, Mistry has alleged that the NCLT Mumbai bench judgment is replete with errors of reasoning and errors of law. On 9 July, the Mumbai bench of NCLT dismissed the petition filed by the Mistry family’s investment firms, saying it found no merit in the case.
Mistry was named Tata Group chairman in November 2011 and took over in December 2012 after the retirement of Ratan Tata. However, on 24 October 2016, the board of Tata Sons dismissed him as Chairman and said former chairman Ratan Tata would take over as interim chairman.
Following his ouster, Mistry contended that the articles of association of Tata Sons were biased against the rights of minority shareholders and thereby oppressive, a charge Tata Sons dismissed, saying Mistry, who had been on its board since 2006, had never raised this issue until he was fired.