SC agrees to hear Cyrus Mistry’s plea seeking more relief against NCLAT judgment

The Supreme Court on Friday agreed to hear a cross appeal filed by Cyrus Mistry seeking more relief than what was granted by the NCLAT in its December 2019 judgment, legal news website BarandBench.com has reported.

The court tagged this cross appeal with the appeals filed by Tata Sons, Ratan Tata and others challenging the judgment of NCLAT that reinstated Mistry as the Executive Director of Tata Sons.

The Bench of Justices AS Bopanna and Hrishikesh Roy took up for hearing today the plea filed by Cyrus Mistry seeking more relief from the National Company Law Appellate Tribunal (NCLAT) than what was granted on December 18, 2019.

On Friday, the Court, while tagging all the appeals arising out of the NCLAT judgment together, also said that the pleadings shall be completed within a period of four weeks.

The NCLAT, through its order of December 2019 had reinstated Cyrus Mistry as the Executive Director of Tata Sons. This judgment of the Tribunal was stayed by the Supreme Court in January this year which agreed to hear the appeals filed by Tata Sons, Ratan Tata and Tata Trustees on merit and went ahead to issue notices to the Responents including Mistry.

Shortly thereafter, in February this year, Mistry moved the apex court with a cross appeal, which is essentially a challenge to a certain aspects of a judgment. This cross appeal said that the Tribunal did not exercise its jurisdiction to do complete justice. The Tribunal, while recognizing the oppression by the Tata Group, did not pass orders in relation to the same.

Mistry, in his plea before the apex court, has claimed that the Shapoorji-Pallonji group deserved more relief from the NCLAT, especially as regards the rights of the minority shareholder and the conversion of Tata Sons as a private company after the removal of Mistry from the position of Executive Director back in 2016.

It is also pointed out that, had the NCLAT exercised its jurisdiction and passed orders granting relief that was sought by the appellant, the oppressive conduct of the majority shareholders would have been put an end to.

This "prejudicial" and oppressive conduct on the part of Tata Group was something well recognized by the Tribunal also, the plea underscores.

The appeal states that the SP group owns 18.37% of the equity share capital in Tata Sons and while the NCLAT ruled that there had been prejudicial conduct on the part of Tata Group, the Tribunal should have also ordered for giving proportional representation to the SP Group on the Board.

Another prayer that was made by Mistry is for the striking down of Article 75 of the Articles of Association of Tata Sons, contending that it is a "draconian" Article having "no place in modern Company law".

This Article empowers Tata Sons to ask any shareholder to sell their stake by passing a special resolution. Terming this as a "confiscatory" Article, it is apprehended that this Article could be used to force the SP Group firms to exit the Tata Group, with which they have been in "quasi-partnership" for years, says the plea.

The NCLAT has the power to alter AoA of any company, the appeal states and points out that the NCLAT erroneously held that it did not have the jurisdiction to do so.

Interestingly, reinstatement of Mistry as the Executive DIrector was not a relief sought Mistry before the Tribunal. While the NCLAT ordered for the reinstatement, it did not grant relief that was sought by SP Group and Cyrus Mistry Investment which forms the basis of this cross appeal before the Supreme Court now.