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The Tax Publishers National Company Law Appellate Tribunal--Tata Sons Case NCLAT's Verdict on Prejudicial and Oppressive Acts in Tata Sons Limited Case D. Ramachandra Rao Judgment of the National Company Law Appellate Tribunal in Cyrus Investments Private Limited v. Tata Sons Limited (2020) TaxPub CL 163 (NCLAT-New Delhi) : (2020) 154 CLA 47 (NCLAT-New Delhi) for prejudicial and oppressive acts on the part of company affecting the minority group, has been analysed in the present write-up. 1. Facts of the case Board of directors of the Tata Sons Ltd. (respondent company) removed Cyrus Pallonji Mistry from the post of Executive Chairman of the company and was also removed from the directorship of certain Tata Group companies. The minority group of shareholders/Shapoorji Pallonji Group (appellants) holding 18 per cent of equity shares in the respondent company, filed an application under sections 241 and 242 of the Companies Act, 2013 before National Company Law Tribunal (NCLT) alleging that majority shareholders (Tata Group) were involved in acts prejudicial to the interest of the company and oppressive to the members including minority shareholders. The NCLT passed stricture and derogatory observations against the appellants and dismissed the petition. An appeal was filed against it, to the National company Law Appellate Tribunal (NCLAT) further challenging the attempt of respondents to convert the company from public to private limited. Respondents stated that Cyrus Pallonji Mistry had totally lost the trust and confidence of Tata Trusts as he did not possess the ability and strategy to manage the Tata Group due to the loss incurred by the company. As per the Articles of Association (AoA) of the Tata Sons Limited, the nominated Director of 'Tata Trusts' are in the direct control of Tata Group Companies or its subsidiaries as the majority decision is fully dependant upon affirmative vote of nominated Directors of Tata Trusts. It is also observed that prior to the Board's meeting held before removing Cyrus, on the same date decision was taken by Ratan N. Tata to remove him, who asked him to step down from the post of the 'Executive Chairman' of the company. When Cyrus refused to do so, the nominated directors brought the motion to replace Cyrus in the Board meeting, though there was no such agenda before the Board nor any document was circulated relating to performance of Cyrus or he was intimated. SUBSCRIBE FOR FULL CONTENT

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National Company Law Appellate Tribunal--Tata Sons Case

NCLAT's Verdict on Prejudicial and Oppressive Acts in Tata Sons Limited Case

D. Ramachandra Rao

Judgment of the National Company Law Appellate Tribunal in Cyrus Investments Private Limited v. Tata Sons Limited (2020) TaxPub CL 163 (NCLAT-New Delhi) : (2020) 154 CLA 47 (NCLAT-New Delhi) for prejudicial and oppressive acts on the part of company affecting the minority group, has been analysed in the present write-up.

1. Facts of the case

Board of directors of the Tata Sons Ltd. (respondent company) removed Cyrus Pallonji Mistry from the post of Executive Chairman of the company and was also removed from the directorship of certain Tata Group companies. The minority group of shareholders/Shapoorji Pallonji Group (appellants) holding 18 per cent of equity shares in the respondent company, filed an application under sections 241 and 242 of the Companies Act, 2013 before National Company Law Tribunal (NCLT) alleging that majority shareholders (Tata Group) were involved in acts prejudicial to the interest of the company and oppressive to the members including minority shareholders. The NCLT passed stricture and derogatory observations against the appellants and dismissed the petition. An appeal was filed against it, to the National company Law Appellate Tribunal (NCLAT) further challenging the attempt of respondents to convert the company from public to private limited. Respondents stated that Cyrus Pallonji Mistry had totally lost the trust and confidence of Tata Trusts as he did not possess the ability and strategy to manage the Tata Group due to the loss incurred by the company.

As per the Articles of Association (AoA) of the Tata Sons Limited, the nominated Director of 'Tata Trusts' are in the direct control of Tata Group Companies or its subsidiaries as the majority decision is fully dependant upon affirmative vote of nominated Directors of Tata Trusts. It is also observed that prior to the Board's meeting held before removing Cyrus, on the same date decision was taken by Ratan N. Tata to remove him, who asked him to step down from the post of the 'Executive Chairman' of the company. When Cyrus refused to do so, the nominated directors brought the motion to replace Cyrus in the Board meeting, though there was no such agenda before the Board nor any document was circulated relating to performance of Cyrus or he was intimated.