Live Mint | 24 September 2020
The Mistry family’s planned separation from the Tata group will likely see a de-escalation in some of the court cases resulting from Cyrus Mistry’s 2016 ouster as chairman of Tata Sons, said two people with knowledge of the matter and legal experts.
The past four years have seen several court cases involving the Mistry family, the Tata group and Tata board members, including company petitions suing for damages, defamation suits, and writ petitions.
The Mistry family also made complaints of insider trading in Tata-listed companies with the Securities and Exchange Board of India (Sebi) and references of tax evasion by Tata Trusts to the tax department. The Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED) are also examining allegations of malpractice at Air Asia.
“For the Mistrys to end this chapter of their history would require them to actively withdraw these cases. The main case filed by the Mistry family by way of company petition is in their capacity as a minority shareholder. So if they are selling and exiting, they no longer have a locus standi,” said one of the two people mentioned above.
The Mistry firms had first filed a company petition in the National Company Law Tribunal (NCLT) in December alleging oppression of minority shareholders and mismanagement under section 241 and 242 of the Companies Act 2013. The case is now with the Supreme Court for a final adjudication. An investor needs to hold at least 10% shares in a company to be able to file such a petition under sections 241 and 242. “So if the Mistry family plans to exit Tata Sons, then they would not qualify for the petition under the Companies Act 2013. In the interim, as a sign of trying to arrive at a settlement, the two groups can start withdrawing cases,” said the other person quoted above.
Bilateral conflicts are easier to resolve, according to Rajesh Narain Gupta, managing partner, SNG and Partners. “Wherever bilateral conflicts are concerned all these cases can be compromised, resolved and withdrawn, whether it is in the tribunal, high courts or the Supreme Court. The two parties may need to file compromise petitions in the courts where the matter is being heard,” said Gupta.
According to the second person quoted earlier, the Tatas may seek to remove the observations made by the National Company Law Appellate Tribunal (NCLAT). “There is a provision for expunging the NCLAT observation and the top court can be petitioned for it,” agreed Gupta.
These compromises may not be difficult to achieve, but the complaints being examined by regulators and enforcement agencies would continue. “Complaints being investigated would continue as any settlement between the parties is not binding on the states. These may die a natural death for lack of perusal or evidence,” said the first of the two persons quoted above.