NCLT to give order on January 18 on contempt plea filed by Cyrus Mistry family companies
The National Company Law Tribunal (NCLT) on Monday reserved its order till January 18 on a contempt petition filed by two Cyrus Mistry family companies against Tata Sons and its directors, including Ratan Tata, alleging violation of NCLT directives in taking steps to remove Mistry from the Board.
The order was reserved by a division bench of NCLT comprising B S V Prasad Kumar (Member-Judicial) and V Nallasenapathy (Member-Technical) after arguments by all the parties concluded on Monday.
The judgment would be delivered on January 18.
Cyrus Investments and Sterling Investment had filed a contempt petition seeking injunction against Tata Sons barring from "convening or holding of the EGM scheduled for February 6, 2017 or any other date or from transacting any business thereat."
The contempt plea alleged that the respondents have "committed a breach" of an NCLT order of December 22 last year by giving a special notice on January 3, 2017, for removal of Mistry as a director of the board of Tata Sons, "in clear violation of the order."
It sought punishment for Tata, other directors of Tata Sons and trustees of Sir Ratan Tata Trust and Sir Dorabjee Trust -- N A Soonawala, R K Krishnakumar and R Venkatramana -- under the Contempt of Court Act which provides for simple imprisonment for a term which may extend to six months or fine of Rs 2,000 or both.
A Sundaram, counsel for Mistry's family Companies, argued that the removal of Cyrus Mistry as a director of Tata Sons could have waited.
By calling an EGM to remove Mistry as a Director of the Company, Tata Sons and others had committed direct violation of the December 22 Tribunal order and its action amounted to "wilful disobedience" of NCLT's order in an earlier petition filed by Mistry's family owned companies against Tata Sons, he contended.
Sundaram further argued that the move to remove Mistry was against the spirit of the NCLT order which had earlier stated that the respondents will not "initiate any action or proceedings over this subject matter pending disposal of the company petition."
The contempt petition contended that the move of Tata Sons to call an extraordinary general meeting (EGM) on February 6 to remove Mistry as a Director violates the undertaking given by its lawyers to NCLT which heard an earlier petition filed by the investment firms on December 22.
The lawyers had assured the Tribunal that no further action would be taken in this matter until the petition was finally heard and disposed of, said the contempt petition.
Abhishek Manu Singhvi, counsel for Tata Sons, said the respondents -- Tata Sons and its Directors -- had not committed any contempt of NCLT by calling an EGM to remove Mistry.
Singhvi said Tata Sons had not given any specific undertaking to the Tribunal earlier that Mistry would not be removed as Director from the company. Hence, there was no contempt committed by Tata Sons and others, he argued.
The Tata Sons' lawyer further argued that there was nothing implicit in the order of NCLT of December 22 that Mistry would not be removed.
Singhvi said Tata Sons had no option but to remove Mistry from the Board because he violated his fiduciary duty to the shareholders by leaking confidential information which was damaging to Tata companies.
He argued that Tata Sons was seeking Mistry's removal as a Director as he was acting in a manner detrimental to the company. He presented a January 12 letter written by Mistry to Income Tax Department wherein the ousted chairman highlighted that Tata trustees were interfering in functioning of Tata Sons in violation of provision of Income Tax Act.
Mistry's lawyer Janak Dwarkadas argued that there was no hurry for Tata Sons to remove him as Director (of Tata Sons). By calling an EGM, Tata Sons and others had committed contempt of NCLT's order of December 22, he said.
Tata Sons had abruptly removed Mistry as its Chairman on October 24 last year and sought his ouster from operating companies like Tata Motors and TCS. Mistry had subsequently resigned from the board of six companies, but dragged Tata Sons and his interim successor Ratan Tata to NCLT.