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Investment firms of the Mistry family have failed to oppress minority shareholders and mismanagement of Tata Sounds at NCLT, and the order would become a precedent for similar disputes in India
"The order of NCLT has ensured that the controlling shareholders have absolute control over the affairs of the company and the minority shareholders will have to prove that the conduct of the majority shareholders was oppressive and "The word" oppression "is hard to prove in court and unless there is illegal activity of the Tata Sons board, it will be difficult to prove such allegations", said HP Ranina, a lawyer based in Mumbai.
On Monday, the bank of Mumbai NCLT rejected the petitions filed by the two investment companies Mistry, Cyrus Investments and Sterling Investment, which hold 18.5% stake in Tata Sons. The Mistry firms had alleged that Tata Sons had oppressed the minority shareholders – the two Mistry firms – and demanded the return of a seat on the board of directors. The petitions were moved after Cyrus Mistry was removed from his position as executive chairman of Tata Sons on October 24, 2016.
In the petition, the two firms alleged that Mistry had been dismissed after undertaking clean-up operations. various existing hotspots. huge losses for the Tata group, and had contested the way of his move. Issues included the costly acquisition of Corus Steel and investment in the Nano car project.
Ranina said that just because an opinion was taken by majority shareholders that is different from the opinion of minority shareholders, it does not need to be clbadified as oppression of "minority shareholders." Mistry should take legal notice of former Supreme Court justices if this case would pbad judicial review in higher courts before going further ", did it he advised.
Other lawyers said that making allegations is a thing has been difficult. "The decisions made by the previous Tata Sons leadership led by Ratan Tata on inherited issues have affected all shareholders Tata Sons and not just the minority shareholders. Mistry must prove that the decisions made by Tata Sons were against the interests of the minority shareholders and that this only benefited the majority shareholders – the Tata Trusts, "said R S Loona, managing partner of Alliance Law. The NCLT order showed that Mistry had not succeeded in proving that,
lawyers and corporate government experts indicated that the case set a precedent and has made it difficult for minority shareholders of Indian companies to prove oppression by majority shareholders. "In case there will be a dispute in the future, the majority will prevail," said Ranina.
The experts also stated that the case could now be brought before the National Societies Appeal Court and then before the Supreme Court. shareholder rights. Recently, the minority shareholders of Fortis have dismissed the independent directors of the company because it was found that they were unable to stop the embezzlement of the company
"This (NCLT ordinance on the Mistry petition) must be challenged in the courts as they relate to the rights of minority shareholders.The NCLT has not reviewed the law but has reviewed the facts of this case.Are the minority shareholders entitled to s & # 39; to oppose the decisions of the majority shareholders or not, what affects them directly? ", asked Anil Singhvi, chairman of Ican Investment Advisory." In the case Cyrus Mistry vs. Tata Sons, the executive chairman The board of directors which holds 18.5% of the capital of Tata Sons has been dismissed by directors who do not own a single share. The Companies Act and even the Constitution of India clearly indicate that minorities have rights and that they should be respected, "he added
. baderts the rights of minority shareholders, "he declared
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