Thursday, January 27, 2022

Bombay HC allows extraordinary general meetings of three Tata companies

Bombay HC has now asked Tata Sons to file a reply by January 15 next year, the minority shareholders to file a rejoinder by January 25, and has scheduled the matter for final hearing on February 6 next year.

Written by Ruhi Bhasin | Mumbai |
December 17, 2016 1:30:33 am
TATA, Tata sons, Tata companies, Tata groups, bombay high court, Bombay HC tata , Tata group bombay HC, TATA companies, Nusli Wadia, ratan Tata, business news The three Tata companies have called for EGMs to remove both Wadia and Cyrus Mistry, who was ousted as chairman of Tata Sons, as directors from their boards.

While declining to give an ad interim stay on the extraordinary general meetings of three Tata group companies, the Bombay High Court on Friday told the firms to keep one seat each vacant on the boards of directors for an independent director until further court orders.

These directions have come in the wake of minority shareholders of three Tata group entities — Tata Steel, Tata Motors and Tata Chemicals — moving the high court against the special notice by these companies to remove independent director, Nusli Wadia from their boards. The three Tata companies have called for EGMs to remove both Wadia and Cyrus Mistry, who was ousted as chairman of Tata Sons, as directors from their boards.

Appearing for the minority shareholders, senior counsel, N H Seervai, while arguing for an ad interim relief said that the action was irrelevant. On Friday, the shareholders sought by way of ad interim relief that either voting in EGMs be restricted or that results of the poll be kept in a sealed envelope before the court until the matter is decided.

While Justice, SJ Kathawalla refused to interfere with the EGMs, he ruled that Tata Sons will have to keep a seat vacant in each of these companies so that if the companies decide on Wadia’s removal, and if the court ultimately decides that such removal was unauthorised, Wadia can be reinstated as an independent director.

In an email statement, the official spokesperson of Tata Sons said, “The Bombay High Court denied every interim relief as claimed by the plaintiff and Nusli Wadia. The court has allowed the EGMS of all Tata companies to proceed without any intervention and as planned. Tata Sons’ votes will be counted and factored in as per the law. Bombay High Court, with the consent of parties, passed an order that one board seat among the maximum permissible directors as per the Articles of each company, should remain unfulfilled until the resolution of this suit. A copy of the court order is awaited.”

“Tata Sons issues requisition and chooses one director to test waters and make others toe the line who they claim is not only supporting Mistry but also galvanising the support of other independent directors. Here is a man who has been a director in the three companies for as long as 37 years in one instance. The question here is what is the urgency? Heaven may not fall if results are kept in an envelope for four weeks,” Seervai said.

He further argued that the independent directors were required to protect the rights of minority shareholders against promoters.

Senior counsel and former Union minister P Chidambaram, appearing for Tata Sons, questioned the maintainability of the petition and said that no interim relief should be granted at this stage. “Four shareholders have come before court asking for specific prayers. Such reliefs cannot be granted on the basis of a plea made by four shareholders belonging to one family. He (Wadia) should have come as plaintiff and said that he can’t be removed.”

Pointing to Section 169 of the Companies Act relating to removal of a director by passing an ordinary resolution, Chidambaram said, “The only person who can remove a director is the general body which has the power to appoint him. If he cannot be removed under 169 then he is irremovable.”

Seervai agreed that this was his case. “This is an absurd conclusion as right from the President of India to the Judges are removable,” Chidambaram said, adding that “in a desperate case they filed the plaint last moment to stop the EGM even as they were not directly affected.” He further refuted the argument of Seervai that independent directors represented the minority shareholders.

Meanwhile, senior advocate Janak Dwarkadas who was appearing for Nusli Wadia, while not a party to the matter, raised issues concerning Sebi’s role and how it could certainly step in. “It (Sebi) has a duty to protect the interest of minority shareholders. It is not open for Sebi to throw up its hand. I had informed Sebi about inside trading, action should have been taken by them,”

Sebi, on its part, said that it would have to examine the policy decision before arriving at any conclusion. Chidambram also told the court that if the EGMs decided on Wadia’s removal, Tata Sons had no “immediate plans to find a replacement.”

HC has now asked Tata Sons to file a reply by January 15 next year, the minority shareholders to file a rejoinder by January 25, and has scheduled the matter for final hearing on February 6 next year.

📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines

For all the latest Business News, download Indian Express App.

  • Newsguard
  • The Indian Express website has been rated GREEN for its credibility and trustworthiness by Newsguard, a global service that rates news sources for their journalistic standards.
  • Newsguard
Advertisement
Advertisement
Advertisement
X