High drama in court as Tata & Mistry's counsels have it out

Moneycontrol BureauIt was a day of high drama at Court Room No. 1 of the National Company Law Tribunal (NCLT) on Monday, as the Tribunal began hearing the contempt petition filed by Cyrus Mistry’s lawyers. Amid a sea of black suits, Cyrus Mistry’s counsel rose to challenge the extraordinary general meeting to be held on February 6 by Tata Sons to remove Cyrus Mistry as Director on the board. Mistry’s legal counsel questioned the “emergent hurry” to remove him when it was agreed upon that no further action would be taken by either parties till the Tribunal gave its order.

Cyrus Mistry’s two investment companies Cyrus Trust and Sterling Investments had filed a contempt petition in court last week, after Tata Sons called for an extraordinary general meeting on February 6 to remove Mistry as a director on its board. Mistry’s counsels argued that since the tribunal had passed a consent order wherein both parties had agreed that no further action would be taken till the Tribunal passed its order. Singhvi argued that the consent was only procedural in nature and that the contempt order was not maintainable. Calling the contempt petition an abuse of the process, Singhvi pleaded that the petitioner be punished with strictures and costs.

Justifying the proposed EGM to be held on February 6, Singhvi said: “Nobody could have thought what Vibhishan or Jaichand could have done (what they did). Can you have a person like him (Mistry) sitting on the board with the objective of cutting his nose to spite his face. And now neither is the nose nor is the face yours. You are out as an enemy to harm the company.” Accusing Mistry of deliberately leaking sensitive information to the tax authorities with additional information, Singhvi said: “You don’t get petty due to ego problem.”

Mistry’s counsels Janak Dwarkadas and Sundereshan engaged in a war of words with Abhishek Manu Singhvi, senior counsel representing Tata Sons and questioned the Tata values which Janak Dwarkadas said only existed on paper. Referring to the move to remove Mistry as director an act of mismanagement and opporession, Mistry’s legal counsel sought to get an injunction against the move if the contempt petition was not upheld by the court.

The consent order was interpreted by Mistry’s counsel as one where both parties had agreed to accept status quo. However, Abhishek Manu Singhvi, representing Tata Sons, contested this rather strongly in court. Mistry’s lawyers argued that for several decades Mistry’s family were on the board as directors as minority shareholders with a stake of 18.4 percent. Singhvi rubbished the claim by stating that there was a period of 17 years when the Mistry family had no board seat and they were fine by it. Between 1965 and 1980, the Mistry family had no representation on the board of Tata Sons and then again for two years before Mistry was inducted on the board in 2006, the family had no board seat.

At the end of the three and a half hours of arguments, the court reserved the order for January 18.