While Cyrus Mistry is yet to take any legal recourse against his ouster from Tata Sons, legal experts say he can contest the decision under the provisions of the Companies Act.
Minority shareholders must file an action under Section 241 of Companies Act 2013, which corresponds to oppression and mismanagement, before the National Company Law Tribunal, said Pawan Kumar Vijay, founder, Corporate Professionals Group and former President, Indian Company Secretary Institute. “Mistry has 18 per cent stake in the company, and hence can contest that the majority forced the decision upon him.”
While Tata has filed caveats against Mistry, the courtroom battle is yet to unfold. According to sources close to the development, discussions are going on to make it a foolproof case.
But the question is whether there was a proper notice involved in the removal process or was there any irregularity. “As per Section 101 of Companies Act, if a minimum of seven days’ notice was not given, and if conducted on a shorter notice, no independent director was present or the decision was taken at such a meeting that was not been ratified by an independent director, Mistry has a strong ground to contest against his removal,” said Utsav Gandhi, a Bengaluru-based lawyer.
Mumbai-based company secretary Tushar Shridharani opines that according to the principle of corporate governance, Mistry must respect the collective decision of the board and abide by it. “I don’t think Mistry has any case against Tatas; this is not oppression or mismanagement,” he said. Aliff Fazelbhoy, Senior Partner, ATML Legal, says since Mistry’s reputation has been tattered, he can file a case under tort law under fairness principle. “He may also try to file a criminal complaint for defamation,” he said.