Contempt Application No. 03 of 2017 in C.P. Nos. 82/241, 242, 244/NCLT/MAH/2016. Case: Cyrus Investments Pvt. Ltd. and Ors. Vs Tata Sons Ltd. and Ors. Company Law Board
| Case Number | Contempt Application No. 03 of 2017 in C.P. Nos. 82/241, 242, 244/NCLT/MAH/2016 |
| Counsel | For Appellant: Aryama Sundaram, Milind Sathe, Sr. Counsels, Somasekhar Sundaresan, Rugvesh Mistry, Apurva Diwanji, Anoj Menon, Gunjan Shah, Parag Sawant and Akshay Doctor, Advocates and For Respondents: Abhishek Manu Singhavi, Ravi Kadam, Sr. Counsels and Nitesh Jain, Advocate |
| Judges | B.S.V. Prakash Kumar, Member (J) and V. Nallasenapathy, Member (T) |
| Issue | Code of Civil Procedure, 1908 (CPC) - Section 151 |
| Judgement Date | January 18, 2017 |
| Court | Company Law Board |
Order:
(Mumbai Bench)
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The petitioners are the family Companies of Mr. Cyrus Mistry (R11), they mentioned Contempt Application alleging that the contesting Respondents willfully disobeyed the orders dated 22.12.2016 of this Bench by R14, R17, and R20, in their capacity as Trustees - JRD Tata Trust, Tata Education Trust, Tata Social Welfare Trust holding 13.66% in Tata Sons Ltd. (R1) by issuing a requisition notice u/s. 169 of the Companies Act 2013 on 3rd January 2017, on which, R2-10, 12 and 23 at the behest of R1, though being parties to the CP, issued a notice on 5th January 2017 to hold Extra Ordinary General Meeting (EGM) on 6th February 2017 to get an approval for removal of R11 from the office of Director of the company with immediate effect annexing an Explanatory Statement with a disclosure of background that R11 was on 24th October 2016 replaced as Executive Chairman with a further resolution to continue him as Director of the Company. The Explanatory Statement further says that Mr. Cyrus Mistry (R11) since subsequent to his removal as Chairman of R1 made unsubstantiated allegations casting aspersions not only on R1 as a whole but also made internal communications public, which are marked as confidential causing enormous harm to the Tata Group, its stake holders, including employees and shareholders, causing significant erosion in the market value of the Tata Group companies which has consequently resulted in harm to Tata Sons Limited (R1) and indirectly losses to its shareholders. And the Board is also of the opinion that the integrity of the Board proceedings is being jeopardized by Mr. Mistry's continuation as a Director and the confidentiality of the Board decisions and proceedings cannot be ensured as the documents presented to the Board have been leaked and made public in a distorted and untruthful manner. This statement further mentions that at the EGM, pursuant to Section 169 (4) of the Companies Act 2013, the Director being sought to be removed has a right to make representation to the shareholders in the manner stated therein.
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Now the case of these petitioners is that the spokesperson (name has not been mentioned) for the Tata Group has spoken to the Media on 21.12.2016 (that is before mentioning date of the CP, i.e., 22.12.2016), inter alia, representing that the Respondents had no intention to remove R11 from the Board and even marked that excerpt as Exhibit to this CA as if it is evidence to decide the relief sought in this Application. Had News Papers become evidence, the petitioners should not forget that almost all newspapers minced no words to say that interim reliefs sought on 22.12.2016 were not granted by NCLT. Of course, this Bench will neither take the newspaper cutting the petitioners made as Exhibit nor the news saying that interim reliefs rejected to R11 as material or inputs to arrive to a determination over this application.
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In Para-h of this Application it has been mentioned that R14, 17, 20 having categorically agreed that they will not initiate action over this subject matter pending disposal of the company cannot cause such notice to be issued. This bench will answer this point later. As to EGM notice and its contents, it has already been enumerated in the first Para of this order itself.
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The Petitioners further submit that if EGM is allowed to be held, it would constitute a deliberate and contumacious breach of the aforesaid order dated 22nd December 2016 and all those participating in and voting in such meeting would also be guilty of contempt, therefore it is necessary that R1 be restrained by an order and injunction from convening or holding such a meeting or from transacting any business thereat.
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The reliefs sought by these petitioners are to punish R14, R17 and R 20 as prescribed under Contempt of Courts Act for having committed breach of the order dated 22nd December 2016 by issuing requisition notice for removal of R11, and to punish Rl, its directors R2-10, R12, R13, R13 and other officers for having issued the notice dated 5th January 2017, for requisitioning an EGM for removal of R11 from the Board of Directors.
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These Petitioners have gone ahead in this contempt application seeking a restraint order against R1 not to convene or hold EGM scheduled on 6th February 2017 or any other date or from transacting any business there at.
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In this background, it is imperative to place the text of the order to examine as to whether the conduct of the Respondents has really been reflecting disobedience to the orders dated 22.12.2016 and also to see whether any directions have been issued against the Company restraining it from carrying its functions, the text of the order is as follows:
"The Petitioner Counsel mentioned this Company Petition arguing for about 90 minutes inter alia asking reliefs (el (f) and (g) covered under IA 17/2016. As soon as the Petitioner Counsel has completed his submissions, when this Bench put it to the Senior Counsel Shri Aryama Sundaram appearing on the petitioners' behalf as to why this Company Petition should not to be posted for main hearing after completion of the pleadings, instead of dealing with the interim reliefs he sought in the IA, to which the Petitioners Senior Counsel Shri Aryama Sundaram, R11 Senior Counsel Shri Janak Dwaraka Das and the answering Respondents Senior Counsel Dr. Abhishek Manu Singhvi, Shri S.N. Mookerjee, Shri Ravi Kadam and Shri Mohan Parasaran conceded for the following Consent Order as mentioned below:
The answering Respondents' side has agreed to file reply within 15 days hereof. The Counsel appearing on behalf of R11, who is evidently sailing along with the Petitioners side, agreed to file reply to the Company Petition within one week hereof enabling the answering...
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