TMI Blog2018 (7) TMI 1397X X X X Extracts X X X X X X X X Extracts X X X X ..... not been disproved that it has not been leaked from his end, it has to be held that it was leaked by him only. With such presumption, we hereby hold that the information letter dated 25.10.2016 about hotel issue, Tata Capital issue, DoCoMo issue, Airlines issue, is leaked by Mr. Cyrus to the media, in the same line, we further hold that Mr. Cyrus sent Tata Sons information to DCIT, though he was not continuing as Executive Chairman at the time when he sent such information to the DCIT without even putting it to the responsible officers of the Tata Sons. In view of these two reasons, we hereby hold that Mr. Cyrus perhaps by virtue of being removed as Executive Chairman, leaked the information above, forgetting that he was giving out Tata Sons information, whose affairs today Mr. Cyrus impugned before this Bench, to the outsiders, which does not go well to the company. Whatever be the differences, as long as Mr. Cyrus continuing as one of the directors along with others as on the date the aforesaid episode happened, he should not have divulged the information at least for the sake of fiduciary obligations cast upon him. All these things, according to the answering respondents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat Articles 75, 104B, 118, 121 of the Articles of Association per se oppressive against the petitioners. (i) We have not found any merit in the argument that Majority Rule has taken back seat by introduction of corporate governance in Companies Act, 2013, it is like corporate democracy is genesis, and corporate governance is species. They are never in conflict with each other; the management is rather more accountable to the shareholders under the present regime. Corporate governance is collective responsibility, not based on assumed free-hand rule which is alien to the concept of collective responsibility endowed upon the Board. (j) We have observed that prejudice remedy has been included in 2013 Act in addition to oppressive remedy already there and also included application of “just and equitable” ground as precondition to pass any relief in mismanagement issues, which was not the case under old Act. - C.P. No. 82(MB)/2016 - - - Dated:- 12-7-2018 - Mr. B.S.V. Prakash Kumar, Member (Judiclal) And Mr. V. Nallasenapathy, Member (Technical) For The Petitioners : Mr. C. Aryama Sundaram, Sr. Adv. Ms. Rohini Musa, Adv. Mr. Somasekhar Su ndaresa n, Adv. Mr. Apurva Diwanji ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents other than the company (R-l) and R-ll (Mr. Cyrus), conducted/conducting the affairs of the company in oppressive manner and prejudicial against the interest of the petitioners, the company and the public, hence sought various reliefs as mentioned in the company petition and affidavits subsequently filed by them under the head of oppression and mismanagement (sections 241-244) of the Companies Act 2013. 3. The petitioners have petitioned to this Tribunal asking to seasoning of Tata Sons functioning, which keeps seasoning our daily food with Tata Salt. Irony is salt also at times needs salt to be seasoned. One revelation out of it is, problem is problem, pain is pain, no matter how big it is, today the company, mother of many other group companies and champion of successfully surviving for a century, passing through troubled waters. Let us see, what could be the answer to its problem. 4. Companies come and go just as men come and go, but on Indian soil, a few companies have survived these many long years. Out of them, Tata is again unique for having its promoter shareholders (now Tata Trusts) been spending all its might solely for the benevolence of the society. I don t co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng courts, ingenuously, to treat the variegated problems of the world of finance, as litigable public-right-questions. Courts of justice are well-tuned to distress signals against arbitrary action, So corporate giants do not hesitate to rush to us with cries for justice. The court mom becomes their battle ground and corporate battles are fought under the attractive banners of justice, fair-play and the public interest. We do not deny the right of corporate giants to seek our aid as well as any Lilliputian farm laborer or pavement dweller though we certainty would prefer to devote more of our time and attention to the latter, We recognize that out of the dust of the battles of giants occasionally emerge some new principles, worth the while. That is how the law has been progressing until recently. But not so now. Public interest litigation and public assisted litigation are today taking over many unexplored fields and the dumb are finding their voice. 2. In the case before us, as if to befit the might of the financial giants involved, innumerable documents were filed in the High Court, a truly mountainous record was built up running to several thousand pages and more have been a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ries in our country as early as in late 17th Century, not only that, thereafter they have become so selfless by dedicating the industries and organizations to the cause of the society. It is not my writing that reflecting the greatness of this family -the statues appearing in various places of Murnbai say what they are, with one click, you will also come to know lot of inspiring philanthropic history about this family, When the history is not disputed, consistency is there in that history for more than 30 years, I believe it could be treated, not exactly as document falling under section 90 of Indian Evidence Act, but can be taken as document of like nature to get correct perspective of the dispute. It goes without saying that totality of the facts and their background gives firm footing to arrive to an objective conclusion with right reasoning. For this reason alone, we have started this journey right from the beginning to understand what Tatas are, and what their objectives are. I must be frank enough to say that this info is taken from Britannica and Wikipedia, of course this history is given in bits and pieces in the replies and arguments advanced by the Respondents side, to my ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1874, it is for the first time this company has set very high standards for worker benefits and welfare with the facilities such as sanitary hutments and filtered water for workers, which was that time unheard of even in the west. By seeing such a humanitarian concern, a famous English poet namely William Blake, wrote Jamsetji was a century ahead of his times ensuring the welfare of his work force. In 1886 itself, Jamsetji launched various schemes such as Free Medical help, creches and primary classes for children of mill workers, he introduced gratuitous pension fund, provident fund, maternity benefit allowance and a compensation funds for accidents for all employees. This man in his journey in the year 1889 being stirred by speech of Lord Reay donated half of his fortune to build University, in the year 1891, he started endowment scheme to support promising students From all over India for going abroad for studies. The first J M Tata scholar was Freny KR, sent to Edinburgh for advance studies thereafter, former president K.R. Narayan, renowned Scientist Raja Ramanna, Jayant Narlikar and Raghunath Mushalkar, like many. If we keep saying, there won t be end for it. 12. To cut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rposes. He died three months later. 14. The wealth that he turned over to the Trust comprised his substantial share holdings in the company, Indian Hotels and a Hied companies, his landed properties and 21 pieces of jewellery left by his wife, including the famous Jubilee Diamond, estimated then to be of the value of ₹ 10 million. Today, these would be worth more than ₹ 500 million . 15. As the Trust got formed and the trustees deliberated on the policy aspects and finalized them, it decided to adopt a broad framework-that it should undertake such projects, which are too large for individuals to handfe and that each of these projects should have a genuine relevance to the welfare of the country. The Trust is mandated to: * Maintain and support schools, educational institutions and hospitals * Provide relief in distress caused by the elements of nature such as famine, pestilence, fire, tempest, flood, earthquake or any other calamity * Help advancement of learning in all its branches especially research work in medical and industrial problems * Offer financial aid to the Indian Institute of Science, Bangalore, by instituting professorships or lectu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tata name and the Tata trademarks, which are registered in India and several other countries. In the fang history of this company, from 1868 till 2016, it has seen six Chairman who are as follows: Jamsetji Tata (1S68-1904): The founder of the Tata group began with a textile mill in central India in the 1870s. His powerful vision inspired the steel and power industries in India, set the foundation for technical education, and helped the country leapfrog from backwardness to the ranks of industrialised nations, Sir Dorab Tata (1904-1932): Through his endeavours in setting up Tata Steel and Tata Power, this elder son of Jamsetji Tata was instrumental in transforming his father s grand vision into reality, rt was also under his leadership that the Sir DorabJF Tata Trust, the premier charitable endowment of the Tatas, was created, propelling the Tata tradition of philanthropy. Nowroji Saklatwala (1932-1938): Sir Dorab was succeeded as chairman of the Group by Sir Nowroji Saklatwala. In 1938, following Sir Nowroji s demise, 34-year-old JRD Tata was appointed as the new chairman. JRD Tata (1938-1991): The late chairman of the Tata Group pioneered civil aviation on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hropic trusts, which support education, health, livelihood generation and art and culture (collectively, the Tata Trusts ). 22. The company has come into existence as Private Limited company with all characteristics of a private company, ever since it continued as private limited company until a change came in statute directing all the companies having more than Rupees one crore rupees paid-up capital to be public limited companies with characteristics of private limited company, ever since, this company has continued as public company governed by section 43 (1A) of Companies Act 1956 because section 43 (1A) says that though private limited company has more than one crore rupees, it could continue as public limited company with all characteristics of private limited company, therefore without any change to the characteristics of private limited company, the company continued as public limited company holding the characteristics of a private limited company. After which, when Companies Act 2013 has come into force in the year 2014, since there is no provision analogous to section 43 (1A) of Companies Act, 1956, time has come to it to choose either to become private or public l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.434253 Indian Hotels (Taj Hotels Resorts and Palaces) 4500 1.11347 Tata Industries 2295 0.56787 Tata Chemicals 10237 2.533021 Kafimati Investment Co (Now Tata Steel) 12375 3.062043 Tata International Ltd 1477 0.365466 Tata Motors 12375 3.062043 Piloo Tata 487 0.120502 Jimmy Naval Tata 3262 0.807142 Vera Farhad Choksey 157 0.038848 Jimmy Tata 157 0.038848 Simone Tata 2011 0.497597 Noel Tata 2055 0.508485 HH Maharawal Virendra Singh Chauhan 1 0.000247 Raja of Chhota Ude ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Articles of Association, therefore, the Petitioners can be called as investors come into the company and has been continuing as equity shareholders earning more than ₹ 800crores dividend from this company till date. 26. With this background, the Petitioners have filed this Company Petition striking the Respondents on the premise that the Respondents have conducted the affairs of the company oppressive against the petitioners and prejudicial to the interest of the Petitioners. 27. Mr. Tata is the Chairman of the Tata Trusts (comprising Sir Ratan Tata Trust and Allied Trusts, and the Sir Dorabji Tata Trust and Allied Trusts). Under his guidance and leadership, the Trusts have metamorphosed from being reactive charities to India s premier philanthropic foundations, striving to transform lives of millions of individuals, through meaningful partnerships with like-minded non-profit organizations, communities, governments (state and central), corporate and foreign funding organizations. 28. Mr. Tata was the Chairman of the company from 1991 till his retirement on December 28, 2012. During his tenure, the group s revenues grew manifold, totaling over 5100 billion in 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said Every operating system has hardware and software. In Tata group, software is ethics and values and hardware is the people. So whatever be the change, Tata principles cannot change. He retired after attaining 70 years by 2nd September 2017. 33. 5th Respondent namely Mr. Ajay Gopikisan Pirarnal joined the Board of the company as a Non-Executive Director in August, 2016. He leads Pirarnal Group, a conglomerate with a diversified business interest across pharmaceuticals, financial institution, information services, real estate and glass. He is also the Chairman of Shriram Capital, the holding company for financial services and insurance entities of Shriram Group. He has been associated with various organizations, namely as Chairman of Board of Governors of Indian Institute of Technology, Indore, Board Member of Pratam (largest NGO in primary education), a member of the Board of Deans Advisors at the Howard School in Business at Boston, Member of Central Board of State Bank of India and member of Alternative Investment Policy Advisory Committee constituted by SEBI, member of the National Council of Confederation of Indian Industry and the member of the Hon ble Prime Minist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... several important assignments both in Madhya Pradesh and at the Centre during his 37-year career, At the Centre, the positions he held included Director, Department of Culture; Joint Secretary and Financial Adviser in the Ministry of Health; Additional Secretary and Financial Adviser in the Ministry of Chemicals and Fertilisers; and Additional Secretary in the Ministry of Information and Broadcasting. He became Chief Secretary of the Madhya Pradesh government in October 2004 and served there until January 2006. Thereafter, he served as Secretary to the Government of India in the Department of AYUSH and later in the Department of Road Transport and Highways, before becoming Defence Secretary in August 2007, He served as a Member of the Union Public Service Commission until April 2013. 38. 10th Respondent namely, Ms. Farida Dara Khambata is a director on the board of Tata Sons. 39. 11th Respondent namely, Mr. Cyrus Pallonjl Mistryraged 48, was made the Chairman of the company in December 2012 after its previous Chairman, Ratan Tata, formally retired, He was the sixth chairman of the group and the only the second chairman who did not carry the Tata name, after Nowroji Saklatwal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Development Banks in Ghana and Nigeria to assist and advise them on their organization and methods of project appraisal and project financing and in 1965 through the World Bank, to assist development banks in Africa. He also serves as a Member and Trustee of several trusts such as the Sir Ratan Tata Trust, Bai Hirabai J, N, Tata Navsari Charitable Institution, Mavajbai Ratan Tata Trust, J. R. D. Tata Trust, R. D. Tata Trust, Sir Dorabji Tata Trust and the Sarvajanik Seva Trust. 43. 15th Respondent namely, J.N. Tata: Trustee of Sir Ratan Tata Trust. 44. 16th Respondent namely, Mr. K.B. Dadiseth, aged 73, Mr. Dadiseth serves as a Trustee of the Ratan Tata Trust and also serves as an independent director on the boards of Britannia Industries Limited, Piramal Healthcare Limited, Siemens Limited, The Indian Hotels Company Limited and Godrej Properties Limited. He is also on the boards of ICICI Prudential Life Insurance, ICICI Prudential Asset Management Trust and Prudential Pic, UK. 45. 17th Respondent namely, Mr. R.K. Krishnakumar, also known as KK, serves as a Senior Member of Tata Administrative Service where he joined in 1963 having received a Master s degree from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee of Sir Dorabji Tata Trust. 51. 23rd Respondent namely, Mr. F.N. Subedar, Chief Operating Officer Company Secretary of Tata Sons Ltd. 52. Mr. Bharat Vasani was Generaf Counsel of Tata Group; he worked as one of the directors of AirAsia India Ltd. (Tata Group Company) as well. His name crops up many a times in relation to Air Asia issue. 53. Mr. Mehli Mistry: Mehlirs and Cyrus mothers are sisters and Mehii s and Cyrus fathers were first cousins. M. Pallonji Co Pvt Ltd. (MPCPL) and other companies are run by Mr. Mehli Mistry. 54. Lord Sushanta Kumar Bhattacharyya is a British-Indian Engineer, educator and government advisor. In 1980, he became Professor of Manufacturing Systems at the University of Warwick and founded the Warwick Manufacturing Group. In 2004, he was made a life peer and became a member of the House of Lords. 55. Mr. Sivasankaran is the owner of Sterling Infotech Limited and other group companies of Siva Group. 56. The Petitioners main grievance is Articles of Association, bleeding of Corus acquisition and overpriced take over, Doomed Mano car project, R2 s relationship with Siva, DoCoMo Arbitration, unjust investment of Mr. Tata at the cost o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrangement, Trusts Nominated Directors started overruling the entire Board of Directors. The Petitioners submit there has been another restriction under Article 86 saying so long as the Tata trusts collectively hold at least 40% of the paid up capital of the company, no quorum shall be constituted in the General meeting of the company unless one authorized representative jointly nominated by Tata Trusts present in such meeting. The petitioners say, as if it is not enough, another restriction has been imposed with a clause saying, so long as Tata Trusts hold aggregate of 40% of paid up capital, Tata Trusts shall have the right to nominate l/3rd of the prevailing member of directors on the Board. In Article 118, it has been provided that so long as Tata Trusts collectively hold at least 40% of the paid up equity, the selection committee shall be constituted to recommend a person as Chairman of the Board of the company and such person would be appointed as Chairman by the Board. The process that is followed for the selection shall be repeated when removal of such chairman is contemplated by the board. Article 121 provides that unless affirmative vote of majority of directors appointed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstitution of the Selection Committee and the quorum for meetings for the selection. According to the Petitioners, the same Article 118 reiterates that the procedure folfowed for section and appointment of chairman shall be followed even for removal of the incumbent Chairman as well. 61. Though these Articles of Association are meant for to exercise judicially and in the interest of all the shareholders, by seeing the recent conduct of especially Mr. Tata, Trustees of Tata Trusts or its nominee directors, of late, the petitioners submit, they realized that the answering respondents started acting as per Mr. Tata s bidding, the example they say is, in one board meeting of the company dated 30.06.2016, the two nominee directors of the company i.e. Mr. Vijay Singh (R9) and Mr. Nitin Nohria (R7) left the meeting for approximately one hour, keeping other members waiting, to seek instructions from Mr. Tata on the issues being in discussion at the meeting. The Trustees by using right under Article 121-A, started dictating terms in respect to other individual Tata companies such as Air Asia India because Mr. Tata has special interest and keenness for the aviation sector, these two Mr. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tinued to do badly. When bleeding in Tata Steel UK increasing, in the beginning of 2016, Mr. Cyrus being the Chairman of The company initiated discussion with UK government, the Pension Trustees, the Pension Regulators and the Labor Unions to restructure the operations of the Tata Steel UK by holding discussion with ThyssenKrupp (Thyssen) to merge the whole of Tata Steel Europe into Thyssen, Mr. Tata was against this decision of restructuring, because Mr. Cyrus trying to merge this Tata Steel Europe into Thyssen did not go well to Mr. Tata, it has become one of the additional reasons for the unceremonious removal of Mr. Cyrus as Chairman of The company. 65. Doomed Nano Car Project : In the year 2007-08, Mr. Tata as chairman of The company made a public promise that Tata motors would produce a car costing ₹ 1 Lakh or less, in pursuance thereof, land was acquired in the state of West Bengal, when it failed to set up project there, it was moved to state of Gujarat with a capacity to manufacture 2,50,000 cars per year, but there also having Tata Motors failed to penetrate Nano into the market, now the demand for Nano cars have come down to 3,000 cars per year, but the car cos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the relationship with Tata, it is self-evident to say that Mr. Tata provided special treatment to Mr. Siva. 68. Sometime in November, 2008, NTT DoCoMo, a Japanese telecom company invested 26% in the equity of TTSL comprising primary equity to the extent of 20% and secondary purchase of 6% by way of an offer, taking it as an advantage, Siva caused Sterling (Siva company) to sell 20.74 million shares to DoCoMo at the rate of ₹ 117.81 per share (i.e. a profit of more than ₹ 100 per share) thereby amassing a huge profit to the tune of almost ₹ 209crores in less than three years. Indeed, this fact has been admitted by Siva in the aide memoire to his letter dated 3rC October, 2013 addressed to Mr. Cyrus. This sale by Sterling of 20.74 million shares under the secondary purchase was pursuant to an Agreement with the company that Sterling would, inter alia, proportionately participate in making good any indemnities being provided by the company and/or TTSL to DoCoMo or any losses arising out of the put option granted to DoCoMo. This understanding was recorded in the letter dated 2rd December, 2008 addressed by the company to Sterling as also by way of an Inter-se Ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s have been paid to Siva s companies by TTSL and its subsidiaries under various contracts purportedly for procuring services and vendor management for TTSL and its subsidiaries. 71. Unjust Enrichment at the cost of the company: Colaba Tenancy Flat - The allegation is that though Mr. Tata, who resided in the flat since 1968, had no ownership rights over the said fiat, he sold away tenancy rights of the residential apartment in a building called Baktawar at Colaba for ₹ 3crores in the year 2000 to a company called M. Pallonji Co. Pvt. Ltd. (MPCPL), owned by Mr. Mehli, a close friend and confidante of Mr. Tata and a distant relative of Mr. Cyrus, because this property was initially belonging to erstwhile Tata company namely Forbes Forbes Campbell Co. {FFC). As to this property, there was a letter from FFC providing occupancy rights to Mr. Tata with an understanding between FFC and Father of Mr. Tata i.e. Naval Tata that should Mr. Tata decides to vacate the said flat, the same would revert to FFC so that it could be given to another employee of FFC. Of course, this company is not in existence today but Mr. Tata has no right to create thirty party rights in favor of Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the age-old image of the Tata Group in addition to breaching the trust of not only the Shareholders of the Tata Group but also its employees. The Petitioners crave leave to refer to and rely upon the forensic report of Deioitte when produced. The Petitioners allege that Mr. Venkatararnan has been trying to scuttle the probe in respect to these transactions for him being the potential beneficiary of the pay-out of ₹ 22crores. The Petitioners further submit that the summary of the forensic report of Deioitte was indeed scheduled to be placed before the Board of the company in its meeting held on 24.10.2016, however it was placed before the board only in the meeting held in November 2016, Despite there is a report concluding that Air Asia had financed the global terrorist Mr. Hamid Raza Malakotipour, the board of the company further funding Air Asia evidencing that current board of the company, under the influence of Mr. Tata, is incapable of taking right decisions. It has also been said that Mr. Cyrus was also forced to accept another fait accompli in the form of joint venture between the company and Singapore Airlines Ltd. for setting up another airline. Because it would not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing for the removal of Mr. Cyrus, regarding other directors, Mr. Amit Ranbir Chandra, Mr. Ajay Gopal Piramal and Mr. Venu Srinivasan have recently been inducted at the instance of Mr. Tata. These respondents had attended just one board meeting prior to 24.10.2016, while the other three directors are trustee nominee directors doing the bidding of Tata Trustees, who nominated them as nominee directors on the Trust behalf. These nominee directors on the board, instead of discharging their fiduciary duty towards the company and its stakeholders, every time keep projecting the interest of the Trusts and carrying the commands of its Trustee Chairman Mr. Tata and Mr. Soonawala despite knowing that by doing so, they have been flouting the provisions of the Companies Act 2013, In the said meeting, when Mr. Cyrus asked on what basis he was removed, he was informed that he was removed basing on a legal opinion, but no such opinion was placed before the Board, which clearly establishes the nexus between the Trustees of Tata Trusts and the board of directors. In addition to illegal removal of Mr. Cyrus as the executive chairman, so as to facilitate Mr. Tata to come as executive chairman, in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Mr. Tata succumbing to the pressure of Mr. Tata. 75. Continued Break-down; In the pressure tactics, the independent director, Mr. Nusli Wadia did not budge to Mr. Tata, therefore he was removed as director of Tata Steel Ltd,, Tata Chemicals Ltd. and Tata Motors Ltd. Being Mr. Tata mind obliterated with the idea of decimating Mr. Cyrus to zero in group companies as well, he had gone to an extent of saying that if Mr. Cyrus was permitted to continue as chairman of any of the group companies, then the company would withdraw the corporate guarantees issued to the group companies. 76. Breach of Insider Trading Regulations: In spite of stringent SEBI (Prohibition of Insider Trading) Regulations 2015 in respect to unpublished price sensitive information, the trustees used to call for unpublished price sensitive information from listed Tata operative companies ignoring the regulations aforementioned. This concern was in fact raised by Mr. Nusli Wadia when Mr. Kumar Bhattacharya made statement before the Parliament in U.K. without having any role or responsibility in Tata Steel Ltd. When Mr. Cyrus tried to eradicate all this kind of mess by proposing Tata operating companies to ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supersession of the existing Board of Directors until new Board is constituted; in the alternative, appointment of a retired Supreme Court Judge as the non executive Chairman of the Board of Directors and such number of new independent directors of professional competence, reputation and standing to the Board of Directors of the company, such that these newly appointed directors constitute majority on the Board; restraining Mr. Tata to continue as Interim Chairman dealing with affairs of the company, restraining Mr. N.A. Soonawala from interfering in the affairs of the company, directing the company not to issue any securities which results in dilution of the present paid-up equity capital held by the Petitioners, directing the company and other Respondents [except Rll) not to remove Mr. Cyrus as director of the company, not to make any changes to the Articles of the company without leave of this Tribunal, direction to investigate the role of the Trustees of the Tata Trusts in the operations of the company and Tata Group companies as also the functioning of the Board of Directors of the company and Tata Group companies, and prohibiting the Trustees from interfering in the affair ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, which is offending and/or repugnant, should be deleted: ...Any committee empowered to decide on matters which otherwise the Board is authorized to decide shall have as its member at least one director appointed pursuant to Article 104B. The Provisions relating to quorum and the manner in which matters will be decided contained in Articles 115 and 121 respectively shall apply mutatis mutandis to the proceedings of the committee. from the Articles of Association of the company and substitute these articles with such articles as the nature and circumstances of this case may require; for a direction to the Respondents (excluding Respondent Nos. 4, 10 11) to bring back into the company, the funds used for acquiring shares of Tata Motors; for restraining the company from initiating any new line of business or acquiring any new business in existing lines without leave of this Tribunal and that too only after the matter is discussed and decided upon by the Board of Directors of the company without applying Article 121 of the Articles of Association; restraining the trustees of the Trusts from interfering in the affairs of the company and in the various companies that form part of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Directors, appointment of an Administrator, (B) appointment of a Retired Supreme Court Judge as the Non-Executive Chairman of the Board of Directors, (C) For restraining the interim Chairman (Mr. Tata) from attending any of the Board Meetings of the company or sub-committee thereof and/or interfering in the affairs of the company. 82. The reliefs not pressed for being infructuous are (F) for direction to the company and other answering Respondents not to remove Mr. Cyrus as Director from the Board of the company, (Q) for restraining the existing Selection Committee from acting any further and/or discharging any functions and a new Selection Committee be appointed, (R) for direction that no candidate selected by the Selection Committee constituted pursuant to Article 118 of the Articles of Association of the company to be appointed without leave of this Tribunal. 83. The reliefs in this case have been decided in pursuant to the memo filed on behalf of the Petitioners by the Counsel appearing on behalf of the Petitioners. 84. Mr. Cyrus, who is sailing along with the Petitioners, since having filed reply to the petition, I believe it is contextual to place his pleadings alon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Mr. Cyrus proposed in respect to communication between listed Tata group companies, the company, the Trusts in particular, Mr. Tata and Mr. Soonawala. 86. He submits that essence of this proceeding is not about seeking retribution to his being illegally removed from the position of executive chairman but to ensure that the company does the right things for the right reasons with a conscious awareness that every step the company takes has serious consequences for a wide range section of the society within and outside the country. 87. He says, he joined as executive chairman believing that interference from Mr. Tata would be with a large heart, to fulfill the same he says he tried his level best to accommodate the requests of Mr. Tata considering his longstanding past tenure as chairman of the company. Initially it went well but over a period of time; Mr. Tata started getting offended if at all any information mistakenly missed out from his sight. To which, he has given an example saying Mr. Tata was keen that Tata Motors entered into discussion with a party engaged in water injection technology with whom Mr. Tata felt Tata Motors must have a tie-up. When the terms and condi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being minuted and recorded at a meeting of the company held on 30,09,2013, where in, Mr. Cyrus further apprised him of the need to handle the various issues in the Tata Group and also the need to prepare strategic framework for the entire group. 90. Mr. Cyrus says that Mr. Tata without even being a director on the Board of Directors of the company, he wanted information to be shared with him and Mr. Soonawala, on other hand Mr. Soonawala had the habit of writing letters to him, meticulously taking care to suggest almost every time that he was doing so in his personal capacity and almost always discouraging a reply, he says, both of them used to allege breach of Articles every time they wished to have their way. 91. Against this backdrop, Mr. Cyrus has again repeated that Article 1046 and Article 121 have given unfettered right to the Trustee nominee director to veto any decision that the entire Board of Directors of the company may want to take, because these Articles, every time whenever the company to take some actions, they need to placate the ego of Mr. Tata and Mr. Soonawala by exchange of letters. So to avoid this misunderstanding, there ought to be a clear framework de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow renewable energy would be a new focus area for the company and thereafter a note was circulated on 31.05.2016 to the Board of Directors of the company sending a copy to Mr. Tata about the proposal to acquire renewable energy of the Welspun group, Mr. Tata and Mr. Soonawala suggested that the transaction must be structured differently, he says that it is also pertinent to mention that Mr. Vijay Singh (R9), Trustee nominee director already appreciated the move initiated by Mr. Cyrus, in respect to this issue, while BM dated 30.6,2016 was in progress, Mr. Nitin Nohria (R7) and Mr. Vijay Singh (R9J repeatedly left the BM in the midcourse to take instructions from Mr. Tata on what stand to take in the transaction, this, Mr. Cyrus feels, is abundantly clear that Mr. Tata was omnipresent and controlling the conduct of the Trusts nominee directors, who in turn had a veto on every single decision of the company - it is nothing but abusing the Articles of Association. It is evident even in the minutes of meeting held on 30.6.20l6that they accorded their support after discussing the proposal with Mr. Tata and Mr. Soonawala and those minutes were approved by all the directors including the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (m) Decisions relation to the Piaggio Aero joint venture; (n) Restructuring of Tata Steel s interests in the United Kingdom; and (o) Decisions relating to the Tata Group s investment in Tata Sky Ltd,, a direct-to-home broadcasting company and potential exit including a listing, 95. Mr. Cyrus says that he annexed relevant documents as Exhibit-F(Colly), demonstrating the scale and depth of the involvement and interference of Mr. Tata in the operations of the company. He also says that Mr. Tata, even after retirement, directly engaged with employees and executives of various Tata companies writing to the project team involved in the negotiation to set up Vistara, the airline company i.e. letter dated 04.10.2013. He accuses that Mr. Ranendra Singh, independent director (R8) and Mr. Vijay Singh, Trust nominee director, would regularly demand to meet CEO and Sr. management of various Tata group companies so as to report back on their interactions to Mr. Tata. On which, Mr. Cyrus had detailed various averments saying that Mr. Tata and Mr. Soonawala demanding unpublished price sensitive information of the group companies to them is in violation of Securities Regulations, for w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the petitioners to raise the issues of alleged oppression against the petitioners and alleged mismanagement in the company, but in reality, it is nothing but a ruse by Mr. Cyrus to publicly express his displeasure at the loss of his office as executive chairman of the company and also to besmirch the reputation of the Tata group. The business decisions of the operating companies of the Tata group which are now sought to be challenged by the petitioners represent past and concluded transactions, which in any event cannot constitute oppression against the shareholders of the company. 99. This company was founded by Jamsetji N. Tata in the year 1868, now Tata group operates in more than 100 countries, across 6 continents, collectively employing over 6,60,000 people with a mission to improve the quality of life of the communities we serve globally, through long term stakeholder value creation based on leadership with the task with the revenue of USD 103.51billion. In this company, 65.3% of the issued ordinary share capital is held by Tata trusts, which supports education, health, livelihood generation, art and culture. The Petitioners for the first time acquired shares of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resolution of the shareholders of the company on April 9, 2014, pursuant to which, the affirmative vote could be exercised by majority of directors appointed pursuant to Article 104B present at the meeting . 103. It is pertinent to note that Mr. Pallonji Shapoorji Mistry was present at the AGM held in September 2000 and voted in favor of the adoption of the new version of the Articles of Association which included the Articles 104B and 121, along with Articles 36 and 118 that the petitioners asking to be struck off in their entirety .It is also important to note so far these affirmative voting rights have never been exercised by Tata trusts. Until Mr. Tata retirement as director and chairman of the company, the Trusts and the company had common chairman. For having new chairman on 18th December 2012, Mr. Tata mentioned that in future with the chairman of the Trust and the company not likely to be the same individual, it would be desirable to enter into an agreement between the major Trusts and the company to clarify the involvement of Tata Trusts envisaged under Article 121 of the Articles of Association of the company . He further referred to an illustrative list of items l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nies and Tata Group companies. 106. In addition to the above issues, there was an increasing diversion in the functioning of the company and the operating companies, the reason is, Mr. Cyrus in a systematic manner reduced the representation of the company on the Boards of other major Tata Companies. Over a period of time, several directors of the company on the Board of Tata group Companies retired, Exercising the executive power, Mr. Cyrus did not appoint any directors of the company on the Boards of other Tata Companies, as was practice in the past. This systemic dilution weakened the bind through which Tata values, ethos, governance principles, group strategies were to be implemented across the Tata Group Companies, In most of the cases, Mr. Cyrus ensured that he was the only director who was common to the company and Tata group companies, effectively making himself the only channel between the company and Tata Group Company. Mr. Cyrus actions deliberately weakening the Tata group structure which was inimical to the company interest, therefore, the mismanagement, if any, it has been perpetrated by Mr. Cyrus not by the Respondents. Despite all these, Mr. Tata personally adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground, in the Board meeting held on 29th and 30th June, 2016, Dr. Nohria and Mr. Vijay Singh being Trusts Nominee Directors, repeatedly reiterated the view that Welspun Acquisition should have been deliberated at the Board of Directors the company at a much earlier stage (even the funding and rating implications) as opposed to being presented as fait accompli, nonetheless, the Trust Mominee Directors finally approved the financing structure of Welspun Acquisition given that definitive agreements had already been executed and deal had been announced in the public domain. 109. The company submits that having seen many issues like Welspun Acquisition, finally on 24,10.2016 Board of Directors of the company in their collective judgment, replaced Mr. Cyrus as Executive Chairman of the company and Mr. Tata was appointed as Interim Executive Chairman of the company, before this step, Mr. Tata and Dr. Nohria personally spoke to Mr. Cyrus offering him to resign voluntarily but having Mr. Cyrus refused to do so he was removed as Executive Chairman of the company. Immediately on the next day, Mr. Cyrus addressed a vitriolic email to the directors of the company making unsubstantiated and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith Mr. Mehli. The company submits that all the above issues raked up by the Petitioners were all hit by delay and laches for many of them or almost all of them were issues in between 1993 and 2008, therefore those issues cannot be issues before this Bench solely because Mr. Cyrus was removed as Executive Chairman. The company submits that this Petition is sponsored by Mr. Cyrus to pursue personal vendetta against Mr. Tata and Mr. Soonawala to adopt a scorched earth policy so as to tarnish the reputation of Tata Group on being removed as Chairman of the board of directors of the company and as non executive chairman of several Tata group companies. 112. The company submits that the allegations in the petition do not constitute the affairs of the company, which in fact is a petition sought to impugn the affairs of public charitable trusts which is not permissible under law, of course, the allegation of violation of Insider Trading Regulation and FEMA Regulations is not triable by this Bench. 113. The company submits that it is weird to hear that Tata Trusts acting detrimental to the interest of the company, if such is the case, Trusts are the first persons to suffer because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of TCS. 115. As to the allegation of interference by Mr. Soonawala, it has been said that he held various positions on financial side in the company including that of Finance Director from 1988-89 to 2000, thereafter for 11 years as Vice Chairman and Finance Advisor of the company, which he dutifully discharged till 2010, this was appreciated on 15,06,2010 stating that he relentlessly served the institution for about 44 years, therefore it was unanimously resolved that Mr. Soonawala would be available as an advisor to the company as such Mr. Cyrus himself and other persons from the company approached Mr. Soonawala on various occasions seeking his guidance and advice, therefore, the company says, it is wondering to hear Mr. Soonawala interfering with the affairs of the company. It says that the directors of the company except Mr. Cyrus have discharged their duties with absolute virtuosity and utmost integrity and it is beyond doubt to say that they have adhered to the highest standard of professionalism. 116. It says it is a matter of record that Trust nominee directors have been appointed as per Articles of Association of the company, as to Mr. Tata, in the capacity as Cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht such relief from this Bench in the first place and secondly, Mr. Cyrus himself has not filed any proceeding challenging the alleged illegal removal. It is also settled proposition of law that directorial dispute cannot form the subject matter of oppression/mismanagement action u/s 241 of the Act. For the Petitioners have strategically not pressed for such reliefs, the Petitioners can disguise this petition as an action in public interest and prevent the public at large from realizing that this action is nothing more than an attempt to settle Mr. Cyrus s personal score with Tata Group for his removal as Chairman. 118. The company submits that the Petitioners are attempting to draw false conclusions based on the movement of the share price of Tata Steel. It has filed a graph ( Exhibit R-l/22 ) depicting the movement of the share price of Tata Steel and some of its listed peers in the steel industry to show the correlation in the movement of the share prices of these companies, the share prices of companies in the steel industry tend to move together in a similar manner and the movement of share prices is influenced by many variables and it is misleading for the Petitioners to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Exhibit R-1/24 (Colly) It is also relevant to mention that when Mr. Cyrus took over as Chairman of Tata Steel, he did not raise any concerns to the Board of Tata Steel regarding the decision to acquire Corus, in fact, in the Chairman s Statement attached to the annual report for the financial year 2012-13, Mr. Cyrus stated: Finally, J would like to thank our Chairman Emeritus Mr. Ratan Tata for his visionary leadership and extraordinary stewardship with which he led the Company through many challenges during his tenure as Chairman of Tata Steel , Further, in the same statement, Mr. Cyrus recognized that the challenge in Tata Steel s European and UK operations had been on account of 2008 financial crisis. He stated that In our key overseas markets of Europe and UK where the Company has significant manufacturing presence, the economic downturn has significantly affected steel demand, which is now almost 30% lower than pre-2008 financial crisis level. (Exhibit R-1/25). It has even filed the statement of former Managing Director of Tata Steel Mr. B. Muthuraman dated 23 November, 2016 that Corus acquisition is well thought out after lot of deliberation to grow the company through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the last year... There actions should improve the competitiveness of the European operations even though the market is expected to remain challenging. 119. Some instances of positive developments in the Tata Steel Europe business which the Petitioners are glossing over are recorded in Annual Reports of Tata Steel for the last five financial years. To support their defense, the company highlighted below to demonstrate the lopsided view of Tata Steel s European operations that the Petitioners are presenting to mislead this Hon ble Tribunal: a. The Chairman s Statement for the Financial Year 2013-14 states that record production performances achieved by various plants of Tata Steel Europe (including plants in the UK which the Petitioners have alleged did not perform as expected) in that financial year. Attention is drawn to pages 52 and 53 of Tata Steel s Annual Report for the Financial Year 2013-14 which is annexed hereto and marked as Exhibit R-1/29. b. Tata Steel Europe comprises both the UK operations as well as the operations in the Netherlands. The Petitioners have acknowledged the fact that the plants in the Netherlands have been fairly successful. This fact was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d through a highly competitive bidding process, and thus represented a fair value. In any event the allegations made by the Petitioners relating to the Corus acquisition pertain to past and concluded transactions by Tata Steel, These do not constitute affairs of the company and cannot constitute acts of oppression or mismanagement. 122. As to allegations in respect to Mano car project, the company says, launch of Nano project was the decision of the entire board, whereby it could not be imputed that it was the decision of a particular individual i.e. Mr. Tata. It was approved by the board of directors of Tata Motors after carefully analyzing the commercial prospect of the project, of course, Mr. Tata may very well have conceived the idea and perhaps promoted its launch, that by itself cannot mean the decision to launch Nano was the sole decision of Mr. Tata. On the allegation that serious investment in land and machinery are being tied down on account of Nano project, by looking at the filing made by Tata Motors with BSE on 4.11.2016, it is evident that major part of the investment in the factory is presently being used for the production of Tata Tiago car, In respect to dividen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ta has some shares in Jayem Auto and supply of Nano Gliders, the company said it is totally baseless for the reason that as soon as Mr. Tata acquired some shares in Jeyem Auto, he immediately wrote letters on 02.02.2016 and 09,02.2016 to Mr. Cyrus disclosing its interest moreover, Tata Motors has not concluded any arrangement or contract with Jayem for supply of Nano gliders, not even an MoU was executed, no monetary consideration was exchanged except for certain testing and trial expenses. In view of the same, the company submits that commercial decisions taken by distinguished board of directors cannot be subjected to judicial scrutiny under the cover of oppression and mismanagement, moreover, it is a past and concluded transaction, which will not constitute the affairs of the company much less under the head of oppression and mismanagement. 123. In regard to an imputation that Mr. Tata made undue favors to Mr. Siva, the company says, the allegation that the price of shares issued to Sterling was highly discounted or at a throwaway price is without merit, because TTSL approved the decision to raise funds within the share price band of ₹ 17 to ₹ 40.The decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006, but this was provided to protect against Standard Chartered Bank selling TTSL shares pledged by Siva group to an undesirable third party, this undertaking required the security trustee to mandatorily serve notice on the company before invoking the pledge on TTSL shares and selling them to a third party, upon receipt of such notice the company was obligated to acquire TTSL shares for the initial subscription price (Rs. 17) plus an additional amount of 6% p.a. on non-compounded basis, in fact this undertaking is to ensure that TTSL shares not be sold to a third party without the company being able to purchase them, This arrangement is clear that the company did not undertake to buy TTSL shares for a price which would settle Sterling s entire liability to Standard Chartered Bank; therefore, no guarantee has been given by the company for the loan taken from Standard Chartered Bank, Given the historical growth in the value of the shares of TTSL at a relevant time, it is evident that the price of ₹ 17 with a growth of 6% p.a. would have permitted the company to acquire TTSL shares at steep discount to the actual value of the shares, this commercial undertaking is similar to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lective basis to impute mala fides to Mr. Tata. 126. In respect to DoCoMo arbitration, the company says that the petitioners have no basis to allege that the legal notice from Siva was backdated, this bald assertion has been made in order to paint a picture Siva having some access to the decision taken at the board of directors of the company, it is a matter of record that on 15.09.2016 board meeting, indeed Dr. Nohria (Trust nominee director) proposed to initiate legal action against Siva Industries and Holding Ltd, making it further clear that the company so far has not waived any of its rights and remedies under law to proceed against Siva group, likewise even to the legal notice dated 15.9.2016 issued by Siva group making baseless claim on the company, it instructed its lawyer to send a strong rebuttal to the said legal notice on the 16.11.2016. 127. As to the allegation stating that the company paid ₹ 600crores to Siva group in various contracts, the company submits that for Siva group, part of promoters of Aircel Ltd. a leading telecommunications had the expertise in program management and vendor negotiations, which are crucial for rapid roll out of telecom infras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h of Mr. Mehli through his companies could not have been attributed as an undue advantage given to Mr. Mehli either by the company or by Mr. Tata, It has been vividly described in the Company Petition as to how 1993 Dredging contract, 2004 Barging contract and 2006 Sea Freight contract were given to Mehli. It is fact of the matter that Mr. Cyrus was Chairman when Mr. Mehli Group Company having contracts with the Tata Power, therefore Mr. Mehli doing works of Tata Power could not be attributed as a favor done by Mr. Tata to Mr. Mehli that apart, Tata Power is not a party to this proceeding. 130. Aviation Industry Misadventures : The attribution made by the petitioners in respect to Air Asia issue, the company submits that the petitioners submitted that joint venture agreement with Air Asia was thrown as fait accompli on Mr. Cyrus initially when he took the reins of the company as its Chairman. The fact is initially the company agreed to invest in Air Asia limited to 30% of USD 30 million, but this limit was subsequently enhanced by the board of directors of the company during Mr. Cyrus s tenure as executive Chairman. Now it has been shown as R2 has passion for airways that s why ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lt can be found against either the directors of Air Asia or Mr. Venkataraman, much less against Mr. Tata. As far as the argument on losses in Airways business, the company says, it is a well-known fact that aviation business is a long gestation business wherein losses have to be born in the initial years until certain level of market penetration is achieved, thereby, merely the industry reeling under losses cannot always be the decisive factor for the fate of a business venture. 131. As to the pleading of the Petitioners that the Chairman of the company should not have been removed without being selection committee constituted as envisaged under Article 118 for it has been stated in the very same Article that the process for removal of incumbent chairman must be as that of the process applied for appointment of the chairman, the company submits, this pleading is fallacious because selection committee means for selection of chairman, it would be absurd to interpret that clause of constitution of the selection committee In the Article is equally applicable for the removal of the Chairman, The company says that this applicability of process for removal is indicative of the fact tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rring a right to a director would become an impediment to the Board in including an item in the agenda, such right made available to a director cannot be interpreted to preclude majority of the board of directors from deciding to take up additional matters during a board meeting in accordance with SS-I. It is submitted that there was no legal requirement for the board of directors to provide reasons for the removal of Mr. Cyrus as Chairman, the reasons for the removal of Mr. Cyrus as chairman is Trust deficit was growing between the Trusts of the largest shareholders of the company and Mr. Cyrus, and also loss of confidence of the board of directors of the company in Mr. Cyrus continuing as Chairman. By Mr. Cyrus being removed as chairman, since Mr. Cyrus and the petitioners are unable to come to terms with the fact that he failed to meet the expectations and win the trust of the board of directors, they filed this Company Petition as if it is a ground covered u/s 241 of Companies Act, 2013. The relaxation of the retirement policy at the board level cannot be considered to be a ground for filing this petition stating relaxing retirement age is oppressive against the petitioners, be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the affairs of the group companies turning their blind eye to the fact that Mr. Cyrus himself on numerous occasions sought the advice of Mr. Tata and Mr. Soonawala for various business and strategic decisions. It has been rightly done so, inasmuch as Mr. Tata has been continuing as Chairman Emeritus to the company, and Mr. Soonawala being Financial Advisor, despite having hung their boots, as per the Articles of the company, in fact for every strategic decision in group companies, the company has to take a call over the same. Most of the times when presentations are made to Mr. Tata, it has been done right in the presence of Mr. Cyrus, therefore, now it is not open to these petitioners to complain about breach of insider trading regulations. Indeed, Mr. Cyrus himself encouraged information being shared by operating companies with the board of directors of the company. The company and the Trustees have always interacted with and dealt with information in relation to the listed Tata operative companies strictly in compliance with SEBI Regulations. The contribution of Mr. Tata and Mr. Soonawala for decades together has led the Tata group to the height it has reached today, and they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... averments of para 108 of the petition, the company says that Mr. Cyrus did not take any steps to introduce any reforms as alleged, but the contents of letter dated 03.10,2016 are being misconstrued for the petitioners convenience suppressing the letter dated 23.09.2016 which is written by Mr. Cyrus to Mr. Tata indicating the role for the Trusts and the nominee directors of the Trusts in the management of the affairs of the company and the proposed governance plan for the same. 137. In respect to allegation about Mr. Cyrus resignation from Tata operating companies, the company has vividly explained as to what happened before his resignation from those respective companies but that those issues not being points at the time of hearing, those explanations have not been depicted as averments of this reply. The company has point by point assailed the reliefs sought by the petitioners saying as to how those reliefs could not be granted by this Bench. The company has concluded its reply saying that the allegations of the petitioners are bereft of any merit, henceforth sought for the dismissal of this Company Petition. Reply of R2 (Mr. Tata) to the Petitioners 138. In reply of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, for providing credit to the underserved and unserved wherein founders are committed to plough the gains from this venture into philanthropy. This is not to say that he has not offered his advice whenever sought either by Mr. Cyrus or others on the board, he always used his good relations and offices with various people to help the new management forge new ties both nationally and internationally. While he was willing to offer any and all assistance he was asked to, he sensed that there was a growing disconnect between Mr. Cyrus, other members of the Board of the company and Tata group and that Mr. Cyrus was not doing enough to steer the company and Tata group forward in line with strategy plan he had presented during the selection process. He says he was informed that there was little or no intention on the part of Mr. Cyrus to encourage active discussion on the board on important business decision and a strategy to steer the company forward. In fact, the financial performance of the company and the operating companies constituting Tata Group witnessed a decline during Mr. Cyrus tenure, the dividend received by the company from operating companies other than TCS had fallen sig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from a person who was entrusted with duty for leading Tata Group. It is regrettable that it is only on his removal that allegations are being made about business decisions that Mr. Cyrus himself was party to for over a decade in different capacities. 143. Mr. Tata says that the petition says that Mr. Cyrus became aware of the issues confronting Tata Group, a so called inheritance from Mr. Tata, little was done on Mr. Cyrus part to alleviate the group from such circumstances despite having completed for more than five years i.e. almost the entire tenure, to hold his inheritance liable for the group performance during his time. It is the fact that Tata Group companies were historically supported by the company in multiple ways by providing funds, strategic advice, simultaneously exercising control over the operating companies through its shareholding and commonality of the board and senior management, this cohesion seamlessly continued for many decades by which this operating companies have individually grown and prospered but whereas after the advent of Mr. Cyrus as Chairman, he has gradually over the course of his tenure concentrated power and authority in his own hands as Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... air market valuation by a registered valuer and these transactions have passed scrutiny of provisions of section 269UL of Income Tax Act and an Income certificate u/s 230(a), but unfortunately, despite everything was done lawfully on fair market valuation with permissions from various authorities after due disclosure, these petitioners and Mr. Cyrus dug out this as an issue holding out Mr. Tata made out illicit gain out of it. 145. Mr. Tata says that these petitioners have smeared accusations against Mr. Tata stating that Mr. Mehli received undue benefit at the cost of Tata Group companies only on account of his close association with Mr. Tata. The main allegation is Tata Power awarded several contracts to Mr. Mehli. Since it has been vividly denied in the reply of the company, instead of repeating the issues already covered revealing how much truth in this allegation is, it is necessary to mention that Mr. Cyrus was director on the board of directors of Tata Power from the year 1996 to 2006 and director again from 2011 and thereafter Chairman from 2012. So all these transactions should be within the knowledge of Mr. Cyrus, in fact they were, as to some transactions Mr. Cyrus hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... delay in production led to loss of market demand, which ultimately depreciated in the brand value of the product and further fall in demand for Nano. By the time production was commenced from Sanand, the market dynamic has changed in the year 2010 by advent of new alternatives emerging in the market. Mr. Tata specifically submits in respect to allegation implying that emotional reasons prevented Nano project from being shut down is incorrect, immature and strikingly naive. He says that although the manufacturing facility at Sanand was originally intended for production for Nano, nothing prevented the management and board of Tata Motors (at least from December 12 onwards) from utilizing these manufacturing capabilities for augmenting production of other cars by Tata Motors, such as the Bolt, Zest, Tiago, etc. This would also have ensured better utilization of investment made by Tata Motors in the land and machinery at the Sanand facility. Mr. Tata is neither on the board of the company nor is on Tata Motors, the decision in relation to Tata Nano entirely rest with Mr. Cyrus at least from December 2012, i.e., for four years. It is a long time for a company such as Tata Motors to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the decision to acquire Corus was the collective decision of Directors of Tata Steel Ltd. after having duly debated upon the structure for the investment, the revision of the bid price, the cause and benefits of the acquisition, there were eminent personalities on the board at the time this decision was taken, therefore, he says that it is not really understood as to why he would deliberately want his company to enter into or to continue with loss making projects and he further says that it is not even the case of the Petitioners that he has made some persona! gains at the cost of such decisions, As to the contention of the Petitioners saying that the Trusts have major stake in the company but whereas the Petitioners are direct and real stakeholders, therefore, they are suffering more on account of this deal, as against this allegation, Mr. Tata says since the Trusts are the majority shareholders of the company far exceeding that of the Petitioners, how could these people make such inconsiderate allegations degrading his lifelong contribution to the success story of Tata Group companies, moreover it is commercial decision taken at the behest of the unanimous Board of Tata Steel, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings so as to provide valuable assistance on any new business plans. Saying so, he elaborated in many paras as to how inputs were taken from him in dealing with various business transactions. He says it is unfortunate and ironical that calling him as sole proprietor , shadow director, super- board reigning over the company, apart from all these things, he says he being the Chairman of the Trust, it is his bounder duty to safeguard and protect the trust property i.e., shareholding in the company, in a situation like this, not only as a Chairman of Emeritus but also as Trustee of Trust having major shareholding in the company expressed his opinion to safeguard the interest of Tata Trusts and the interest of the company. 152. He has further clarified in respect to Welspun Energy issue, that issue was brought before the Board in June, 2016 by Tata Power Co. Ltd with a decision to acquire renewable energy assets of Welspun Energy Pvt. Ltd for around ₹ 9000crores, at that point of time, when two of the Nominee Directors of Tata Trust present at that meeting expressed their reservations regarding the manner in which a significant decision, having a bearing on Tata Power, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvolved in social sector for 15 years contributing both his time and money. He says he has the privilege of serving on the board of NGOs and now divides his time equally between the corporate world and the social sector. For he proudly considers Jamshedji Tata is one of the role models and follows his approach to giving nearly all his wealth he has been fortunate to create for the benefit of the less privilege in the society. He says he had long standing association with the Tata Group and was invited to join as the Trustee of Tata Trust starting in 2015 in addition to serving as one of the Trustees of Shri Ratan Tata Trust, his philanthropic endeavors also include active participation in India not for profit including his service as the trustee and board member of Akansha Foundation, IFRE (Ashoka University) and Give India. He says his Board commission and sitting fees, net of taxes received from the company are pledged to charity. 154. He was formally appointed on the Board of Directors of the company on 26.8.2016, which was proudly accepted by Mr. Cyrus saying his vastexperience could be of immense value to the company and will enrich the deliberations at the meetings of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... including Mr. Cyrus) voting in favor of his replacement, one abstaining and Mr. Cyrus not voting which itself makes it clear that Board arrived at a conclusive decision to reintegrate leadership of the company, Finally, he says that the decision taken on 24.10.2016 by the Board of Directors is in paramount interest of the company therefore there is no merit in the argument of the petitioners and Mr. Cyrus. He voted in the resolution and acted in the interest of the company at board meeting whereby this Petition against him is liable to be dismissed. 156. It is Mr. Ajay Gopaikishan Piramal, Leader of Piramal Group, a Conglomerate with diversified business interest across pharmaceuticals, financial services, information services, real estate and glass packaging apart from this, also the Chairman of Shriram Capital, associated with various esteemed organizations as a Chairman of Board of Government, the Indian Institute of Technology, Indore, the Board Member of Pratham, largest MGO in the space of primary education, a member of Board of Deans Advisors at the Haward Public School, in Boston, Member of Central Board of State Bank of India and member of (i) the alternative investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f conflict due to the gift given to HBS by Mr. Tata, he submits that Tata became a member of HBS Board of Deans Advisors in 2000, during his service on the Board of Deans Advisors, he was approached by Dean Jay Light to consider a gift to HBS to build a new executive building, he had no involvement whatsoever in the discussions. His predecessor Dean finalized this gift in March, 2010, before he even knew he was going to be appointed Dean. His appointment was announced on April, 2010 and his term began in July, 2010 whereas he only joined on the Board of the company on 6.9.2013 after Mr. Tata had retired from the Board. Mr. Nohria says that the Petitioners and Mr. Cyrus twisted this background as if he was involved in soliciting the aforesaid gift from Mr. Tata and thereby compromised in his role as Director of the company. This was denied by Mr. Nohria saying that there is no truth in this allegation. He says that he joined the Board of the company to give something back to his country by serving on the board of one of the important institution-Tata Group, He was proud of being nominee of Tata Trust, he says, because he always argued that a good business must create a value for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. Tata, consensus was arrived at in the said meeting to approve Welspun acquisition despite no formal approval was taken from the board of the company before the decision came from Tata Power to the Company Board. He says that it is one of the glaring examples to say that there was irreparable trust deficit between Mr. Cyrus and Tata Trust - the majority shareholders of the company, in spite of it, minutes came out with consensus. 159. As to allegation in acting with concert with Mr. Amit and Mr. Piramal, he says it is true that Mr. Amit is his brother-in-law and Mr. Piramal is friend and long term business associate, despite all of it, they have their business reputations and have attained their independence and integrity maintaining track record. Therefore, he takes strong exception to any insinuation that he acted in concert with any other board member maligning his integrity or their integrity. He says that he faithfully discharged his fiduciary duty and stand by the board decision to remove Mr. Cyrus as Executive Chairman therefore he says he exercised his vote for good and cogent reasons without any favor, in fact out of his experience he says, he became increasingly con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... some meetings to discuss some specific financial matters relating to the company and the operating companies just to show one example, Mr. Cyrus had asked the Company representatives of Tata Chemicals Ltd. to seek the views of Mr. Tata and himself, regarding divestment of divisions of Tata Chemicals, he filed a mail sent by Mr. Tata on 28.7,2016 greatly appreciating the clarifications he had given. He further clarifies it was Mr. Cyrus who would send him the copy of presentations on the matters to be discussed though he had never asked for those documents to be sent to him. For Mr. Cyrus being the Chairman of the company, he could not have declined the request come from Mr. Cyrus to attend meetings or to accept the presentation papers sent for this purpose without which he would unable to express any views. 162. He has given another example of the year 2016, when Mr. Cyrus wanted to seek Mr. Tata s views on strategic matters pertaining to Tata Tele Services Ltd (TTSL) and Tata Power, documents were sent for having meeting with Mr. Cyrus as well as Mr. Tata to express his personal views on the relevant topic, to establish the same, Mr. Soonawala placed relevant correspondence ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tata Group and presumably his experience in the relevant field. 164. He says he has held equity shares of only two listed companies, out of them; one is Tata Investment Corporation Ltd where he holds only 3000 shares therefore no question of his personal aggrandizement by use of such information. He says he has never attended a single Board Meeting of the company since his retirement in 2010. He met the Trust nominee directors on the Board of the company only on two occasions, that to at the request of Mr. Tata to answer some specific questions. 165. As to Welspun acquisition, he came to know of it only through a press release by the company that the acquisition has been agreed upon, when Mr. Tata queried Mr. Cyrus as to whether this large and important acquisition had been placed before the company who has 30% stake in Tata Power, upon which, Mr. Cyrus requested Mr. Tata and himself to attend a presentation by the Tata Power management to explain this acquisition, the Financials involved, as to this aspect the correspondence exchanged with Mr. Cyrus is between 24,6.2016 and 25.7.2016 which is annexed as Exhibit R-XIV/11(Colly), When the management, in respect of this acqu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lent transaction that was taken place in AAIL, that is finally made clear in the forensic audit report of M/s. Deloitte Touche Tohamatsu India LLP (Deloitte) regarding the transactions aggregating to ₹ 22crores, attributable to Ex-CEO of AAIL, but whereas in this Petition, he says he was alleged as beneficiary of this fraudulent transaction attributing involvement with a suspected and UN sanctioned global terrorist which is downright defamatory and scandalous. In fact, Deloitte itself, which was appointed by the unanimous decision of AAIL never made any such observation in their forensic audit report. And having AAIL Board already initiated concrete action against the Ex-CEO by fifing a complaint before the Commissioner of Police, Bangalore on 9.11.2016, how could he be blamed for something done by another. In this entire audit, it is nowhere ever whispered that Venkat have been indulged in this fraudulent transaction except by these petitioners, moreover Director of Enforcement and Local Police of Bangalore, has been pursuing the issue pursuant to the complaint lodged by AAIL, in view of the same, Mr. Venkat has sought for dismissal of this Company Petition against the Res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Trustees and for interference by the Trust and calling for information by the Trustees specifically Mr. Tata and Mr. Soonawala directly from the company and operating Tata Group Companies, he says these are all unfounded allegations without any supporting evidence. While explaining historical evolution of the rights of the Trusts in the company, he says that Trusts have been majority shareholders of the company since their inception in 1919 and 1932, the Petitioners have become shareholders of the company in the year 1965, by the time Trusts were majority shareholders of the company, over the years also, the situation has remained same having all through majority in the company having all these Trusts collectively holding 65.30% of the equity/ordinary share capital of the company. He says former Articles of the company were substituted by a new set of Articles by way of a unanimous special resolution passed at the Annual General Meeting of the shareholders of the company on 13.9.2000 wherein the Petitioners were duty represented at the said General Meeting by Mr. Pallonji Shapoorji Mistry [Mr. Cyrus s father) and voted in favor of substitution of Articles agreeing for these two T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e says that the petitioners modulated their case saying that the manner in which the rights majority exercising is oppressive against the Petitioners, but no material to support this allegation. He says that there is no legal restriction on inclusion of protective covenants in the Articles of the company and the Articles stand to the scrutiny of time and no objection regarding these provisions had ever been raised by either the Petitioners or Mr. Cyrus before filing this petition. He says that these are the reactionary allegations surfaced for the sake of making allegations only after Mr. Cyrus has been removed as Executive Chairman. He says that there is not even a single instance saying that have these Trustees or Trusts or its Nominee Directors ever exercised the affirmative rights against the Petitioners or even in any of the meetings so far held therefore, this per se argument made by the petitioners is not tenable. The Petitioners nowhere stated in their Company Petition, he says, what benefit the Trusts availed by the so called interference in the matters concerning the company. If at all their interference caused any loss to the company, the Trusts would hurt most rather ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shareholders agreeing to provide free hand to Mr. Cyrus, in fact as per the provisions of the Companies Act, there is no concept like providing free-band to Executive Chairman except to work within the boundaries of the applicable law and its chartered documents, in fact, this concept of free hand will militates against the collective authority of the Board which the Petitioners themselves purportedly claims to espouse. He says this espousal of free-hand concept by the Petitioners and Mr. Cyrus will clearly indicate that Mr. Cyrus wants an unbridled control over the company and its operating companies by virtue of having Executive Chairman position in the company and the majority shareholders in thecompany to remain decimated to mere formalism. He says that the board of the company expressed loss of confidence in Mr. Cyrus leadership and his ability to provide visionary leadership to Tata group and therefore he was replaced as Executive Chairman. He says, their personal grouse against his removal has been falsely manifested as cause of action to file this Company Petition stitching it with various other non-issues, henceforth, Mr. Venkat submits that this Petition shall be dism ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... every decision of Board of Directors of the company and implementation of those decisions. Mr. Tata being the Chairman of the Trust, he would instruct the Trust nominated Directors before Board Meetings of the company in the manner in which such meetings are to be functioned. With the constant interference by Mr. Tata in the affairs of the company, it only goes to show that the Board of Directors were acting in the interest of the Trust ignoring the interest of all other stakeholders of the company. Mr. Tata as Chairman of Tata Trust, holding sway over the affairs of the company which constitutes an act of oppression against the minority shareholders like the Petitioners. 179. The Petitioners have questioned the removal of Mr. Cyrus as Executive Chairman of the company on 24.10.2016 stating that his removal from Chairmanship of the Board of Directors was not on the agenda of the Board Meeting though Articles of Association require Selection Committee to be formed for the removal of the Executive Chairman as enunciated under Article 118 of the Articles of Association. On being removed without even following the rules laid down in the Articles of Association, the petitioners subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Association and by doing so, they have oppressed the minority shareholders, The recent instance of such oppression is that the notice dated 05.01.2017 issued by the company for holding an EOGM for decision on the special agenda of removing Mr. Cyrus from its Board of Directors. After Mr. Cyrus having been appointed as Executive Chairman, he identified some contentious issues troubling the company and therefore, documented the same in the strategic plan of June, 2014. Thereafter, he not only identified them but also pleaded to take necessary action into those hotspots such as requirement of closure of Tata Nano project, restructuring of Tata Steel UK, working on TTSL-Siva transactions which have been causing losses to the company. About Mr. Cyrus along with his brother being 100% shareholders of the Petitioners, raising all these hotspots so as to avoid tosses to the company, it is nothing but raising concern over the losses the company incurring, that being so, it could not be said that the Petitioners have not raised any grievance in respect to the losses the company incurred before removal of Mr. Cyrus as Executive Chairman of the company. 183. The Deponent herein submits that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevance, because the petitioners had agreed to the amendments of the Articles on the premise that it would enable the Trustees to bring on Board, individuals of standing and capacity to take decisions for enabling the governance of the company, but on the contrary, the Trust Nominee Directors started acting as postman and communicators of views and decisions of Mr. Tata and Mr. Soonawala without applying their wisdom, since such a framework is de-facto reality, the petitioners therefore submit, it is appropriate to have the provisions of Articles of Association cited in the Company Petition struck down. 188. It is true that till the retirement of Mr. Tata from the Board of Directors, the Chairman of the company and Tata Trusts were common therefore there was no scope for any difference of opinion, but on appointment of Mr. Cyrus as the Chairman of the company, the Chairman of Tata Trust has become different, in that new scenario, to provide a degree of protection to Tata Trusts from any future potential adverse managerial decisions taken by the company, to protect the dividend distribution flows to the Trusts and to ensure businesses were not entered into that were in variance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs submit that showing business strategy as cash flow statement is an afterthought process, because Mr. Tata wrote a letter dated 2,9-2016 asking for more information to be included in business plan and draft business plan covering the information asked for was also part of the agenda for the meeting scheduled on 24,10.2016. The petitioners submit that when Mr. Tata was the Chairman, there was no annual business plan presented to the Board, in the four years of tenure of Mr. Cyrus, no fault was found and no change in the format was sought. Only in the months preceding the illegal ouster of Mr. Cyrus, changes were sought - evidently pointing to the stratagem to pull some ground however tenuous to find fault with Mr. Cyrus. As to Welspun transaction, the petitioners deny that there was lapse of governance in the context of the Welspun acquisition. 192. As to board room storm, the petitioners submit that Mr. Tata and Mr. Nohria personally spoke with Mr. Cyrus just minutes before commencement of the meeting of Board of Directors on 24.10.2016, no reasons were given by them for requesting Mr. Cyrus to resign. Mr. Tata and Mr. Nohria insisted that the Board of Directors of the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f over a decade to make them right, is what is oppressive in character. The petitioners submit that the content therein are irrelevant in view of the fact that the challenge is not against the transaction but against the decision to continue with the same despite they having been proven to be mismanagement. They deny that they have failed to explain how the petition is within limitation period as prescribed under the Act and the Limitation Act, 1963 and the real cause of action for the petition is the replacement of Mr. Cyrus as Executive Chairman, likewise, even denied that the receipt of dividend and the petitioners by reasoning of accepting dividend would render the Petition not maintainable, if that is so, no member who has received dividend can ever invoke the provisions of law that confer statutory protection against oppression and mismanagement. They deny that this petition has been sponsored by Mr. Cyrus so as to pursue an agenda of personal vendetta against Mr. Tata and Mr. Soonawala adopting a scorched earth policy of tarnishing the reputation of the Tata Group on being removed as chairman, in fact the intent of the petitioners is to save the company from the whims and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of the company is nothing but reducing the board meeting to mere ritualistic formality. The petitioners submit that the removal of Mr. Cyrus as Executive Chairman is an act of oppression and mismanagement of the company and also say that the Company Petition is to protect the company from the oppressive conduct by the other Respondents. The petitioners submit, as to the allegation of Mr. Cyrus leaking information to the petitioners, that the respondents deserved to be hoisted on their own petard considering they are seeking to level serious allegations of confidentiality breaches against Mr. Cyrus even while themselves indulging in full flow of all information received by Mr. Tata in his fiduciary capacity to create a super board and shadow directorship and controlling the strings from the background. The petitioners submit that Mr. Cyrus approving the resolutions for alteration of Articles in the past is of no consequence because Mr. Cyrus voted in favor of the decisions believing those decisions were legitimate business decisions, now it appears to him that they were in fact decisions taken to give impetus to the objectives of Mr. Tata and Tata Trusts. The Petitioners have ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is as follows: a. Email dated February 05, 2013 addressed by respondent No. 20 to Respondent No. 23 with a copy marked to Respondent No. 11 (page 68 of the Cyrus Reply) whereby Respondent No. 20 communicates the suggestions of Respondent No. 2 to the board minutes of Respondent No.1; b. Email dated May 08, 2016 addressed by respondent No, 23 to Mr. Vijay Singh (page 70- of the Cyrus Reply); c. Email dated September 28, 2016 addressed by respondent No. 23 to Respondent No. 11 (page 67 of the Cyrus Reply) which clearly shows that Mr. Vijay Singh would clear the draft board minutes with Respondent No. 2. 197. On the reply given by the company stating that the process of selection is not applicable for removal of Chairman, the petitioners deny that the Articles of Association do not require the constitution of selection of committee for the purpose of removal of the chairman and state that the interpretation of the articles sought to be propounded by the company is in clear contradiction to the letter and spirit of the Articles, they further submit that the nominee directors of the Trustees of the company have not been exercising the powers granted to them in judici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CP reiterating that Mr. Tata stepped down as Chairman of the company with a view to take a clean break from the company citing company policy of retiring at the age of 75 but as soon as Mr. Cyrus was removed as Chairman on 24.10.2016, he came back as Interim Chairman disregarding the company policy. The petitioners submit that Mr. Tata announcing his renunciation from the post ofExecutive Chairman of the company to the world at large as anexample of Tata values was nothing more than a mere facade and he expected Mr. Cyrus to do his bidding and allow Mr. Tata to function as shadow director without any accountability, which Mr. Cyrus realized over a period of time. Soon after Mr. Cyrus became chairman, Mr. Tata started Interfering in the day-to-day affairs of the company undermining the board of the company and directing Mr. Cyrus to meet some of his business associates and also from time to time kept on instructing the Trust nominee directors even about the language of the resolution to be passed at the board meeting of the company making it clear that Mr. Tata had not made clean break from the company. Indeed, they submit, Mr. Tata abused the position as Chairman Emeritus by demand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst whom ₹ 6,00,000penaltyhas been imposed by SEBI for violation of unauthorized and illegitimate sharing of unpublished price information outside the need to know framework. He was also inducted as director in the month of August 2016, in the second meeting he voted in favor of the removal of Mr. Cyrus from the position of chairman, He also has not given any detailed reasoning for voting in favor of the proposal for removal of Mr. Cyrus as Chairman of the company. 204. As to the reply filed by Mr. Nitin Nohria (R7), the petitioners submit that it is Mr. Nohria volunteered to draft governance document clarifying the role of the Tata Trusts in the affairs of the company, in his email dated 31.01.2015 and 04.02.2015 he has stated as follows: 31.01.2015 I can certainly empathize with your frustration about what items can be dealt with by the company board and what require prior approval of the trusts. These are the questions that my note also seeks to get clarity on. I will send it to you in the next week. I hope we can find some way to get clarity on these issues because it is otherwise a source for tension and confusion for all involved. 04.02.2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company must conduct business, they took Mr. Cyrus asking guidance from them as a license for them to interfere in the day to day affairs of the company. The continuous hold that Mr. Soonawala enjoyed is upfront from the email dated 8.11.2013 (Exhibit F, page 87 of Mr. Cyrus reply) when a draft letter was circulated which has changes suggested by Mr. Soonawala. They further submit that from plain reading from Mr. Cyrus reply (Exhibit A B) when Mr. Cyrus s officials had briefed Mr. Soonawala in relation to a proposed issuance by Tata Motors Ltd., Mr. Soonawala sought postal ballot notice for the director s remuneration, copy of the working on the impact of the Right Issue on EPS and promoter voting rights due to dilution, on such asking, the officers of Mr. Cyrus briefed Mr. Soonawala on 22.12.2014, they were given an impression that Mr. Soonawala preferred Right Issue, with that impression when Tata Motors proceeded with the proposed issuance, Mr. Cyrus received rude handwritten letter dated 30.1.2015 alleging that there had been no discussion of the issue and that the Articles of Association had been breached. The petitioners submit that the above stated series of events mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adow directors and superboard super imposing their decisions upon the board of the company, With this submission, the petitioners submit that Mr. Soonawala always imposed his direction upon the company even if he was not being asked to advise upon the issues pending for decision by the board of the company. 208. As to the reply affidavit filed by Mr. Venkataramanan (R20) on behalf of R6, R16-21, the petitioners rejoined stating that the independence of the board of directors was compromised, the decision making process has taken backseat. The petitioners submit that the Exhibit E, page 17 of Mr. Cyrus reply reveals Mr. Tata giving his inputs regarding the minutes and agendas of the company board meetings, likewise other email dated 24.06.2013 and 26,06.2013 disclose that Mr. Venkat simply acted as an assistant to Mr. Tata instead of acting as director of the company. The petitioners submit that Venkat has been acting as a director of AirAsia India Ltd. as well as Trustee of Sir Dorabjee Tata Trust which are in conffict of interest to each other because Mr. Venkat has access to commercially sensitive information in relation to the joint venture on account of his close proximity t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and mismanagement complained of are continuing in nature, in the case of NTT DoCoMo transaction where the company has very recently suffered an award in the amount of nearly ₹ 8,500crores because the transaction in between TTSL and DoCoMo led the company to pay aforesaid amount as fair market value for the shares of TTSL, which is contrary to the law of the land. Likewise, in the case of IHCL where the company has significant stakes, Mr. Tata dissuaded sale of assets in the United States thereby demonstrating his inability to think of the best interest of the company and its stakeholders which is explicit in the email dated 03.04.2015 addressed by Mr. Tata to Mr. Cyrus. Mr. Cyrus has categorically stated that for he was continuing as executive chairman, instead of filing any case against Mr. Tata and others, was taking immediate action from within the company to put an end to the past oppressive conduct and mismanagement orchestrated at the hands of Mr. Tata, before Mr. Cyrus being removed, considering his 50% shareholding in the petitioners, they thought it would not have been prudent or logical to approach judicial forum to complain of such oppression and mismanagement. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Association provided some guidelines, they have not been translated into operating practices that have everyone s buy-in. I will send you the document I have been working on by this week end. 213. Though Mr. Nohria said all these things, no such note ever saw the light of day, then Mr. Cyrus decided to himself prepare governance framework, in furtherance of it, several drafts were sent between March 2016 and May 2016 to Mr. Nohria and they were ultimately shared with Mr. Tata in August 2016. Finally, the note prepared by Mr. Cyrus in September 2016 was placed on the Agenda for the board meeting dated 24.10.2016. He submits that even Mr. Bharat Vasani was also frustrated with the level of interference by the Trustees of the Trusts in respect to DoCoMo issue, this was illustrated by Mr. Cyrus saying that Mr. Vasani in his mail dated 26.07.2016 put it to Mr. Cyrus saying that unfortunately, with the Trustees directly taking charge of the matter and giving direct instruction to Darius and showing extreme anxietymy view became irrelevant . 214. As to Tata Steel in UK and Europe, Mr. Cyrus submits that all his efforts to improve the viability of Tata Steel Europe operations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the ensuing discussion. 218. Whether Siva Group company (Sterling) non-paying its share amount payable proportionate to its shareholding out of the total award amount paid by the company through TTSL towards the award passed against TTSL on the Arbitration proceedings initiated by Nil- DoCoMo; Mr. Siva coincidentally sending legal notice to the company assailing the proposal to take legal action against Sterling about nonpayment of its share of payment towards Arbitration Award as per the tripartite agreement, just about the time resolution passed by the company and the Tata group companies having had some business deals with Siva and his companies in the past, relate back to Sterling acquiring TTSL shares in the tenure of former Chairman, Mr. Tata so as to attribute Mr. Tata conducted or conducting the affairs of the company in a manner prejudicial to the interest of the company or oppressive/prejudicial to the interest of the petitioners or not? 219. On perusal of the pleadings and written submissions filed by either side, the points that could be derived from the facts admitted by either side are as follows: 220. Tata Teleservices Limited (TTSL) is an Indian br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s s brother and father sold part of their shareholding at ₹ 117 per share to NTT-DoCoMo, for DoCoMo investment having eventually turned sour, and with no initial public offering in sight, as there is a clause of put option in favor of DoCoMo, on initiation of arbitration proceeding by DoCoMo, an award was passed directing TTSL to pay ₹ 8450crores to DoCoMo for the shares held by DoCoMo, by virtue of this award, since there is an inter-se agreement binding Sterling to the put option provided to the DoCoMo, the Siva group has come under obligation to pay the share price of its shares of TTSL out of ₹ 3450crores payable to DoCoMo. Since Sterling has not turned up to pay its share out of award amount paid to NTT-DoCoMo, Mr. Nitin Nohria, Trust Nominee Director on the Board of Directors of the company proposed to initiate legal action against Siva for his Group failed to contribute its part in making payment to NTT DoCoMo- No sooner the resolution was passed on 15.9.2016 to initiate legal action against Siva Group Company; it is either by coincidence or by leakage of information, on 19,9.2016, Siva issued legal notice to TTSL alleging mismanagement of TTSL reserving it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 224. As to Tata Capital s loan of ₹ 200crores to Siva, it has not been raised in the Petition, but it has been raised by Mr. Cyrus in his reply to the Petition, the fact of the matter is, this loan was given on pledge over the shares of TTSL on arm s length basis, when Siva group defaulted on its loan, Tata Capital pledged over the TTSL shares and acquired the TTSL shares pledged to it. After acquiring shares in TTSL, Tata Capital has entered into Shareholder s Agreement with Siva Group which interalia gives TTSL the right to sell TTSL shares held by it back to Siva Group at a minimum threshold price in order to protect its interest. For which Mr. Siva himself has provided personal guarantee to secure the amounts due to TTSL. Thereafter, TTSL has exercised the put option and also invoked the personal guarantee granted by Mr. Siva, following which, Tata Capital has already taken steps to recover these amounts from Siva Group and also initiated legal proceedings against the Siva Group. 225. As to acquisition of Disnnet DSL (DDSL) from Siva Group, it is a fact that this transaction took place in the year 2004, that time DDSL in fact had the highest revenue from among its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recovery of the monies to which Mr. Tata raised an objection. The Petitioners chiefly raised two aspects saying that one of the group companies of Tatas, i.e. Kalamati provided a loan of ₹ 132crores to Siva Company for buying shares from TTSL and another argument is the company provided guarantee for taking loan of ₹ 684crores from Standard Chartered Bank for paying towards the shares acquired from TTSL. There is no merit in this argument because the loan taken from Kalamati was already paid back by Siva Group Company, the undertaking given by the company was expired in 2009 itself and the company was relieved from such undertaking for Siva himself provided personal guarantee for the loan taken from Standard Chartered Bank. For no money has been paid by any of the Tata group companies for the acquisition of TTSL shares by Siva Group, it cannot be attributed that the company incurred loss by acquisition of shareholding of TTSL by Sterling (Siva Group Company). 229. As to another argument of the Petitioners that TTSL, at the behest of Mr. Tata, allotted shares at discount when compared to the allotment made to Tamasek immediately one month after shares were allotted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a resolution passed to initiate action against Siva group, Siva Group Company issued notice within 3-4 days since resolution was passed by the company on 15.9.2016. Their allegation is this information would not have gone out causing Siva to give notice to the company unless that information was leaked by somebody from the side of Tata Trusts, First of all, no material has been placed either by the petitioner or Mr. Cyrus showing that such information has been leaked to Siva Group either by Mr. Tata or from the answering Respondents except a guess work spun off by the Petitioners and Mr. Cyrus. Such leakage if any there, what proof the petitioners placed before us? Nothing is placed. Such allegation, shorn of any material proof, cannot be attributed to the Trust or its Nominee Directors, on the top of it, Mr. Cyrus did not propose the resolution to proceed against Siva, it is Mr. Nitin Nona, trust Nominee Director proposed to initiate legal action against Siva. The petitioners as well as Mr. Cyrus have kept on and on shifting their stands from the petition to rejoinder then to written arguments, no proof nothing to any of these ever changing allegations - grasping at straws. 23 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exposure into TTSL shares and taken the value of TTSL shares in their book in line with the arbitration award. While converting this loan, Tata Capital said they took overall valuation hit of ₹ 53crores if any further impediment in TTSL shares value, it is said that they will have to take further hit, it is being said that technically they have no further exposure on Siva account. In this correspondence in between Mr. Pravin Khadle and Mr. Cyrus, it has not been said anywhere that Mr. Tata involved in ensuring loan was granted to Siva Group Company over the TTSL shares. Merely by giving loan by one of the group companies on due diligence, can never become an issue to be tainted as a transaction giving undue advantage to somebody else. Had it been said that Mr. Tata influenced Tata Capital to provide loan to Siva Group Company, there is chance at least to believe that at some point of time, Mr. Tata tried to help Mr. Siva. Therefore on this allegation one of the group companies on due diligence providing loan to Siva Company, Mr. Tata s involvement has not been seen anywhere in the loan given to Siva Group, everything has been properly audited and accounted from time to time, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he management of the company. It is not that whenever profit comes, quietly enjoying, when loss comes, filing case u/s 241. As to TTSL acquisition is concerned, it s a decision taken long before basing on the valuation of that company and it being the fact that TTSL getting highest revenue from amongst its peers at that point of time, it could not be said as a careless decision taken by management at that point of time. It appears that the petitioners and Mr. Cyrus, because of the heart burn they had for Cyrus being removed as Executive Chairman of the company, they tried to steamroller all these business decisions upon Mr. Tata as mismanagement of the affairs causing prejudice to the company, so as to bully the answering Respondents by using Section 241 as a device. 238. In view of the reasons aforementioned, we are of the view that these allegations on demur do not constitute any case u/s 241, assuming all are correct they fall u/s 241, then also, no case is made out to invoke 241 242 of Companies Act 2013, besides the above, the petitioners have not made TTSL or Kalamathy or Tata Capital or their management as parties to these proceedings, knowing well section 241 speaks of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been informed that the company had received a proposal from Air Asia to start a new domestic airline operation in India. For which, Mr. Tony Fernandez, Group CEO, AirAsia (Malaysian Co.) made a representation to the Board regarding airline s history and proposed business plan for India, After Mr. Fernandez departure from the meeting, the board discussed the proposal in some detail and finally felt that airline business would be viable and provide investors appreciation on their investment. Accordingly, the board decided to give its approval to participate in the business with the condition that the company capital infusion would be capped at US $9million and that there would be no recourse to guarantees by the Tata Group and that the company would get appropriate representation on the board of Air Asia India. In the said meeting, Mr. Cyrus did not raise any objection for such approval and subsequently also was there never any objection either in continuing in the joint venture or in infusing funds in Air Asia India until before Mr. Cyrus was removed as Chairman of the company. 3. Now the issue raised by the petitioners as well as Mr. Cyrus is that Mr. Venkat at the behest of Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Mr. Cyrus was present in the said meeting as Dy. Chairman of the company, indeed that minutes was signed by Mr. Cyrus himself. On reading of the minutes, no iota of material was present disclosing Mr. Cyrus raising objection over the decision to enter into joint venture with Air Asia Berhad. Today, Mr. Cyrus had no sooner been removed as Executive Chairman of the company, the decision of Air Asia became fait accompli upon Mr. Cyrus and the petitioners. On which, the respondents submitted that the petitioners in their desperate attempt to make a case out of nothing, on one hand they submit that Mr. Cyrus had no say in the Air Asia transaction and he was given a fait accompli situation, on the other hand, they state that Mr. Cyrus protected the interest of the company by limiting its exposure to 30% equity of USD30million and by ensuring no fall back liability came on the company. 243. If at all this decision was fait accompli on him, he would not have been conscious of the discussion happened in the meeting, on the contrary, if his second statement stating that he was the person instrumental in ensuring the company exposure is limited to 30%, then it ought to be construed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther, I can say that the petitioners miserably failed to atleast set up a case basing on this allegation, all are abominably baseless allegations thrown at a reputed person, and not knowing what consequences follow when such scurrilous allegations are not supported by any material paper. In view of the same, we heresy dismiss this allegation against the answering respondents holding no case is made out against Mr Tata, Mr Venkat. 247. Whether the business transactions between Mr. Mehli Mistry and Tata Power Co Ltd taken place when Mr. Tata was Chairman of the Company amount continuation of conducting the affairs of the company in a manner prejudicial to the interest of the company or in a manner oppressive/prejudicial to the interest of the Petitioners as stated by the Petitioners and Mr. Cyrus or not? Will other issues like selling Bhakthawar flat and buying Alibaugh land have any bearing to link them as issues relating to the interest of the company? 248. The issue for discussion is in relation to the allegations made by the Petitioners and Mr. Cyrus are in relation to awarding of dredging and shipping contracts to Mehli s companies by Tata Power for long periods of ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Mr. Kemple who was at that time heading FFC stated that Mr. Mehli Kersasp Mistry (father of Mr. Mehli) had already intimated his approval to Mr. Tata occupying Bhaktawar and as soon as various arrangements had been confirmed saying that he would put this on record with Kersasp. On such letter of arrangement came from Mr. Kemple, on 10.10.1968 Mr. Naval Tata wrote a letter to Mr. Kemple for letting Mr. Tata have Bhaktawar flat for his use, in a reciprocal arrangement, Mr. Naval stated with regard to the flat in Everest , he mentioned that it was originally occupied by Mr. Stew Nelson of Tata Hydro Electric Company and subsequently occupied by late Mr. Fale Pentochi for it was under repairs by the owners of the trustees of R.D. Shetana, Mr. Naval Tata has agreed to bear their share of repairs. On 11.10.1968, another letter was written by Kemple that should Mr. Tata vacate Bhaktawar, the occupancy rights would revert to FFC. In the same letter, Mr. Kemple mentioned that Mr. Naval indicated that Forbes would be given a flat in Everest which was at that time under repairs. So it is one kind of reciprocal arrangement happened between FFC and Mr. Naval Tata. To say that as to this tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x liabilities were cleared simultaneously despite this transaction is clear and transparent. Mr. Cyrus and the Petitioners simply throw this allegation against Mr. Tata as if he was unjustly enriched by surrendering his tenancy rights to MPCL. 252. On seeing the historical facts, we have not seen anything indicating Mr. Tata getting enriched at the cost of the company. Moreover, as I said earlier, again these Petitioners have not made Forbes Golak as a Party, not disclosed all these details given by answering Respondents disclosing as to how this transaction happened. It happened somewhere in the year 2002, now this allegation was raised in the year 2016, for all these 16 years there was no whisper over it. These Petitioners did not ever say how much shareholding the company has in Forbes Golak. On the top of it, Mr. Tata retired from the company in the year 2012, therefore, firstly it could not be an affair related to the company, secondly, Mr. Tata has not been in the management since 2012, in any event even the facts are assumed as happened, this cannot become an allegation falling under Section 241 to say that the conduct of Mr. Tata is related to the affairs of the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous Mehli companies namely, MPCL, M. Pallonji Shipping Pvt. Ltd. (KPSPL) and M. Pallonji Shipping Singapore Pte. Ltd. (MPSSPL) ranging contracts from painting works to dredging and international shipment of coal for TPC without having any tenders for most of them. By doing such business, Mr. Mehli companies reserves grow from ₹ 3.29crores in the F.Y. 1994-95 to Reserves of ₹ 114crores by FY, 2003-03, i.e. within 10 years thereafter, in the following 10 years those reserves have gone upto ₹ 917crores. All these happened only because Mr. Mehli was considered for getting all these contracts without having any proper bidding. They say that these contracts were awarded despite Mehli not having any prior experience in the contracted job scope, many of them given for abnormally long period, which were then extended without any fresh competitive bids. But whereas under the Executive Chairmanship of Mr. Cyrus, all Tata Group companies including TPC adopted a policy of awarding such contracts only through competitive bidding so that Tata group companies receive maximum benefits possible from their contracts with third parties. When the price of Mehli s contracts got re-nego ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... times for various tenures from October 2002 to September, 2014 after obtaining requisite approvals. While these approvals were being given, Mr. Cyrus who was continuing as Director of Tata Power from 1996 to 2006 and again from 2011 to 2016 never raised any objection, indeed approved every extension that was given in his tenure therefore, this could not become grievance either to the Petitioners or to Mr. Cyrus after he was removed as Executive Chairman, When this extension was given on 1.7.2013, the Executive Committee of the Board was chaired by Mr. Cyrus. 259. As to 2004 barging-cum-dredging contract, it is being said that Tata Power awarded this contract to MPCL for construction of jetting and transportation of coal to the Jetty in 2004. This was awarded to MPCL under the single party process approval after bench marking prices, when it was terminated on 4.1.2017; Mr. Mehli initiated arbitration in respect to the dispute between Tata Power and MPCL. This was subsequently resolved through resolution in October, 2017, Since there is no material to say whether it has been rightly done or wrongly done, it couldn t be taken as allegation to come to a conclusion that it has cause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Power changing the terms of a particular contract. By seeing this letter, we don t find anything to conclude that Mr. Mehli either expropriated something from Tata Power or bullied Tata Power to do something which it is not supposed to do. For his company being the contractor, according to him, that permission to storage in MBPT area came to this contractor, he said it would be difficult to them to do the business in case place of storage is not opened for them to keep the coal. He only asked Tata Power to ensure proper coordination and joint decision taken to ensure that coal supply chain to Trombay Power House should not be affected. But the Petitioners instead of reading those lines put in italics in the context of the remaining text, taken out from the text so as to give an impression that Mr. Mehli was audacious towards Tata power. Is it that if anybody says that something is objectionable, it will become a ground u/s. 241 to make an allegation against Mr. Tata? It is not a letter from Mr. Tata, it s only a letter come from a contractor to Tata Power, This is the only document that has been placed by the Petitioners and Mr. Cyrus to say that Mr. Tata did favors to Mr. Mehli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to this case, so the people who really dealt with these business transactions are not before this Bench, no board meetings minutes of Tata Motors have been placed before this Bench by the petitioners. If any member of the holding company or associate company wants to make his grievance or their grievance in the subsidiary company as grievance of the holding company, it is fundamental to make such subsidiary company and its directors as parties to the case but that has not been done. 266. Mr. Tata has not been the director of Tata Motors at any point of time during which that actions complained of happened. Mr. Tata remained as an advisor as and when the officials of either the respective companies or the company came to him seeking his advice. It so happened at some point of time Mr. Tata volunteered his suggestions for the betterment in the interest of the company, but one thing to remember is, if his unsolicited advice is accomplished through board approval, the persons privy to that approval cannot complain over the same, if his unsolicited advice is not considered, then there cannot be any grievance over such advice for it has not been considered. Of course, almost all sugg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mplained of must be relating to conducting the affairs of the company. First it is not directly in relation to the affairs of the company; secondly since he advises in relation to affairs of any other company cannot be construed as conducting the affairs of the company because conducting the affairs of the company always remain in the hands of board of directors- Whether advice is good or bad, unless such advice is put into action, it cannot be called as conducting the affairs of the company; merely for having the advice of Mr. Tata taken into consideration by the board cannot be said as action taken by Mr. Tata. Is there any one instance in the history of the company or in Tata Group Company, at least in the regime of Mr. Cyrus that Mr. Tata s advice has been directly put into action without placing before the respective board? At least I have not found any such action which has not been approved by the Board of respective companies in relation to the issues raised by the petitioners or by Mr. Cyrus. Of course, Mr. Tata is heading the Trusts holding more than 66% shareholding i.e. 2/3 d of the shareholding, by virtue of this majority as per rule of democracy, these companies have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to discuss about various issues relating to engine and handling upgrades. 272. Had there been any issue over the visit that was made by Mr. Tata and Cyrus to Jayem Auto, what prevented Mr. Cyrus to raise an objection over that visit immediately after the said incident, but there is no whisper about such visit made by both of them nor any allegation over such visit at any point of time until Mr. Cyrus was removed as executive chairman, therefore the petitioners now making it as an issue as if Mr. Tata did some business behind the back of the company is bereft of any merit. 273. The petitioners and Mr. Cyrus relied upon two letters dated 23,6.2013 and 15.09,2013 written by Mr. KarlSlym, MD of Tata Motors to Mr. Cyrus stating that Mr. Tata had called upon him to rely more upon J. Anand of Jayem and also to ensure faster payment to Jayem, side by side indicating a proposal for special vehicle centre outside Tata Motors Ltd. expressing his will to spend ₹ 60crores personally to set up the special vehicle. 274. These letters were written by Mr. Karl in the year 2013 directly addressing to Mr. Cyrus by the time he was Executive Chairman, he did not revert to the said lette ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it has become a reality in July 2016 - Tata Motors and Jayem in July 2016 incorporated a joint venture company named J.T, Special Vehicle Pvt. Ltd. with 50:50 shareholdings in that joint venture. This joint venture was incorporated under the stewardship of Mr. Cyrus himself, It is therefore entirely incorrect to say that Jayem has benefited unduly from any patronage extended by Mr. Tata. Accordingly, we are of the view that nothing is present in the letter written by Mr. Karl to say that Mr. Tata did something so as to have any gain to himself or to cause loss to the company. Since the special vehicle has come into existence under the stewardship of Mr. Cyrus, in the year 2016, it could not be said that Mr. Tata did or advised something against the cause of the company or Tata Group companies. 276. The petitioners and Mr. Cyrus relied upon an e-mail dated 29.01.2014 written by Mr. Tata to Mr. Cyrus to say that Mr. Tata, despite Tata Motors incurring losses on each Mano car that was being sold, continued to suggest ways in which the sales of Nano car could be bolstered and did not once entertain the idea that Nano, a commercial project with no profitability in sight ought to be s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... financing scheme and large discounts given to artificially boost the sales of Mano cars. 279. As to this point, it is being shown as TM Finance which has financed TM vehicles incurred NPAs of ₹ 4000crores, this entire NPAs are being held out as loss incurred in lieu of financing Nanos, but the fact of the matter is the losses suffered by TM Finance was primarily due to financing for commercial vehicles, the loss caused by financing Nanos is only a part of the total losses suffered. It is a note sent to Mr. Tata disclosing historical liabilities, this is a document annexed to the reply filed by Mr. Cyrus under the head of financing liabilities on TML/TMF on account of 100 /o loss cover scheme . Financing by TMF Limited under 100% toss cover scheme, for commercial vehicles and passenger vehicles, was stated in April 2008 and December 2010 respectively amounting to ₹ 11,556 crores. Due to tough economic environment, abnormally high defaults in payments led to huge losses for Tata Motors and TMF. Total estimated loss - based on actual loss, provisions and estimated future losses - adds up to Rs, 2,000crores. Key products that have led to these losses under this sche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r having gone through all those projects, may be, he must have made up his mind to inspect those projects to have his own assessment. For whose benefit he has done all these, it is for the benefit of TM in turn to Tata Sons. Whose company is Tata Sons? It is the company of Tata Trusts, because majority of the shareholding is held by them. It is really disquieting to take out one line from this entire document to hold out as if Mr. Tata carried some secret information so as to benefit Jayem Auto. 282. The Petitioners, upon email correspondence between Dr. Tim and Mr. Cyrus, made an allegation that Mr. Tata was regularly meeting Mr. Anand [Jayem Auto). If this email correspondence in between Tim and Cyrus (page No. 437 of reply filed by Cyrus on 29.12.16), is read, it is ascertainable that every time when Mr. Tata met Mr. Anand, it was on a purpose for getting information from Mr. Anand, the same is evident in this document. Meeting two persons can never be called as conspiracy between them, unless such meeting has happened with a sinister design to cause harm to somebody. Is there any material from these documents to say that Mr. Tata met Mr. Anand to do some harm to TM or to Tat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir need to take advice from Chairman-Emeritus, such information must have been provided. In this back drop, it is inconceivable to understand how providing such information will become interference with the affairs of Tata Sons or flouting SEBI Regulations. That apart, to say that it is an oppressive conduct, first of all, these petitioners should file proceeding before SEBI then if SEBI is of the opinion that some violation happened reflecting that such conduct is prejudicial to the interest of either the company or the petitioners, then only there is a possibility to look into it in the surrounding circumstances, because as I said umpteen times it is not violation of some law that amounts to prejudice the interest of either the petitioners or the company, it is the unfairness causing prejudice to the aggrieved is the deciding factor to decide the case under section 241 and 242 of the Companies Act. 285. In fact, I can say that seeking information will never amount to conducting the affairs of the company. Yes, when majority shareholder is there and majority shareholder himself is not a director and majority shareholder nominate someone as director, it is obvious such majority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omebody else, Here, no such situation is existing, then how come Jayem Auto getting business from TML could be seen as Mr. Tata doing favor to Jayem Auto at the cost of TML or Tata Sons. 288. The petitioners and Cyrus relied upon other emails dated 31.8.2015 and 16.9.2015 to say that Mr. Tata was unhappy about the fact that TM was not dealing with Ola since Mr. Tata had a personal investment in Ola, despite Mr. Tata knowing that TM and other group companies were in advanced talks with Uber, a competitor of Ola. 289. To cut long into short, let us come directly to the letter written by Mr. Tata to Mr. Cyrus on 16.9.15, which is as follows: You will recall when we were together in Pune on September 1st I mentioned to you that Mr. Bhavish Aggarwal, Co-Founder of OLA cabs told me that they were very keen to immediately acquire 10,000 Nanos and Indicas/Indigos from Tata Motors on outright purchase, lease or joint venture. On as annual basis they had plans to acquire 150,000 such vehicles. He mentioned that while OLA was keen to do the transaction with Tata Motors, there was no positive response from Tata Motors. By contrast Maruti Suzuki was chasing him everyday. In my v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... With Regards, 290. I must also give Introduction what made Mr. Tata to write such a letter to Mr. Cyrus. It is apparent on record from the reply filed by Mr. Cyrus dated 29.12.2016 that Mr. Tata wrote a letter to Mr. Mayank Parekh on 31.8.2015 stating that the CEO of Ola Cabs Mr. Bhavesh Agarwal met him and mentioned that Ola Cabs have been very keen to procure large number of passenger cars from Tata Motors saying that he would immediately procure 10,000 and his eventual forecast would be that it would take 1,50,000 cars in one year period and it is also expressed that the response from TM is slow and if TM is not interested in his business, he would transact this with Suzuki who were chasing him constantly. Knowing this information, Mr. Tata immediately dashed it to Mr. Mayank, Officer of TM that selling 1,50,000 vehicles would constitute approximately 10-months business, if this went to Suzuki, then how TM management would explain, how and why they turn away from such business in offing, he has doubted that there was some disconnect somewhere in getting through, Therefore, he put it to Mr. Mayank and Mr. Mayank immediately brought it to the notice of Mr. Cyrus. Then one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de investment in that company, which has serious conflict of interest with the interest Trusts have in Tata Sons. 293. It has been answered by Tata Sons as well as Mr. Tata that Mr. Tata wrote a letter to Mr. Cyrus on 09.02.2016 i.e. o the same date I believe Mr. Tata invested in Jayem Auto, stating that he made a minor investment of 10 cores in Jayem Auto in the form of debenture. He has openly put to Tata Sons that he made an investment in Jayem Auto. Is it the case of the petitioners that Jayem Auto is a competitor to the business of TML; is it the case that Mr. Tata made a substantial investment in Jayem Auto shifting its interest from Tata Sons to Jayem Auto? Moreover, this investment was done only on 9.2.16 but all these allegations of Mr. Tata helping are far before Mr. Tata made investment. 294. There is an allegation from Petitioners and Cyrus saying that TM supplied 69 gliders to Jayem Auto during the period Sep-Dec 2017, to which the answer from the respondent side is those gliders have been provided for the development of its own electric car sold under the brand name Neo the role of TM in this project has been limited to being the supplier of Nano gliders to Ja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber 2016, in salvaging Tata Steel from losing by entering into joint-venture with ThyssenKrupp and other business entities basing on an unfounded allegation against Lord Bhattacharya allegedly making statement in the Parliament of UK and other frivolous allegations not supported by any material paper, which according to the petitioners resulted into conducting the affairs of the company prejudicial to the interest of the company/petitioners or not? 296. The Petitioners submit that Tata Steel is a listed company, in which the company is the promoter along with its associated companies holding 31.35% share capital of its equity capital. Sometime in 2007, Mr. Tata fed the purchase of Corus Group PLC by Tata Steel for a sum in excess of USD 12 billion, which was at that point of time largest global acquisition by Indian company,, this bid was valued at over USD 12 billion which was more than 33% of its original offer price, By virtue of this acquisition, the shares of Tata Steel on Indian exchanges came crashing down, clearly suggestive of the fact that this transaction was not in the best interest of Tata group. 297. The petitioners submit that they have consistently highlight ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eel on having Tata Steel UK announced a cash offer of 455 pence per share of Corus, In the next meeting dated 26,11.2006, it was informed to the board that a Brazilian Companhia Siderurgicia Nacional (CSN) had approached the Corus management with a proposal to acquire its shares. On having the competitor come, the bid price was revised on 9.12.2006, 10.12.2006, 11.12.2006. As there were competing bids for Corus from Tata Steel UK and CSN, the Takeover Panel of the UK, on 26.01.2007 issued a note setting out the auction process for bidding Corus under UK Takeover Code, On auction process set out by the Takeover Plan, Tata Steel held board meeting on 30.01.2007 authorizing committee of directors to revise the offer up to 650 pence per share for Corus recording that the transaction was in the best interest of Tata Steel and it is the commercial interest of Tata Steel. Finally, Tata Steel UK emerged as winner in the Corus auction process. On 02.02,2007, Tata Steel announced USD 12 billion acquisition of Corus at a price of 60S pence per share, this acquisition made Tata Steel the world s 2nd most global steel producer with a combined presence in 45 countries, then Tata Steel had gone f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith a novel allegation that Mr. Tata consistently refusing Mr. Cyrus to enter into a merger with ThyssenKrupp, therefore it is oppressive and prejudicial against the petitioners and the company. 303. If you go through all these allegations, not even a single material paper is available to say that Mr. Tata objected Mr. Cyrus from entering into merger with ThyssenKrupp. Since the petitioners and Mr. Cyrus themselves saying that Mr. Tata has been acting as shadow director getting approvals as he wanted, Mr. Tata would have got an approval from the board even on this issue as will stopping Mr. Cyrus from entering into merger with ThyssenKrupp. If at all Mr. Tata was really interested to cause such objection, at least there should have been some correspondence from Mr. Tata asking Mr. Cyrus not to go ahead with merger with ThyssenKrupp. Mere making a pleading without any material paper will never amount to an action causing prejudice to the person complained of. 304. Mr. Cyrus or these petitioners have not placed any letter or email, Mr. Cyrus making persistent demand for divesting or fundamentally restructuring Corus or any material from Mr. Tata side showing obstruction or oppo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppressive/prejudicial to the interest of the Petitioners or not? 307. Before going Into discussion about this issue, it is pertinent to mention that this issue has been raised by the Petitioners and Mr. Cyrus only after this Company Petition was filed, because of which, it is obvious that the Petitioners could raise this issue only after filing this Petition because the company filed this application for conversion only after the Petitioners have filed this Company Petition, therefore, this Bench, considering this as an issue subsequently come into existence after filing of the Petition, we hereby decides this issue as part of this Company Petition by taking additional Affidavit filed by the Petitioners on record. 308. The argument of the Petitioners Counsel is that since this company was declared as public company upon the advent of Section 43{1A) of the Companies Act, 1956 with the characteristics of private company existing as on the date Section 43(1A) came into existence, and the same being repealed by Companies (Amendment} Act, 2000 with effect from 13,12.2000, this Company should be treated as public company without characteristics of private company because the sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill still remain in force. 311. The Petitioners Counsel further relied upon General Circular 15/2013, dated 13.9.2013 (Ministry of Corporate Affairs), giving clarification on the Notification dated 12.9.2013 saying that under Section 2(68) of the Act, 2013, the Registrar of Companies will register those Memorandum and Articles of Association received till 11.9,2013 as per the definition clause of the private company under the Companies Act, 1956 without referring to the definition of private company under Companies Act, 2013. 312. He has also relied upon General Circular 23/2002, dated 30.9.2002 (Ministry of Corporate Affairs) to say that though time line has not been prescribed in the statute for the companies to revert from the position of Section 43A, the Department has given a clarification saying that those companies which do not approach the Registrar of Companies, seeking reversion to their original status are deemed to have chosen to remain as public companies. 313. The Counsel further argues that for Section 43A of 1956 Act was repealed on 13.12.2000, the company should have applied for conversion of its status from public to private basing on the then existing pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... persons who, having been formerly in the employment of the company, were members of the company while in that employment and have continued to be members after the employment ceased; and (c) prohibits any invitation to the public to subscribe for any shares in, or debentures of, the company; (d) prohibits any invitation or acceptance of deposits from persons other than its members, directors or their relatives:] Provided that where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this definition, be treated as a single member; Section 2(68): Private company means a company having a minimum paid-up share capital as may be prescribed, and which by its articles, - ( i ) Restricts the right to transfer its shares; ( ii ) Except in case of One Person Company, limits the number of its members to two hundred: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e have not noticed any big difference in the characteristics of public company and private company between 1956 Act and 2013 Act, since we are concerned in respect to the restriction to the right of transfer of the shares of private company, it has been simply lifted from 1956 Act to 2013 Act without even a letter of difference, therefore, as to this right or other characteristics of private company is concerned, it could be safely inferred that whichever company that has continued with characteristics of private company under 1956 Act is permitted to continue with the same characteristics under 2013 Act without any change. 317. As to public company also, the definition given under 1956 Act has been allowed to continue in 2013 Act as well, The proviso highlighted by the Petitioners Counsel as if some change has been taken place in the 2013 Act is not of any different from Section 3(l)(iv)(c) of the Companies Act, 1956. 318. It is also relevant to see as to how in the past, private companies by operation of law were qualified as public limited companies under 1956 Act. Initially, Section 43A in the year 1960, 43A(1A), (IB) and (1C) on 1,2.1975 were brought into existence flag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that such companies should be treated as public companies, retaining with the characteristics of private companies so as to subject them to the restrictions and limitations as to disclosure applicable to public companies, In the same line, in the year 1960, an amendment to the Act, 1956 was brought in stating whichever private company that has not less than 25% paid up share capital of one or more bodies corporate, such company shall become by virtue of Section 43A, a public company with a proviso saying that it can retain the characteristics of Section 3(l)(iii) of 1956 Act. Subsequent thereto, on 1,2.1975 another amendment was notified bringing in Section 43A (1A) (quoted above) to cover the private companies having more than ₹ 1OOcrore as deemed public companies with private company characteristics as mentioned under Section 3(l)(iii) of 1956 Act. 320. Over a period of time, the Companies Act, 1956 has again been amended adding two sub-sections to 43A of the Act, 1956 which are as follows: The Companies (Amendment) Act, 2000 Dated 13.12.2000 1-11 .. 12. Amendment of section 43A of the Principal Act - (a) after sub-section (2), the following s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company under Section 43A (2A) shall apply for substitution of the tag of the word public , with the word private has not been mentioned in the statute, (iv) it has nowhere mentioned in section 43A (11) that the companies registered as deemed public companies under Section 43A will either become public company or private company, (v) in the same sub-section 11, it has not been mentioned that this sub-section will have retrospective effect, but it has been mentioned that it will have prospective effect saying that it will be applicable from 13.12.2000. The only thing said under sub-section 11 is that except Section 2A other sub-sections of Section 43A will not apply on and after 13.12.2000, It has also not been envisaged that section 43A is repealed, it has only been said in sub-section 2A, 43A shah not apply hereafter. 323. In a scenario like this, what will happen to the Company which was originally registered as private company has become public company by operation of Section 43A (1A), if it has not been reverted to private as enunciated under Section 43A (2A)? 324. It is pertinent to note that private Companies which have become public by virtue of Section 43A, have n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 975. It is also fact that this company till date has not made an application for deletion of its status as public company as enunciated under Section 43A (2A) of the Companies Act, 1956, Mow the present status of this company is, it has been continuing in the records of ROC as Section 43A company continuing with characteristics of private even after the advent of Companies Act, 2013. 328. To say that the company is still deemed public company or Section 43A company, Sr. Counsel, Dr. Abhishek Singvi relied upon Darius Rutton Kavasma Neck v. Gharda Chemicals Ltd and Ors. [2013] 14 SCC 277 to say that these deemed public companies/43A companies have been considered by the Hon ble Supreme Court of India in the aforesaid case as hybrid companies with characteristics of private company as defined under Section 3(l)(iii) of the Act, 1956. 329. Going through this case, we have noticed that the Appellants in that case are minority holding 17% of equity in Gharda Chemicals incorporated in the year 1962 as a private limited company having Article 57 in the year 1967 with restriction on rights of all the shareholders to transfer their shares with a definite clause stating that any sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come into existence. Inspite of it, the judgment recognized companies with characteristics of private company, therefore, these companies cannot be equated to public companies to say that the Articles of the company are fn breach of the provisions of Section 9 of Companies Act, 1956/Section 6 of Companies Act, 2013. 332. Another Sr. Counsel of the Respondents side, i,e, Mr. Mohan Parasaran has gone further to say that there is no provision analogous to Section 43A (2A) of the Companies Act, 1956 in Companies Act, 2013 and the Section dealing with repeals and savings, i.e. Section 455 having not yet been notified, therefore it cannot be said that Section 43A (2A) has not been in force. 333. It is true that there is no provision in the new enactment stating that if turnover is more than ₹ 1crore, such company, though having characteristic of private has to be treated as public company. So under new establishment, there is no company like Section 43A company therefore, the companies which have the characteristics of Section 2(68) of the Companies Act, 2013 will become private companies. What is the definition of public company? The definition of public company says whiche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning whether they indicate a different intention. The line of enquiry would be, not whether the new Act expressly keeps alive old rights and liabilities but whether it manifests an intention to destroy them. We cannot therefore subscribe to the broad proposition that Section 6 of the General Clauses Act is ruled out when there is repeal of an enactment followed by a fresh legislation. Section 6 would be applicable in such cases also unless the new legislation manifests an intention incompatible with or contrary to the provisions of the section, Such incompatibility would have to be ascertained from a consideration of all the relevant provisions of the new law and the mere absence of a saving clause is by itself not material. The provisions of section 6 of the General Clauses Act will, in our opinion, apply to a case of repeal even if there is simultaneous enactment unless a contrary intention can be gathered from the new enactment.... (Emphasis supplied) 336. Looking at the ratio decided by Hon ble Supreme Court of India, even if an enactment is repealed, under new enactment an analogous provision is not given equivalent to the provision under the repeale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, only two classes, one is public company and another is private company, If the Articles of the company are looked into, it falls within the definition of private company under new regime as well, therefore, it is quite obvious that it will continue as private company, for which since it has to restore its original position, it has applied to become private. 339. Another point to be noted is from 13.12.2000, application of section 43A (2A) and non-application of 43A has started, but section 43A is still in the books of the statute, it has not gone, therefore, there cannot be a construction that 43A companies registered up to 13.12.2000 have derecognized as 43A companies. 340. Now when the company filed an application for conversion under Section 14, i.e. after filing this Company Petition, the Petitioners have come out with an argument that for this company has filed Section 14 application for conversion after having remained quite from 2000 till date, the timing of filing this conversion application clearly indicates that the answering Respondents have filed this application with a malafide intention to make it private and then to invoke Article 75 against the Petitioners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome void in respect to public company, since Tata Sons is also a public limited company, Article 75 of the Articles of Association of Tata Sons restricting the free transferability of the shares repugnant to Section 6 and Section 58 (2) of the Companies Act, 2013, the same shall be declared as null and void. 343. In the light of the submission made by the Petitioners Counsel, when this citation above referred is perused it appears that Cricket Club of India Ltd is a public limited company, limited by guarantee, it is a point decided on this company proposed to amend its Articles of Association by passing a resolution to amend Article 74 to make the members continued continuously for six years not to stand for re-election at least for three years. When such an Article has been moved for amendment, on the Civil Suit filed by one of the members, the said Article has been struck down stating that it is repugnant to Section 6 and Section 283 of Companies Act, 1956. 344. This ratio cannot be applied to the present case because Tata Sons is a Section 43A Company holding characteristics of Private Limited Company, more so, the Respondents have not proposed for any amendment or alter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stered as deemed public company by virtue of the mandate given under Section 43A (11) of the Companies Act, 1956 without seeking any alteration to any of the Articles of it. As to English cases, referred by the Petitioners herein, they are cases filed under Section 13 of the Companies (Consolidation) Act, 1908 and another English case that is of 2012 case, it is not in relation to alteration of Articles but it is in relation to expropriating the rights of minority noteholders in respect to Bank notes which is not permissible under the terms and conditions in between the bank and noteholders, whereby it has been decided against the proposal for holding such a meeting for passing a resolution against the interest of the minority noteholders which is nowhere applicable to the facts of the present case. Henceforth, we hereby distinguished the ratio decided in all those cases holding that they are not applicable to the facts of this case. 347. To counter the argument of the petitioner side, the respondents counsel relied upon Borland s Trustee v. Steel Brothers Co. Ltd., (1901) 1 Ch 279, Inland Revenue Commissioners v. Crossman, [1937] AC 26, Albert Philips and Albert Philips ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e company intended to bring a resolution to compel the existing shareholder to sell his shares in suppression of his pre-existing rights under the shareholders agreement and articles of association, which is not the case in the given facts, in as much as, the respondents neither altering the existing articles nor Introducing new articles thereby the ratio in the case supra is not applicable here. In the case supra the article proposed to introduce militates against the rights already in pre-existence in favour of the shareholder. 352. The petitioner counsel relied upon Ratan Lal Adukia and Ors. v. Union of India [1989] 3 SCC 537 to say that when old provision is irreconcilable to the new provision that has come into existence, though old provision is not explicitly repealed it has to be treated as impliedly repealed for which the petitioner counsel relied upon the para from the case supra mentioned below: The doctrine of implied repeal is based on the postulate the legislature which is presumed to know the existing state of the law did not intend to create any confusion by retaining conflicting provisions. Courts in applying this doctrine are supposed merely to give eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt is not competent to supply the omission by engrafting on it or introducing in it, under the guise of interpretation, by analogy or implication, something what it thinks to be a general principle of justice and equity. To do so would be entrenching upon the preserves of Legislatures. 355. Looking at the ratio placed by the Petitioners, ft appears that the above ratio is in relation to supply of the omissions in the new enactment from the repealed enactment, here nothing has been taken from 1956 Act to say that Tata Sons is a Private Company in substance, this company is a private company by the definition of old enactment as well as new enactment whereby nothing is to be supplied from old enactment to new enactment to say that this company is a private company except the tag that has come by operation of Section 43A (2A) of the Companies Act. Therefore, this ratio is not applicable to the present case. 356. The Petitioners also relied upon Needle Industries (India) Ltd. v. Needle Industries Newey (India) Holding Ltd. [1981] 3 SCC 333 Para 158 at Page 421-422 to say that when a provision is made for renunciation of shares in favour of a non-member, it will become an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the price is also objectionable; it is an unfair method because the possible purchaser themselves fix the price, any element of unfairness in fixing the price is sufficient to vitiate the resolution. This ratio was held solely on the ground that court is unable to find any adequate reason for saying that the exemption of Briton Ferry company from the operation of the new article is or was for the benefit of the Llanelly Company. 361. By seeing this case, it appears that the Plaintiff Company (Briton Ferry Company) challenged passing a special resolution approving Articles of Association prejudicial to the interest of this Plaintiff Company, here in the company , the majority shareholders have neither opted for any alteration of Articles diluting the rights of the Petitioners herein, the time when the Petitioners became shareholders of this company, the Article presently impugned was very much present, it remained good for more than 100 years, now it could not be said just by showing this case where the majority tried to impose some new obligation upon the minority shareholders, therefore, we are of the view that this finding is not applicable to the present case. 362. On the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anies before 43A (1A), the only requisite that has been mentioned in Section 43A (2A) is to inform ROC that it has become private company and thereupon the Registrar shall substitute the word public into private, accordingly, made necessary alteration in the Certificate of Incorporation. It is only mere information that has to be given to ROC as per sub-section 2A. What this company today doing is, i.e. filing petition u/s 14, i.e. more than what has been directed under sub-section 2A of Section 43A, perhaps they have done it because Section 14 has come into existence on the advent of 2013 Act. (ii) The company has not altered any of the Articles of Association so as to bring any new entrenchment to the Articles already in existence- Therefore, it cannot be said that the management in the company has applied to slap some action upon the Petitioners herein so as to cause prejudice to the rights already in existence. Of course majority is always at liberty to alter the Articles, but that has also not happened here. (iii) Of Course legally, nothing available on record to say that the company by filing an application to declare it as Private is unlawful or in violation of the Art ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 369. The petitioner s counsel, the answering respondent counsel and Mr. Cyrus counsel having elaborately argued over this issue breaking it into sub-issues lining them as battle front against each other centering us in between to defend ourselves from the battle pitched against each other, let us see how we have come through. In this discussion, intermittently the interplay of corporate democracy against corporate governance has also got into. 370. Before going into discussion in respect to this aspect, I believe it is essential to place the text of articles and their existence to refer them in the progress of discussion; henceforth the Articles have been placed as below; 86. Quorum at General Meetings No quorum at a general meeting of the holders of the Ordinary Shares of the Company shall he constituted unless the members who are personally present are not less than five in number including at least one authorised representative jointly nominated by the Sir Dorabji Tata Trust and the Sir Ratan Tata Trust so long as the Tata Trusts hold in the aggregate at least 40% of the paid-up Ordinary share capital, for the time being, of the Company Explanation : the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) independent outside person selected by the Board for this purpose. The Chairman of the Committee will be selected by the Sir Dorabji Tata Trust and the Sir Ratan Tata Trust from amongst the nominees nominated by the Trusts. The quorum for a meeting of the Selection Committee shall be the presence of a majority of members nominated jointly by the Sir Dorabji Tata Trust and the Sir Ratan Tata Trust. Explanation: The words nominated jointly used in this Article shall mean that alt Trustees of the Sir Dorabji Tata Trust and the Sir Ratan Tata Trust acting together shall decide the nominees in the case of any difference, the majority decision of all the Trustees acting together of the Sir Dorabji Tata Trust and the Sir Ratan Tata Trust shall prevail. 121 Matters How Decided. Matters before any meeting of the Board which are required to be decided by a majority of the directors shall require * the affirmative vote of a majority of the Directors appointed pursuant to Article 104B present at the meeting and in the case of an equality of vote s the Chairman shall have a casting vote. **121A. The following matters shall be resolved upon by the Board of Dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions to such representative on how to exercise the Company s voting rights, Explanation: the term Tata Company used in this article shall, as the context requires, mean each or any of the following companies Tata Consultancy Services Ltd., Tata Steel Limited, Tata Motors Limited, Tata Capital Ltd., Tata Chemicals Ltd,, Tata Power Company Ltd., Tata Global Beverages Ltd., The Indian Hotels Company Ltd., Trent Limited, Tata Teieservices (Maharashtra) Limited, Tata Industries Limited, Tata Teieservices Limited, Tata Communications Limited, Titan Company Limited and In fin it i Retail Limited and any other company in which the Company (or its subsidiaries) holds twenty percent or more of the paid up share capital and whose name is notified in writing to the Company by the Directors nominated under Article 104B **121B Any Director of the Company will be entitled to give at least fifteen days notice to the Company or to the Board that any matter or resolution be placed for deliberation by the Board and if such notice is received it shall be mandatory for the Board to take up such matter or resolution for consideration and vote, at the Board meeting next held a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferring affirmative right in favour of the Trusts directors making it requisite it to the Board for affirmative vote of the nominee directors for passing resolution, likewise to place some issues of the specified group companies to be placed before the board of the company prior to voting on such issues by any of the group companies mentioned in Article 121A. Minutes of it were signed by Mr. Cyrus. 374. As to Article 75 is concerned, it has been present in the Articles of Association ever since this company was incorporated, the petitioners were not subscribers or members of the company when it was incorporated, they came as shareholders in the year 1965 by acquiring around 18.34% shareholding from erstwhile shareholders. This Article has been there by the time the petitioners have acquired shareholding in the company. For they have come into the company knowing fully well, restriction on transfer of shares in the mode mentioned in Article 75 is binding on them, it has now to be tested as to whether the persons consciously acquired shares of the company despite Article 75 is present, can they say existence of Article 75 wilt amount to per se oppression against the petitioners? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f majority shareholders would become counter-productive to the concept embodied in Article 121-A, 378. To the argument of the Sr. Counsel Dr. Singhvi retorting that the will of majority alone counts in relation to the affairs of the company, the petitioners counsel submitted that it is retrograde belief of the respondent counsel that the company speaks through its majority is wholly prejudicial, oppressive and stems from total misrepresentation of what corporate democracy would be in the present day context. 379. He submits, in the backdrop of this progressive change in the law, the majority shareholders i.e. Trusts using their might through their two nominee directors to ensure that important matters relating to the affairs of the company and Tata group companies are required to be tabled before the directors of the company subjecting the final decisions to their affirmative vote. By application of this affirmative vote, the Trusts through its nominee directors have made the board meeting as a routine ritual over the decision already taken by the Trusts. This kind of approach has given a go by to any meaningful discussion in the board meetings. The petitioners counsel subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ominee directors to record their allegation of the Articles being violated, eventually, the Trusts nominee directors stepped out of the Board meeting to take instructions as to what is to say and what is to be recorded; since they were being told to record the breach of the Articles of Association, despite Mr. Cyrus firmly refuted the same at the meeting, they did so. The counsel says that nothing could be more demonstrative than this to prove bigger abuse of Article 121, where despite Article 121-A not being attracted, using Article 121, Tata Trust asserted that they were being denied their right to approve matters before Tata Power company approved the resolution. 382. In Tata Motors also the same kind of predicament arose. The petitioners counsel submits that the argument of the respondents saying that the aforesaid situations were fait accompli for they were not being consulted before decisions were taken by Tata group companies is not sensible as it was already circulated. 383. After having gone through the minutes dated 29.6.2016, in the light of the pleadings of the respondents and documents thereof, it appears the facts taken place are slightly otherwise from the vers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat he fulfilled all the requirements under the Articles. In this piquant situation, Mr. Vijay Singh and Dr. Mohria, before giving an approval to such acquisition, which was already signed by Tata Power Co. Ltd., discussed this issue with Mr. Tata and Mr. Soonawala and then agreed for the same reiterating the views of the Trusts that this proposal should have come earlier. 385. On looking at this transaction, it is evident that Tata Sons did not hold board meeting before Tata Power Co. Ltd. proceeded with the transaction on 12.6.16. Let alone exercising the powers under Article 121-A, when substantial investment to such acquisition was to be made by Tata Sons, is it not the duty of Mr. Cyrus to hold board meeting to take the approval of the board for acquisition of Welspun before TPCL proceeded with this transaction on 12.6.16? It is also evident that this approval is really a fait accompli as stated by the answering respondents because they could not express anything except approving the acquisition for already TPCL has signed papers over the acquisition of Welspun on 12.6.16 itself. Another interesting thing to be noted is when Mr. Vijay Singh and Dr. Nohria made a call to Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o how these petitioners counsel supports the existence of Article 121A to assail Article 121 providing affirmative vote to the Trust nominee directors when in the petition, the petitioners asked for striking off not only article 121 but also 121A as well. 390. Tata Sons counsel has reasoned out that Article 121 does not give a right to these nominee directors to pass any resolution as they wish, because the mandate of Article 121 is that for passing any resolution, affirmative vote of trusts nominee directors is a requisite but it is not said that these two trust nominee directors could pass resolution without the support of other directors. Indeed, the right that majority kept to itself is less than what they could do as majority in the company, perhaps for that reason only, the respondents counsel have categorically mentioned that the petitioners counsel tried to paint the affirmative vote vested with the trust nominee directors as tool oppressive against the petitioners. 391. In this background, we are of the view that these petitioners made an attempt to portray that these two trusts nominee directors causing havoc to the functioning of the company, the petitioners couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attempt to bring in new insertion to the Articles, then there would be an occasion to this Bench to look into such issue to find out as to any expectation or covenant conferred upon the petitioners is frustrated by virtue of exercise of that article. Can courts, could then be used as leverage to break the back of X assuming that something may happen tomorrow to y ? This argument of the petitioners in respect to the Articles of Association is not only far fetching and abstract but also misconceived 396. If we sum up the argument of the petitioners, for them, there should not be any affirmative vote to the nominee directors representing majority, there shall be proportionate representation on the board and all committees to the petitioners. Such law is at least not present in Indian Law. On what basis are they entitled to? No answer. What will happen to majority, if they are deprived of affirmative vote? Is it that Mr. Cyrus will remain whole and sole and call the shots in the company by virtue of he being appointed by the majority as Executive chairman, and keep Mr. Tata representing majority and the trust nominee directors remain as credit cards in his wallet to use them whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs and the Central Government may prescribe the minimum number of independent directors in case of any class or classes of public companies. Explanation . -For the purposes of this sub-section, any fraction contained in such one-third number shall be rounded off as one. (5) Every company existing on or before the date of commencement of this Act shall, within one year from such commencement or from the date of notification of the rules in this regard as may be applicable, comply with the requirements of the provisions of sub-section (4). (6) An independent director in relation to a company, means a director other than a managing director or a whole-time director or a nominee director, - (a) who, in the opinion of the Board, is a person of integrity and possesses relevant expertise and experience; (b) (i) who is or was not a promoter of the company or its holding, subsidiary Or associate company; (ii) who is not related to promoters or directors in the company, its holding, subsidiary or associate company; (c) who has or had no pecuniary relationship with the company, its holding, subsidiary or associate company, or their promoters, or directors, during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titution in pursuance of the provisions of any law for the time being in force, or of any agreement, or appointed by any Government, or any other person to represent its interests. (8) The company and independent directors shall abide by the provisions specified in Schedule IV. (9) Notwithstanding anything contained in any other provision of this Act, but subject to the provisions of sections 197 and 198, an independent director shall not be entitled to any stock option and may receive remuneration by way of fee provided under sub-section (5) of section 197, reimbursement of expenses for participation in the Board and other meetings and profit related commission as may be approved by the members. (10) Subject to the provisions of section 152, an independent director shall hold office for a term up to five consecutive years on the Board of a company, but shall be eligible for reappointment on passing of a special resolution by the company and disclosure of such appointment in the Board s report. (11) Notwithstanding anything contained in sub-section (10), no independent director shall hold office for more than two consecutive terms, but such independent director shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s; (7) determine appropriate levels of remuneration of executive directors, key managerial personnel and senior management and have a prime role in appointing and where necessary recommend removal of executive directors, key managerial personnel and senior management; (8) moderate and arbitrate in the interest of the company as a whole, in situations of conflict between management and shareholders interest. III. Duties: The independent directors shall - (1) undertake appropriate induction and regularly update and refresh their skills, knowledge and familiarity with the company, (2) seek appropriate clarification or amplification of information and, where necessary, take and follow appropriate professional advice and opinion of outside experts at the expense of the company; (3) strive to attend all meetings of the Board of Directors and of the Board committees of which he is a member; (4) participate constructively and actively in the committees of the Board in which they are chairpersons or members; (5) strive to attend the general meetings of the company; (6) where they have concerns about the running of the company or a proposed action, ensure tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... himself or to his relatives, partners, or associates and if such director is found guilty of making any undue gain, he shall be liable to pay an amount equal to that gain to the company. (6) A director of a company shall not assign his office and any assignment so made shall be void. (7) If a director of the company contravenes the provisions of this section such director shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees. 398. Before going into what Section 149 says, to know the background in bringing independent director concept, it is pertinent to know what corporate governance is meant. Corporate governance is primarily to have transparency of operation, accountability towards shareholders and fairness in dealings. It is a system of rule, practices and process by which a firm is directed and controlled, corporate governance essentially entails balancing interest of the company, the stakeholders, such as shareholders, management, customers, suppliers, financers, government and the community. Since corporate governance also provides the framework for attaining company s objectives, it is encompassing practi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a situation that is in conflict to the interest of the company. In between, I must say that this legislation 2013 is much touted as investor/shareholder friendly, transparency is first of it, audit side it has been tightened, accountability towards shareholders more than before, the reason behind it is, management, most of the times, leaves shareholders high and dry, now information has to reach to the shareholders, this happens mostly in the cases where shareholders are more and to protect the interest of the minority shareholders. This protection is indeed designed to the shareholders, off from management, but not to the minority who uses this protection to pulverise the interest of the company with this heavy weighted provision (sections 241 242) which can even mar the company if its application is not properly employed. Therefore, by seeing this shareholder/investor protection under new dispensation, it shall not be mistaken as floodgates are open to the minority to proceed on any issue against any company without looking into the applicability of the provision, if that is so, it can even become red herring to the company for that no company could be in a position to take dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company. Mr. Cyrus was made as Executive Chairman of Tata Sons, not because he is the owner of the Petitioner companies which holdl8,34% shareholding of Tata Sons. It is very much reflective in the company petition because the petitioners themselves stated in the company petition in para 25 as follows: In 2010, Respondent No. 11 was a member of the Selection Committee, which was conducting a search for a replacement to Respondent No. 2 as Croup Chairman. After an unsuccessful initial exploration, both Respondent No. 2 and his close persona! friend, the said Bhattacharya approached Respondent No. 11 to be a candidate to chair the Board of Respondent No. 1. After giving it some thought, Respondent No. 11 declined this offer. However, despite interviewing several global leaders, the Selection Committee was unable to locate a suitable candidate, Respondent No. 11 was again asked to reconsider. After consulting the promoter family of the Petitioners, and on being assured by Respondent No, 2 that Respondent No. 11 would be given a free hand, he accepted the offer to become the Chairman, in the broader interests of the Tata Croup, 405. In the above para, it is clear that the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 241, As I said earlier, though there is no specific definition to Corporate Governance under any of the sections of Companies Act, 2013, the meaning of it could be culled out from the historical developments that have taken place so far. 408. If we see UK Law as well as the spade work that has been done for bringing it into Companies Act, 2013, it is primarily to have transparency of operations of a corporate, accountability towards its shareholders and fairness in dealings of the affairs of the company. Is it the case of the Petitioners that transparency is lacking in respect to the accounts of the company, is it the case that there is no accountability towards its shareholders and is it the case of the Petitioners that fairness is lacking? If at all any of these things are lacking, according to this corporate governance concept, the management is liable to be held for it. Who was in the management until before this company petition was filed? It is Mr. Cyrus who headed this Company as Executive Chairman up to 24.10,2016. Had really been there any infraction to any of these principles, what did he do all along? Is it the case that when auditors audited the accounts somethi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fectively only and only on one concept, i.e. democracy. Whether it is political democracy or corporate democracy, it makes no difference, concept and its objective is one and the same. Corporate Governance is not an anathema to corporate democracy, in fact it is corollary to the Corporate democracy to strengthen corporate democracy, the three principles set out in corporate governance are transparency, accountability and fairness. If you see the word accountability, transparency and fairness, we have to understand to whom who is accountable. If you see political democracy, Parliament is accountable to the people, in turn, Government is accountable to the Parliament. Whenever Parliament fails to have confidence in the Government, Parliament will recall the Government, so is the case here. There in political democracy, Government comes into existence to protect the basic rights of the people like right to speak, right to life and other incidental rights such as property rights. Here, in corporate field, governance is over the economic interest of the shareholders. In both the aspects, if we go little deep into it, it is ascertainable that the persons who are in the management and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e perception of the Petitioners and Mr. Cyrus) of majority is causing dent to the corporate governance therefore, it is to be considered as grievance under Section 241 of the Companies Act, Of course, such interference, as the petitioners held out, is not present anywhere in this Company Petition. 411. If you see the Welspun issue, it is evident Mr. Cyrus refusing to provide space to Tata Trust and, besides this, other issues would also clearly reveal that Tata Trust has been put to the receiving end, in fact it is fight for upmanship. Mr. Cyrus tried to have ride over the majority shareholders by virtue of the position of Executive Chairmanship given to him. Since we have already set out to discuss the evolution of the rights of minority shareholders separately, we can only say here that the existence of Articles of Association per se will not become oppressive to the Petitioners, indeed exercise of some action under the Articles to which the Petitioners agreed ever since they have come into the company, will never become a ground to raise grievance under Section 241. 412. As we all know, Articles of Association is nothing but an Agreement between the Company and its shareho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, i.e. to look into one by one to find out any truth is there in impugning these Articles. 415. Article 104B is an Article inserted on 09.04.2014 that so long as Tata Trust owned 40% of the paid up ordinary shares of Tata Sons, Sir Dorabji Trust and Sir Ratan Tata Trust shall have one third of the prevailing number of directors on the board. It need not be reiterated again that Trust hold majority of shareholding, including the other Trusts, companies and independent persons supporting the Trusts, i.e. more than 3/4th of the shareholding of Tata Sons so they can pass ordinary resolution as well as special resolution as and when a situation arises for passing such resolution. 416. In the Companies Act, a separate Chapter has been carved out under the caption of Management and Administration dealing with provisions for holding meetings, quorums to be maintained for meetings, the procedure for voting, the provisions for holding Annual General Meeting and Extra Ordinary General Meeting, modus for holding ordinary and special resolutions. This entire procedure has been set out to decide as to how the company has to be run and election of the Directors and other issues that fell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rance to Article 104B for saying that the matter that has come before the Board shall not be decided without affirmative vote of majority of the Directors appointed pursuant to Article 104B. Yes, to have majority control, they have opted the route of affirmative vote, since the majority limited its strength to l/3rdof the Board of Directors, they have to have affirmative vote, otherwise how a majority rule will work out. Had there been directors from the majority side, entire Board would have been occupied by the directors of the majority, that not being the situation, to have their majority, they have settled to affirmative vote. Affirmative right having not given anything more than majority by strength, we don t see anything as per se oppressive in this article against the interest of the Petitioners. 420. As to Article 121A, the Petitioners stated that existence of 121 is repugnant to exercise rights under Article 121A but in the same breath, the Petitioners sought for striking off this Article as well in the relief asked, though asking such relief is in conflict to the pleadings of the Petitioners, for the sake of completeness, let us look into it as to whether anything is o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d exercise their voting rights in the General Meeting of Tata Group company. Welspun is a tell-tale example as to how Tata Sons Board to take the decision in respect to investment for acquisition of Welspun, It need not be said separately all these group companies either acquired by Tata Sons or promoted by Tata Sons. All these group companies virtually have been set up by Tata family members to spread its business and to use the funds for the well-being of the society. Since the investments of Tata Sons lying in various group companies, it is always good to take collective decision in the Board of Directors whenever any money is to be invested in the group companies, That being the purpose and object of this Article, it is sordid on the part of the petitioners to plead that Articles have become all of sudden per se oppressive against the interest of Petitioners. We remind that this is also an Article that has been approved in the EGM held on 09,04.2014 headed by Mr. Cyrus as Executive Chairman. To us, nothing appears per se oppressive against the interest of the Petitioners, Of course, the petitioners subsequently filed a memo deleting the relief for annulment of this article. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... completely misplaced because no state action constituting expropriation of property rights is even remotely involved. 427. In this case, we have elaborately discussed and made an observation that it is a company running under the caption of Public company with private characteristics. We have already reiterated that it was a private company and it has been private company under the caption of Deemed Public company/Hybrid company after the advent of Section 43A (1A) and even after non application of Section 43A{1A) of the Companies Act, 1956. I again recall the judgement of Hon ble Supreme Court in between Ram Parshotam Mittal v. Hillcrest Realty Sdn. Bhd. [2009] 8 SCC 709 , to say that characteristics of the company is a decisive factor to decide which company is private company and which company is a public company, not the caption that has remained on the file of ROC. Since legal intricacy has already been discussed in the issue of conversion, we need not again say that it is a company running with characteristics of private, therefore, this company asking ROC to restore its status as private company cannot make this Article per se oppressive against the Petitioners. If at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il has become responsible for the day-to day management of the London office, his brother Bernard in the year 1946 went to New York to take up the office of Vice President of H.R. Harmer incorporated as an American company. This family business was merged into the company incorporated on July 1, 1947. In this company, father i.e. Harmer to be the Chairman of the board of directors for life. He was also to be the governing director, but the article contained no provision conferring any power on the governing director or restricting the powers of the other directors, The shareholding in the company at the date of the petition was: (a) A ordinary shares - the father - 1,028; Cyril - 4,611; Bernard - 4,361; (b) B ordinary shares - the father - 491; Cyril - 4; Bernard - 4; the father s wife - 295; Cyril s wife - 103; Bernard s wife - 103; (c) preference shares - the father - 11,029; Cyril - 5,291; Bernard - 3,230; Cyril s wife - 150; Bernard s wife - 150, the remaining 14,152 of the issued preference shares were held by other members of the family, by directors and former directors of the company and by the American company. Over a period of time, father became old but remained cling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f extraordinary and special as well as ordinary resolutions. The Judge Roxborough found that Mrs. Harmer agreed with her husband, when her holding of B shares were transferred to her, to vote in accordance with his direction and it was to be assumed that she would in fact always do so. It seems father executed an agreement that on his death the remaining 3,250 A shares and 760 B shares allotted to him were to be allotted to the three sons. The third son was not in the business of the company. Under the Articles of Association, the father was to be the chairman of the board of directors and as such he was entitled to casting votes in the event of equality of votes. Further by the articles, the father was appointed governing director for life but no special rights were attached to that office. He also had a service agreement appointing him as Managing Director for 10 years from 31.08.1946, at a salary of $3000 a year. That agreement was expired in 1956 and was not renewed. And no special power was delegated to him in his capacity as Managing Director. Thereafter, it appears from the judgment, I am given to understand, the shares that have beneficial interest were rest with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udgment. It has been proved that father has many health problems not in a position to hear, not in a position to remember, but one thing is clear that he was very much obsessed in the notion that he is whole and sole of the company and his sons should not speak anything until his demise. He could not even tolerate his sons suggesting anything to him in respect to affairs of the company. Moreover, the father did not give any chance to sons to have any discussion in the board because he used to say that he has casting vote whatever he said should happen. By seeing the attitude of the father and his actions causing sufferance to the company, his actions were declared as actions falling within the ambit of section 210 of English Companies Act, 1948. 434. In Harmer case, no ratio has been decided saying voting power cannot be exercised. They have decided that case in the backdrop of the shareholding pattern, family concept and proved wrong doings of the father causing damage to the company without even letting the board to take collective decisions; the arbitrariness the Court noticed in Harmer case is the father not allowing the other co-directors to speak anything. That is not the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the court has risen up to resolve this issue by regulating the idiotic conduct of the father, Here Mr. Tata has never said that board meeting should not happen, he has never tried to rewrite any of the minutes of the board meetings, the petitioners have also failed to show minutes of a single meeting that either the petitioners or the answering respondents differing with each other. 438. Per contra, it is evident on record, most of the time, almost all the times, Mr. Tata as well as Mr. Soonawala gave advises on being solicited. Even otherwise also, they being majority and it is being a practice to take decisions on informed basis, for they being richly experienced over the affairs of company, what is wrong in giving suggestions. In what way, it has affected the affairs of the company?. Any material that Tata refused to take a call over either Nano or Corus or for that matter on any other issue?. The petitioners cannot generalize by showing some letters saying that Mr. Tata and Soonawala jeopardising the interest of the company, There were instances that their suggestions were also not taken into consideration, For Tata Trusts having majority that headed by Mr. Tata and Soonawal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icial to the petitioners/the company?. 442. For discussion is getting overlapped spreading the same discussion to various issues, whatever residual issues such as argument on just and equitable ground, unfair prejudice, corporate governance, shadow director, legitimate expectation, equitable consideration, leakage of information to outsiders, interplay of sections, development of law from section 397-398of 1956 Act to section 241-242 of 2013 Act, business judgment rule, non-joinder of parties, etc. have been discussed along with the issue of removal of Mr. Cyrus as Director of the company. 443. The story lying to make his removal as Executive Chairman and subsequently as Director of the company is that the Board of the company removed Mr.- Cyrus working as Executive Chairman of the company on 24.10.2016 on the ground that Tata Trusts lost confidence in the functioning of Mr. Cyrus as Executive Chairman, thereafter on 06.02.2017 he was also removed as Director of the company in the extra-ordinary general meeting held on 06.02.2017. 444. At the outset, the petitioners counsel clarified that though the removal of Mr. Cyrus as the Executive Chairman is wholly illegal, ult ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... designate Mr. Cyrus as Executive Chairman during this period and any removal of Mr. Cyrus by the Board during this period would on the face of it be in breach of the Resolution of Shareholders and would logically have to be approved by the Shareholders. In other words, it was not just a matter for the Board of Directors in view of the Shareholders Resolution of 1stAugust 2012, and for admittedly, there has been no Shareholders Resolution in respect of the purported removal of Mr. Cyrus, the counsel therefore says, the removal of Mr. Cyrus has become illegal and oppressive act and deliberately done so as to circumvent the requirements of shareholders approval for the same. 447. The petitioners counsel has further relied upon other instances such as on 28,6.16 nomination and remuneration committee of the company giving a glowing account after the review of Mr. Cyrus performance, Mr. Cyrus flagging, as per the petitioners, the legacy issues ranging from expensive Nana project to unworkable international hotel and hospitality acquisition, indiscriminate vehicle financing by Tata Finance cumulatively creating non-performing assets of ₹ 4000crores and increase of cash-flows by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p. Then Mr. Tata mentioned recognizing the services Mr. Cyrus rendered to the company by further saying that it was important for the group to move forward in as seamless manner as one can, It was further put to Mr. Cyrus that it is his choice whether he would like to continue as non-executive director of the company, after he was removed as the Executive Chairman, for which, Mr. Cyrus said he would continue on the board. It is how the meeting ended, 449. In this historical background, now it has to be seen as to whether such removal has made out any case u/s 241 and 242 of the Companies Act, 2013 or not. The petitioners counsel and Mr. Cyrus counsel submit, it certainly falls within the ambit of section 241 and 242 reiterating that it is not an item in the agenda, it was not discussed in the meeting, the legal opinion upon which the nominee director of the trust said to have relied upon was not placed before the meeting, his removal is not only in violation of article 118 of the company but also in violation of secretarial standards mandate i.e. to give 15 days prior notice in regard to any issue to be taken up before the board of directors and also in violation of Article 121B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cutive Chairman to any of the shareholders or to any of the group of the shareholders of the company. 454. If you see the observation one after another, as to Mr. Cyrus position as Executive Chairman, as I have already discussed, was a position given to him to work as Executive Chairman with approval of the majority of shareholders through its nominee directors. The time when he was appointed, a selection committee was constituted as envisaged Article 118 of the Articles of Association of the Company, which has already been reproduced in other context. In the said Article, a provision has been made for constitution of selection committee to recommend the appointment of a person as the Chairman of the board of directors, on such recommendation, the board may appoint the person recommended as the Chairman subject to Article 121 which requires the affirmative vote of all directors appointed pursuant to Article 104B. If you see this language, it is pertinent to know that the selection committee constituted is competent only to make recommendation, on such recommendation, since the language is employed in such a way that the board may appoint , it is to be construed that the discret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... election process. Asking for the recommendation of selection committee for removal is an anathema to the doctrine of reasonableness. If at all such reading is given as ushered into by the petitioners and Mr. Cyrus counsel, it would become irrational and meaningless, therefore we consider this argument as bizarre and misconceived. 455. With regard to the contention that the item of agenda for removal of Mr. Cyrus, which was not present in the original agenda circulated, the petitioners and Mr. Cyrus counsel submit that bringing such item for discussion and resolution on the day of meeting is nothing but flouting the procedure set out in Article 121B of the Articles of Association. 456. In Article 121B, it has been said that any director will be entitled to give 15 days notice either to the company or to the board for deliberation and if such notice is not received by the board, it shall be mandatory to take up such matter in the following board meeting. Here no such notice has been issued. In furtherance of this argument, the petitioner counsel has also stated that paragraph 1,3-7 of the secretarial standards provides that the agenda setting out, the business to be transacte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forth, this point is decided against the petitioners. 459. On the contention of the petitioner that replacement of Mr. Cyrus as Executive Chairman was in breach of the shareholders resolution dated 01.08.2012, when we have gone through this resolution, it appears it has been resolved that the company in its annual general meeting dated 01.08.2012 approved the appointment and terms of remuneration of Mr. Cyrus as the Executive Dy. Chairman of the company with substantial powers of management for a period of five years with effect from 01.04.2012 to 31.03.2017 upon the terms and conditions set out in the explanatory statement with authority to the board to re-designate Mr. Cyrus as it may deem fit. Basing on this resolution, now the petitioners counsel argued that as the shareholders approved Mr. Cyrus as Deputy Executive Chairman for five years w.e.f. 01.04.2012, Mr. Cyrus could not have been removed from the office prior to 31.03.2017 by the board of directors of the company. Subsequent thereto, Mr. Cyrus was later, by the board resolution passed on 18.12.2012 designated as Executive Chairman by the board and not by the shareholders of Tata Sons. 460. It is also to be noted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h arose on account of Trust nominee director participating in the board meeting on the resolution to remove Mr. Cyrus. Merely the Trust/Trust nominee directors losing confidence in the functioning of Mr. Cyrus as Executive Chairman will never amount to conflict of interest with the interest of the company. 462. It has to be born in mind that every act that has been moved by a director cannot be considered as their proposal is in conflict with the interest of the company. Interest has specified meaning. We have been all through saying, interest of the shareholders in a company or interest of the company meaning that the Interest that makes some difference to the pecuniary interest of the company or the shareholders. If at all we go through section 166 of Companies Act 2G13, it could be evident that directors shall act in good faith for the benefit of its members and in the best interest of the company. Under section 184, the directors are required to abstain themselves from the board meetings in respect to the commercial transaction of the company, therefore, if any of these shareholders or directors give any requisition for removal of director or Executive Chairman, it cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the company by 2015 had increased to ₹ 42,000crores from ₹ 26000crores in 2011, many new business were launched, the Tata group market cap/valuation increased to ₹ 2,95,000 crores from 2006 to 2013, in 3 years 6 months, between 2013 and October 2016, increased to ₹ 3,26,000crore, the ratio of operation cash-flow to capex was 100% for first time in the last 10 years, Tata Tiago car was declared as the best compact car for the year 2016 by over drive, the brand value has increased by USD 5 billion in spite of all these achievements, the petitioners counsel submits, Mr. Cyrus was unceremoniously removed from the post of the executive chairman. 465. As against this, the answering respondents counsel, stating that though the respondents are not required to give reasons for the removal of the executive chairman of the company, it has been said that the reasons for losing the confidence in the stewardship of Mr. Cyrus are detailed as below (page 335-341 of Tata Sons Ltd. reply to the Petitioners): * Respondent No, 11 did not demonstrate any results in turning around areas where the operating companies were facing problems viz. Tata Steel s Europe operation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to dig out something from the business decisions and reflections of the businesses to scale the performance one saying he has done well and other saying he has doomed the company. We don t believe that it is right to measure out his removal basing on achievements and figures given by either side, it is evident that Mr. Cyrus came to the company as an employee, the position may be executive chairman, but that is also employment. Moreover, this will not become a ground u/s 241 primarily for the reason that it is not in relation to managing the affairs of the company, it is in relation to removal of a man managing the affairs of the company on being appointed by the directors, It has been time and again said, removal of an employee from the company by any stretch of imagination could not become a ground u/s 241 because removal of a person appointed on remuneration cannot be said as conducting the affairs of the company, it can at best be employment dispute. 467. In view of these reasons, we have not found any merit in the argument attributing removal of executive chairman as an act falling within the ambit of section 241. Otherwise also there is no merit in any of the points thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s there any one case against them by SEBI saying that they used such information against the company Rs. Answer is no. Such situation is possible where the people having some marginal shareholding in the company if they happened to be in the board, then there is a chance of leaking such information so as to have some unlawful gain by causing sufferance to the company whose information has been leaked out. Here the majority in the company belongs to Tata Trusts. If at all any such thing happens, the first loser will be Tata Trusts. Is that majority will do damage to themselves?. Normally not. To say yes to it, no information before this bench. It is highly preposterous on the part of these petitioners and Mr. Cyrus making such unfound and serious allegations just as a retribution to the heart-burn they had by the removal of Mr. Cyrus as Executive Chairman. In view of the observations we have made, we don t find any material to say that Mr. Tata or Trusts Nominee Directors caused the removal of Mr. Cyrus as chairman as a retort to the purported legacy issues set out in this company petition. Removal of Mr. Cyrus as director 470. Another argument under this head is removal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on the ground hehas right to seat on the board by virtue of his shareholding orArticles of Association. It is an admitted position that Pallonji Mistry became director of the company in the year 1980, though Palfonji family acquired shares in the company in the year 1965. Mr. Pailonji Mistry entered as Director in the company and continued as Director till 2004 and then for a period of two years (2004-2006), thereafter Mr. Cyrus came as director in the year 2006 and continued until he was removed. 475. The Respondents submit that the Petitioners in their rejoinder affidavit to the reply by the company, in their additional affidavit dated 21.1.2017, they have admitted (Para 31) that even though there is no written agreement between the parties, byconduct the Respondent No-1 (The company) has ensured that Shapoorji Pailonji Group is represented on its Board of Directors . It is not correct to say that Shapoorji family group had representation on the Board continuously ever since they came into this company, the Respondent Counsel submits, in any case such conduct cannot constitute a legal foundation for Mr. Cyrus continuation on the Board of the company de hors the Articles of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tand as to whether the Petitioners are entitled to the claim of proportional representation as envisaged under Section 163, the text of the Section is as below: Section 163: Option to adopt principle of proportional representation for appointment of directors Notwithstanding anything contained in this Act, the articles of a company may provide for the appointment of not less than two-thirds of the total number of the directors of a company in accordance with the principle of proportional representation, whether by the single transferable vote or by a system of cumulative voting or otherwise and such appointments may be made once in every three years and casual vacancies of such directors shall be filled as provided in sub-section (4) of section 161 . 480. On reading Section 163 It is no doubt that it is an overriding provision laying down that Articles of the Company may provide for the appointment of not less than 2/3rd of the total number of directors in accordance with the principle of proportional representation with three years term, but whereas in this company, no such provision has been made in the Articles of Association to have Directors in accordance with p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... islative are not affected by the conferment of powers on the Directors as section 31 of the Companies Act provides that an alteration of an article would require a special resolution of the company in genera! meeting. But a perusal of the provisions of the Companies Act itself makes it clear that in many ways the position of the directorate vis-a-vis the company is more powerful than that of the Government vis-a-vis the Parliament. The strict theory of Parliamentary sovereignty would not apply by analogy to a company since under the Companies Act there are many powers exercisable by the Directors with which the members in general meeting cannot interfere. The most they can do is to dismiss the Directorate and appoint others in their place, or alter the articles so as to restrict the powers of the Directors for the future. Gower himself recognizes that the analogy of the legislature and the executive in relation to the members in general meeting and the Directors of a Company is an over-simplification and states to some extent a more exact analogy would be the division of powers between the Federal and the State Legislature under a Federal Constitution. As already noticed, the onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd quite apart from removal powers, there are normally provisions for retirement of directors by rotation so that their re-election can be opposed and defeated by a majority, or even by a casting vote. In all these days a particular director-member may find himself no longer a director, through removal, or non-re- election: this situation he must normally accept, unless he undertakes the burden of providing fraud or mala fides. The just and equitable provision nevertheless comes to his assistance if he can point to, and prove, some special underlying obligation of his fellow member(s) in good faith, or confidence, that so long as the business continues he shall be entitled to management participation, an obligation so basic that if broken, the conclusion must be that the association must be dissolved. 100. Thus, we see that every shareholder of a company has the right, subject to statutorily prescribed procedural and numerical requirements, to call an extraordinary general meeting in accordance with the provisions of the Companies Act. He cannot be restrained from calling-a meeting and he is not bound to disclose the reasons for the resolutions proposed to be moved at the mee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding up on just and equitable ground, therefore I have discussed the facts and finding that was arrived on the facts of Ebrahimi. 484. The company involved in Ebrahimi case is Westbourne Galleries Ltd, before incorporation of this company, from about 1945, Ebrahimi(Appellant) and one Asher Najar were partners in a business, subsequent thereto, in the year 1958, a private company was floated by these very two persons by taking over partnership business into the newly incorporated company. In the said company, Ebrahimi and Najar were first directors, in the said Articles, there was a provision for removal of Director by an ordinary resolution in the General Meeting, In this background, Mr. Asher Majar s son, George Najar was also made as Director, for doing so, both Ebrahimi and Najar transferred 20% shareholding of each to George Najar, by which he had got 20% shareholding in the company. This company was doing good and all the profits of the company going to the directors as remuneration. No dividends were ever paid. Over a period of time, in the year 1969, for there being some misunderstanding among them, George Najar being son of Asher Majar, both of them flexing their majori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fits, when it was incorporated as a company they appointed themselves as first directors. As I said subsequently, Najar s Son George Najar came into the company as the two promoters transferred 100 shares each to the son of Mr. Najar. It was also recorded that the company made good profits all of which were distributed as director s remuneration, no dividends have ever been paid before or after the petition was presented. The Trial Court held that company was to be wound up under the just and equitable provision. Upon which, when appeal was filed, it was reversed saying that just and equitable ground could not be invoked unless it was shown that the power has not been exercised bonafide in the interest of the company or that the grounds for exercising the powers was such that no reasonable man would think that the removal was in the interest of the company. His Lordship has further held as another sign post that these words just and equitable appears in the Partnership Act, 1892, Section 25, as a ground for dissolution of partnership, He said that the importance of this is to provide a bridge between cases under Section 222 (f) of the Act, 1948 and the principles of equity develo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsiderations may arise. Certainly the fact that a company is a small one, or a private company, is not enough. There are very many of these where the association is a purely commercial one, of which it can safely be said that the basis of association is adequately and exhaustively laid down in the articles. The superimposition of equitable considerations requires something more, which typically may include one, or probably more, of the following elements: (i) an association formed or continued on the basis of a personal relationship, involving mutual confidence - this element wilt often be found where a pre-existing partnership has been converted into a limited company; (ii) an agreement, or understanding, that ail, or some (for there may be sleeping members), of the shareholders shall participate in the conduct of the business; (iii) restriction upon the transfer of the members interest in the company - so that if confidence is lost, or one member is removed from management, he cannot take out his stake and go elsewhere . 490. By the above para, it is evident that to apply this principle, there must be element of personal relationship or mutual confidence as pre-existing p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssarily submerged in the company s structure. It is a qualified statement in respect to the rights of the shareholders. This ratio is applicable to the companies where aggregation is knitted with individuals having rights, expectations and obligations which are not submerged in the company even after individuals being knitted. When company is not based on partnership lines, when no rights, expectations or obligations have not been carved out in the Articles, the Courts are not supposed to go beyond the contractual arrangements already the shareholders have among themselves in the form of Articles of Association because the basic proposition behind it is nobody can have any right more than what he has agreed to. 493. To say that since exclusion has been considered in Ebrahimi and other cases, it does not mean that the same is applicable to this case because as it Is said in Escorts supra, appointment or removal of director is one of the primary right of shareholders, therefore, it could not be diluted ascribing the principle that has been decided in Ebrahimi, 494. Even in Ebrahimi itself, Lord Wilberforce has time and again held that Westbourne Galleries is primarily a partner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k to the letter sent by Income tax Authorities. Nothing has been done. 497. He said that he sent an email making it confidential to the Directors of the company but it is a fact that letter has come out into public domain, before it was reached to the Board of Directors. 498. As I already said, there is no proportional representation to the shareholders of the company to have a seat on the board, no special rights to the petitioners to have their man on the board, no court order providing a seat to the Petitioners on the board, in the backdrop of it, for the Respondents have taken every precaution and procedural steps in compliance with the Companies Act for removal of the Petitioner. A complaint assailing the removal of director cannot become a grievance to the Petitioners under Section 241 of the Companies Act, 2013. As I said earlier, grievance means the economic interest of the shareholders because the interest of the shareholders is counted basing on the funds invested into the company, for that reason only, the criteria for filing company petition has been qualified basing on the share capital the shareholders holding, not the head count of shareholders whereby removal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 241, Parliament has adopted the doctrine of unfair prejudice under the English Companies Act 1980, then English Companies Act, 1985 and thereafter, under the English Companies Act, 2006. The Petitioner Counsel himself stated that the doctrine of unfair prejudice has been interpreted by English Companies Act to mean exercise of powers by the company which breaches promises or expectations of shareholders. 502. To establish that concept, the Petitioner Counsel relied upon O Neil v. Philips [1999] 1WLF 1092,the House of Lords held that such promises would arise by words or conduct, which it would be unfair to all the members to ignore and it was not necessary that such promises should be independently enforceable as a matter of contract. A promise may be binding as a matter of justice and equity although for one reason or another (for example, because in favor of a third party) it would not be enforceable in law. Unfair prejudice has been defined as conduct that lacks probity and involves a visible departure from standards of fair dealing . 503. The respondents relied upon Scottish Co-operative Wholesale Society v. Meyer, [1959] AC 324, to say that the word op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioners counsel further submits in the given case, the affirmative rights providing an overwhelming voting power to the Tata Trust, coupled with the practice of R2 and R14 presenting various incentives at their personal level vitiated the guarantee of the commercial probity that should be expected such as disinterest in recovery of dues in Siva, disinterest in closure of Nano, doing favors to Mehli, keeping Corus with the company despite it has been bleeding Tata Steel India since long. 507. The Petitioners Counsel relied upon the judgment given by Hon ble High Court of Madras in Ethiraj v. Sheetata Credit Holdings (P.) Ltd. [2017] 204 Company Cases by saying that just and equitable concept is applicable to listed public companies as well because the Hon ble High Court observed that running of the company requires inclusiveness which is intrinsic part of democracy process and that cannot be different where Corporate jurisprudence or governance is involved. 508. Basing on this argument, the Petitioners Counsel made out the following points as acts caused prejudice to the Petitioners: a. The affairs of R1 would be managed by the Board of Directors acting independent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of oppression and mismanagement concept thereafter historical changes brought in From time to time in Indian Law as well as English Law to answer this argument 511. This oppression and mismanagement law has in fact originated in England and from there it has been percolated down to British India, at the point of time when this law was evolving, since India was ruled by England, this taw also simultaneously developed in India, 512. This concept started brewing From Foss v. Harbottle [1843] 67 ER 189,it is a leading English precedent in corporate law, known as the rule in Foss v. Harbottle , over which, the several important exceptions that have been developed are often described as exceptions to the Rule in Foss v. Harbottle , Amongst these, the derivative action , is one which allows a minority shareholder to bring a claim on behalf of the company. This applies in situations of wrongdoer control and is, in reality, the only true exception to the rule. The rule in Foss v. Harbottle is best seen as the starting point for minority shareholder remedies. 513. The exceptions developed to the Rule in Foss v. Harbottle, to protect basic minority rights, regardless of the maj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loped into unfair prejudice in English Companies Act 1980, thereafter as 1985 Act, finally as English Companies Act, 2006. Along this journey, many changes have also come in giving more clarity to this concept from time to time. 516. On reading section 210 of English Act, 1948, any member of a company complained saying that the company affairs are being conducted in a manner oppressive to some members of the company, then a relief could be passed instead of winding up the company on just an equitable ground. In this section, it was not said as to whether any legal action could be taken if the actions are prejudicial to the company or to the public interest and it has also not been said anywhere in this section that the actions of prejudice aiming at the interest of the members, it has only been said that prejudice against the member, when their position has come to 1980, in the English Companies Act 1980 oppression remedy was morphed into unfair prejudice remedy when the interest of the members is affected, for the first time English law was changed from oppressive to unfairly prejudice to the interest of the members, in this section also, it was nowhere mentioned that when an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against unfair prejudice caused to the complaining member. But to take derivative action, the complaining member has to take permission from the Court on placing an application and evidence disclosing prima facie case, if the party fails to place prima facie case, the application moved by the complaining member shall be dismissed. When it comes to members grievance against unfair prejudice, such permission is not required to take action against the company. In the case of subsidiary companies, this derivative action is said as double derivative action, which requires lot of compliance, normally in England, granting relief under section 260 of English Companies Act 2006 itself is difficult, then we can imagine how difficult to get relief in the case of double derivative actions. Here, the petitioner impugned the actions of group companies without even making them as parties, 517. For taking derivative action it shall be only against the cause of action arising from an actual or proposed act or omission involving negligence, default, breach of duty or breach of trust by a director of the company. So to take derivative action, the cause of action should be vested in the company, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny law and mere proof of unfairness does not amount to oppression, therefore this theory of legitimate expectation, according to the respondent, is not applicable to the present case. 521. As to facts of this case, the petitioners has not raised any ground as such under legitimate expectation except saying that Mr. Cyrus father continued as director from 1980 to 2004 and Mr. Cyrus continued as director from 2006 to 2016, there is no other ground for them to say that legitimate expectation is available to them. Merely a person continuing as director for some time itself will not become legitimate expectation and to call it as oppression if a director is removed from that post. As to continuation of director in a company as a legitimate expectation is evolved from partnership concept, which is not the case here therefore the concept of legitimate expectation is not applicable to the present case. On this ground, we have not made any further discussion on the doctrine of legitimate expectation. 522. As to Indian Company jurisprudence, when section 397-398 has brought to Companies Act, section 210 of English Companies Act, 1948 was rewritten adding mismanagement, initially in se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se are elementary principles in respect to business run by an association and an aggregate of persons, As we know every decision in a case always turns on its facts, we have to be serious in examining the facts and also to see whether those facts are admitted or at least proved to be true before venturing into apply statute and ratio decided on facts similar to the given facts of our case. This is how application of law happens. 527. Even in Ebrahimi also, the case was decided on the premise that it is Partnership Company, holding Mr. Ebrahimi removal would tantamount to deprivation of profits of the company, because the directors receive entire profits as remuneration to the directors so as to sustain their lives. It was also held that it normally happens in small companies. 528. But as to big companies, management is always different from ownership - there, these kind of legitimate expectations or assumptions do not exist. This concept of quasi partnership company has come into existence to meet with eventualities that come up in small companies and partnership companies, in our country it is family companies. The base for this premise is, when partnership has been dissolve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely the fact that the company is small or private will not ipso facto entitle the complainant to have roughshod over the company which is purely commercial with adequately and exhaustively laid down articles. It has been specified that the superimposition of equitable consideration over legal rights will come into picture only when the elements that have been mentioned in the following paras of Ebrahimi. So, there is a clear line in which cases this just and equitable ground is applicable and in which case just and equitable ground of winding up is not applicable. 531. In section 397 of the old Act as well as 241 of the new Act, the precondition for passing an order is, there shall be just and equitable ground before coming to an opinion that it is unfairly prejudicial to the member if winding up order is passed. As per the ratio decided in Ebrahami and the same being referred in catena of judgments of Indian Courts, the same guidance could be taken by this Tribunal for stating that just and equitable ground would be in the cases where preexisting partnership has been converted into a limited company, a stipulation for shareholders to participate in the conduct of business and r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an another, which may make it unjust, or inequitable, to insist on legal rights, or to exercise them in a particular way. It would be impossible, and wholly undesirable, to define the circumstances in which these considerations may arise, Certainly the fact that a company is a small one, or a private company, is not enough. There are very many of these where the association is a purely commercial one, of which it can safely be said that the basis of association is adequately and exhaustively laid down in the articles. The superimposition of equitable considerations requires something more, which typically may include one, or probably more, of the following elements: (i) an association formed or continued on the basis of a personal relationship, involving mutual confidence - this element will often be found where a pre-existing partnership has been converted into a limited company; (ii) an agreement, or understanding, that all, or some (for there may be sleeping members), or the shareholders shall participate in the conduct of the business; (iii) restriction upon the transfer of the members interest in the company - so that if confidence is lost, or one member is removed f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ector of the management or for that matter the majority shareholders, do something malafide aiming the aggrieved to be put to sufferance, that can be dealt with under the head of oppression and mismanagement relieving him honorably, means by compensating him with his due in the company. This itself is relief, because this cannot be otherwise granted, because once money goes into company as equity, shareholder will not have any right to ask for the refund or return of it, because he has no such right under company law for title of it is vested with independent entity, i.e., company. Therefore, even if anybody is identified doing wrong, it has to be limited to the wrong that has been done to such member, because by virtue of such wrong, company should not be put to sufferance. For this reason alone, whenever the grievance of the complainant is proved, the regular and common relief that has been passed in many of the cases is, providing exit to such person on fair valuation, the reason is the aggrieved cannot continue in such company, where trust levels are put to question. If you see the closing clause to section 242(1} of the Act, it could be ascertainable that the relief that is to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... press upon this Bench that this so called interference by Mr. Tata and Mr. Soonawala is prejudicial to the interest of the company as well as the petitioners, of course, these petitioners utterly failed to prove that Mr. Tata and Mr. Soonawala acted prejudicial either to the interest of the company or to the interest of the petitioners. 541. A question may arise that had their actions of Mr. Cyrus prejudicial to the interest of the majority; they would have sought the same relief against the petitioners herein, For this, the answer is when majority is given right to set right the business of the company or transactions of the business including management issues, they could set right the same as per law by bringing change in the management to which they are entitled to. The Court also will not grant majority shareholders a remedy under the head of unfair prejudice where such prejudice can be avoided by the exercise of their rights as majority shareholders. The same is done here. 542. If you see the correspondence and transactions happened under the stewardship of Mr. Cyrus, it is evident on record that Mr. Cyrus created a situation that since he being the executive chairman o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re that at least one out of those deals not slipped out from Tata Motors. It seems finally neither Uber did a deal nor Ola did a deal for Tata Motors cars. In a situation like this, when majority felt that Mr. Cyrus should not continue as executive chairman, they removed him, in the same time when he showed anxiety in sending bundles of papers to Income Tax authority without even putting it to the notice of principal officer, and leaking out information of the company to media, conflicting with the interest of the company, he was even removed as Director. 545. On having the petitioners relied upon Amalgamations Ltd. v. Shankar Sundaram (2011) (6) CTC 594 to assert that in a petition u/s 241, members can raise a grievance/complaint not only regarding the company in which they are shareholders but also regarding subsidiary companies of the former company. However, when this matter went to Supreme Court, in Civil Appeal No. 4574-4585/2017, it has been held that the Appellant shall be at liberty to argue on the ground in the said petition and the prayer regarding the alleged mismanagement of the companies in question, in case the corporate veil is lifted, by holding further that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oppression: (1) Any members of a company who complain that the affairs of the company are being conducted in a manner prejudicial to public interest or in a manner oppressive to any member ormembers (including any one or more of themselves) may apply to the [Tribunal] for an order under this section, provided such members have a right so to apply in virtue of section 399. (2) If, on any application under sub-section (1), the [Tribunal] is of opinion ( a ) that the company's affairs are being conducted in a manner prejudicial to public interest or in a manner oppressive to anymember or members : and ( b ) that to wind up the company would unfairly prejudice such member or members, but that otherwise the facts would justify the making of a winding up order on the ground that it was just and equitable that the company should be wound up ; the [Tribunal] may, with a view to bringing to an end the matters complained of, make such order as it thinks fit. Section 398-Application to [Tribunal] for relief in cases of mismanagement: (1) Any members of a company who complain - ( a ) that the affairs of the company are being conducted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, setting aside or modification of any agreement between the company and any person not referred to in clause ( d ), provided that no such agreement shall be terminated, set aside or modified except after due notice to the party concerned and provided further that no such agreement shall be modified except after obtaining the consent of the party concerned; ( f ) the setting aside of any transfer, delivery of goods, payment, execution or other act relating to property made or done by or against the company within three months before the date of the application under section 397 or 398, which would, if made or done by or against an individual, be deemed in his insolvency to be a fraudulent preference; ( g ) any other matter for which in the opinion of the [Tribunal] it is just and equitable that provision should be made. Chapter XVI- Prevention of oppression and mismanagement Section 241- Application to Tribunal for relief in cases of oppression, etc.: (1) Any member of a company who complains that- ( a ) the affairs of the company have been or are being conducted in a manner prejudicial to public interest or in a manner prejudicial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) the termination, setting aside or modification, of any agreement, howsoever arrived at, between the company and the managing director, any other director or manager, upon such terms and conditions as may, in the opinion of the Tribunal, be just and equitable in the circumstances of the case; ( f ) the termination, setting aside or modification of any agreement between the company and any person other than those referred to in clause (e); Provided that no such agreement shall be terminated, set aside or modified except after due notice and after obtaining the consent of the party concerned; ( g ) the setting aside of any transfer, delivery of goods, payment, execution or other act relating to property made or done by or against the company within three months before the date of if made or done by or against an individual, be deemed in his insolvency to be a fraudulent preference; ( h ) removal of the managing director, manager or any of the directors of the company; ( i ) recovery of undue gains made by any managing director, manager or director during the period of his appointment as such and the manner of utilisation of the recovery including tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... II. LEGISLATIVE EVOLUTION UNDER ENGLISH LAW: ENGLISH COMPANIES ACT, 1948 ENGLISH COMPANIES ACT, 1980 ENGLISH COMPANIES ACT, 1985 ENGLISH COMPANIES ACT, 2006 Part IV- Management and Administration Minorities Section 210- Alternative remedy to winding up in cases of oppression: (1) Any member of a company who complains that the affairs of the company are being conducted in a manner oppressive to some part the members (including himself) or, in a case falling within subsection (3) of section one hundred and sixty- nine of this Act, the Board of Trade, may make an application to the court by petition for an order under this section. (2) If on any such petition the court is of opinion- ( a ) that the company's affairs are being conducted as aforesaid; and ( b ) that to wind up the company would unfairly omission on its behalf) is or would be so prejudice that part of the members, but otherwise the facts would justify the making of a winding-up order on the around that it was just andequitable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are being or have been conducted in a manner which is unfairly prejudicial to the interests of some part of the members including at least himself) or that any actual or proposed actor omission of the company. (including an act or omission on its behalf) is or would be so prejudicial. (2) If in the case of any company- ( a ) the Secretary of State has received a report under section 168 of the 1948 Act (inspectors report) or exercise his powers under Part III of the 1967 Act or section 36(2) to (6) of the Insurance Companies Act 1974 (inspection of company's books and papers); and ( b ) it appears to him that the affairs of the company are being or have been conducted in a manner is unfairlyprejudicial to theinterests of someDart of themembers or that any actual or proposed act or omission of the company (including an act or omission on its behalf) is or would be so prejudicial, he may himself [in addition to or instead of presenting a petition for the winding-up of improper the company under section 35(1) of the 1967 Act) apply to the court by petition for an order under this section. (3) If the court is satisfied that a petition under this sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the company have been transferred or transmitted by operation of law as it applies to a member of the company, and references to a member or members shall be construed accordingly. (10) in subsections (2) to (9) above company means any body corporate which is liable to be wound up under the 1948 Act. (11) Section 210 of the 1948 Act and section 35(2) of the 1967 Act (which are superseded by this section) shall cease to have effect in relation to proceedings on a petition presented before the appointed day. Part-XVII Protection of company's members against unfair prejudice Section 459- Order on application of company member: (1) A member of a company may apply to the court by petition for an order under this Part on the ground that the company's affairs are being or have been conducted in a manner which is unfairly prejudicial to the interests of some part of the Members including at least himself) or that any actual or proposed act or omission of the company (including an act or omission on its behalf) is or would be so prejudicial . (2) The provisions of this Part apply to a person who is not a member of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art 30- Protection of members against unfair prejudice Main Provisions Section 994- Petition by company member: (1) A member of a company may apply to the court by petition for an order under this Part on the ground- ( a ) that the company's affairs are being or have been conducted in a manner that is unfairly prejudicial to the interests of members generally or of some part of its members (Including at least himself), or ( b ) that an actual or proposed act or omission of the company (including an act or omission on its behalf) is or would me so prejudicial . (1A) For the purpose of subsection (l)(a), a removal of the company's auditor from office - ( a ) On grounds of divergence e of opinions on accounting 9 treatment s or audit procedures, or ( b ) On any other grounds, Shall be treated as being unfairly prejudicial to the interests of some part of the company's members, (2) The provisions of this Part apply to a person who is not a member of a company but to whom shares in the company have been transferred or transmitted by operation of law as they apply to a member of a company. (3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act, and each case must depend on its own circumstancesI think the moneys of the company have been misapplied, and that the company is so constituted that it is deprived of its usual remedies. This is again sufficient for a winding up. 548. He goes on to rely upon the judgement in Baird v. Lees 1924 S. C, 83 where Lord Clyde has held, J have no intention of attempting a definition of the circumstances which amount to a just and equitable cause. But I think I may say this. A shareholder puts his money into a company on certain conditions. The first of them is that the business in which he invests snail be limited to certain definite objects, The second is that it shall be carried on by certain persons elected in a specified way. And the third is that the business shall be conducted in accordance with certain principles of commercial administration defined in the statute, which provide some guarantee of commercial probity and efficiency. If shareholders find that these conditions or some of them are deliberately and consistently violated and set aside by the action of a member and official of the company who wields an overwhelming voting power, and if the result of that is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd equitable clause baffles a precise definition. It must rest with the judicial discretion of the court depending upon the facts and circumstances of each case. These are necessarily equitable considerations and may, in a given case, be superimposed on law. Whether it would be so done in a particular case cannot be put in the straitjacket of an inflexible formula, 552. As against this argument, Senior Counsel Dr. Abhishek Singhvi made the following submissions: 1. A division bench of the Calcutta High Court in the case of Bagree Cereals Others v. Hanuman Prasad Bagri and Others 2001 105 Comp. Cas. 465 has held that for a petitioner to be successful under Section 397 of the 1956 Act he had to prove not only that it was just and equitable to wind up the company, but also that such winding up would unfairly prejudice the petitioning shareholder. In the event the petitioners fail to make out such case, the petition is liable to be dismissed. The division bench held the aforesaid to be a prerequisite jurisdictional requirement for obtaining relief under S. 397 of the 1956 Act. In appeal against the said decision the Supreme Court in Hanuman Prasad Bagri Others v. Bagress ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Partnership Act, under Section 46 thereafter, it has become part of Section 153(c) of Indian Companies Act, 1913. It is the fundamental foundation of a partnership that good faith of the partners is pledged mutually to each other that the business shall be conducted with the actual personal interposition, subject to the Agreement of Partnership, so that each may see that the other is sparing it for their mutual advantage (vide Per Lord Eldon in Peacock v. Peacock). While applying the analogy of Partnership Law, for winding up a quasi-partnership company on the just and equitable ground, a passage was referred from Lindley in Re Yenidje Tobacco Co Ltd (1916) 2 Ch 426f 430 (CA) Loch v. John Blackwood Ltd (1924) AC 783 (PC) at 791; Re Lundie Brothers Ltd (1965) 1 WLR 1051, Ebrahimi, which is as follows; It is not necessary, in order to induce the court to interfere, to show persons/ rudeness on the part of one partners to the other, or even any gross misconduct as a partner. All that is necessary is to satisfy the court that it is impossible for the partners to place that confidence in each other which each has a right to expect, and that such impossibility has not been cause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te here before we leave the Companies (Amendment) Act, 1951 is that this provision on mismanagement in Section 153(c) was inextricably linked to winding up on the just and equitable ground just as the provision regarding oppression was linked both in Section 210 of the English Act and in Section 153(c). Under Section 153(c), to invoke jurisdiction under the head of mismanagement , the complainant was invariably to prove that the facts would justify the making of a winding up order on the ground that it is just and equitable that the company should be wound up. From 1951 when it came to 1956 Companies Act, this 153(c) was bifurcated into two Sections, i.e. Section 397, as to mismanagement is concerned Section 398 (l)(a). In regard to mismanagement, it has been delinked from proving or showing the facts that would justify making of a winding up order on the ground that is just and equitable that the company should be wound up. 557. For the sake of historical importance, Section 153(c) of Companies Act, 1913 and Section 397-393 of Companies Act, 1956 are placed herein. COMPANIES ACT, 1913 The Indian Companies (Amendment) Act, 1951. Alternat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was justand equitable that the company should be wound up ; the [Tribunal] may, with a view to bringing to an end the matters complained of, make such order as it thinks fit, Section 398-Application to [Tribunal] for relief in cases of mismanagement: (1) Any members of a company who complain - (a) that the affairs of the company are being conducted in a manner prejudicial to public interest or in a mannerprejudicial to the interests ofthe company; or (b) that a material change (not being a change brought about by, or in the interests of, any creditors including debenture holders, or any class of shareholders, of the company) has taken place inthe management or control ofthe company. whether by an alteration in its Board of directors or manager or in the ownership of the company's shares, or if it has no share capital, in its membership, or in any other manner whatsoever, and that by reason of such change. it is likely that the affairs of thecompany will be conducted ina manner prejudicial to publicinterest or in a mannerprejudicial to the interests ofthe company ; may apply to the [Tribunal] for an order under this section, provided s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yaji Jublee Cotton Jute Mills (1964) 34 Com Cas 777, Navnittat M. Shah and Qrs, v. Atul Drug House Ltd and Ors. to know how this change has come in law and its implications. Out of all these cases, Seth Mohanlal supra elucidated with erudition over oppression and mismanagement law by Hon ble Justice P. N. Bagawati when he was with Gujarat High Court to understand the interplay of these Sections, it is very much to know what has been said in that judgement, thereby we place some of the paras of that judgment which are as follows: 28. Sections 397 and 398 are part of a fascicles of sections commencing from section 397 and ending with section 407 and this fascicles of sections occurs in section A dealing with powers of court under Chapter VI headed Prevention of oppression and mismanagement . Under section 397 any members of a company who complain that the affairs of the company are being conducted in a manner oppressive to any member or members including any one or more of themselves, may petition the court which, if satisfied that the company s affairs are being conducted in a manner oppressive to any member or members and that the facts justify the making of a winding-up or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be made should be such as will suppress the mischief and advance the remedy and add force and life to the cure and remedy according to the true intent of the makers of the Act, pro bono publico. Now Mr. S. B, Vakil is certainly right in his submission that sections 397 and 398 being designed to suppress an acknowledge mischief, they should receive liberal Interpretation and the court should give such construction as will advance the remedy, but even applying this principle of interpretation, it is not possible to accept the construction contended for on behalf of the petitioners- The reasons are as follows: 29, Prior to the enactment of the Companies Act, 1956, the statute relating to companies was the Indian Companies Act, 1913. There was in the Indian Companies Act, 1913, section 153C which corresponded to sections 397 and 398 of the Companies Act, 1956. This section was introduced in the Indian Companies Act, 1913, by Act LII of 1951 following the enactment of section 210 in the English Companies Act, 1948. The genesis of the provisions contained in section 397 and 398 of the Companies Act, 1956, is therefore, to be found in section 210 of the English Companies Act, 1948. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, the aggrieved shareholders could, instead of applying for winding up the company in order to put an end to such oppression or mismanagement, apply for relief under the section and the court could make such order as it thought necessary with a view to putting an end to such oppression or mismanagement and preventing its recurrence. When the Companies Act, 1956, was enacted, what was originally section 153C was split up into sections 397 and 398 and the scope of the remedy was expanded by removing in cases covered by section 398 the requirement that the aggrieved shareholders must make out a case for winding up under the just and equitable clause before they can apply for relief under that section. The object and purpose of the remedy, however, remained the same, namely, to curse the mischief of oppression or mismanagement on the part of controlling shareholders by bringing to an end such oppression or mismanagement so that it does not continue in future. The remedy was intended to put an end to a continuing state of affairs and not to afford compensation to the aggrieved shareholders in respect of acts already done which were no longer continuing wrongs. It is in the light of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be at the date of the application a continuing course of conduct of the affairs of the company which is oppressive to any shareholder or shareholders or prejudicial to the interests of the company and it is this course of oppressive or prejudicial conduct which would form the subject-matter of the complained in the application. Now the purpose for which an order can be made under sections 39? and 398 being to bring to an end the matters complained of and the matters complained of in an application under these sections being a course of conduct on the part of controlling shareholders in the management of the affairs of the company which is oppressive to any shareholder or shareholders or prejudicial to the interests of the company, it is clear that an order can be made under these sections only for the purpose of bringing to an end such course of oppressive or prejudicial conduct, that is for the purpose of putting an end to oppression or mismanagement on the part of controlling shareholders so that there may not be in future such oppression or mismanagement. The language of sections 397 and 398 leaves no doubt as to the true intendment of the legislature and it is transparent that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depend on the state of affairs prevailing in the company and the nature of the restrictions required to put an end to such state of affairs. The necessity of interference under these section may arise in an infinite variety of circumstances and the legislature has, therefore, left the discretion of the court unfettered in the matter of making an appropriate order. Such power can, however, be exercised by the court only for the purpose of bringing to an end oppressive or prejudicial conduct in the management of the affairs of the company. 31. This, in my opinion, is the true import of sections 397 and 398 and it is apply supported by the heading under which the sections occur. It is now well settled that heading of this kind can be referred to for the purpose of construction of the sections ranged under the headings. In Inglis v. Robertson (1) [1898] A. C. 616., Lord Herschell, called upon to construe section 3 of the Factors Act, 1889, relied upon the fact that the section appeared in a group of sections headed Dispositions by Mercantile Agents and after referring to the headings of different parts of the Act, observed: These headings are not, in my opinion, mere marginal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of a continuous and continuing course of oppressive or prejudicial conduct, any shareholders who are aggrieved by such conduct would be entitled to ask the court to set aside such transaction. Now such transaction may not come within any of the three recognized exceptions to the rule in Foss v. Harbottle (4) (1843) 2 Hare 461. and yet the aggrieved shareholders would be entitled to challenge such transaction by taking proceedings in their own right under sections 397 and 398. The result would be that on this construction the exceptions to the rule in Foss v. Harbottle (1) (1843) 2 Hare 46 L, would be enlarged beyond the three well recognized exceptions and whenever any transaction is entered into by a company with a third party which is part of oppressive or prejudicial conduct on the part of those in management of the affairs of the company, it would be liable to be challenged at the instance of the aggrieved shareholders, Now could the legislature have intended to being about such a result which would have the effect of almost abrogating the rule in Foss v. Harbottle (1) (1843) 2 Hare 461. In so far a$ transactions with third parties are concerned? Could the legislature hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion also arise on the construction advocated by Mr. S.B, Vakil and it is difficult to find an answer to that question. If sections 397 and 398 are intended to confer a new cause of action on individual shareholders to set aside transactions entered into by the company with third parties, on what ground are those transactions liable to be impeached? No clue to the answer to this question is furnished by the sections save and except that the transactions would be liable to be set aside if they are part of a continuous and continuing course of oppressive or prejudicial conduct on the part of controlling shareholders. But this would mean that individual shareholders would have a right to ask the court to set aside any transaction entered into by the company with a third party on the mere ground that such transaction, though otherwise perfectly legal and valid and hence, incapable of being avoided by the company, was oppressive to the complaining shareholders or prejudicial to the interests of the company. Such a view would make it Impossible for any outsiders to deal with the company and far from advancing the interests of the company would be clearly detrimental to the interests of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both scenarios, i.e. for oppression as well as mismanagement. The scope that was open for more than 60 years, i.e. from 1956 to 2013 for making out cases under the caption of mismanagement without proving a ground for winding up under just and equitable principle. It is not that something new has come in in the regime of 2013 Act, indeed the position that was in existence from 1951 to 1956 has been restored under 2013 Act. Now it is not opened to any member to raise mismanagement ground saying that since mismanagement has been proved relief is to be granted. Now twin conditions have to be proved for mismanagement, i.e. mismanagement as well as ground for winding up under just and equitable ground. 560. Right of minority shareholders as against majority rule is paradoxical to each other; it is an anathema to each other, but beauty of dispensation of justice lies in employment of law and seamless application of contrast concepts to the conspectus of given facts to meet the ends of justice. Justifying these two given concepts is somewhat uphill task because governance by majority is a rule; protecting minority from majority is an exception, in fact minority protection is an occasio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tainable that Mr. Cyrus, according to him joined as Executive Chairman under the assumption that he was given free hand to run the affairs of the company. To agree with this argument, there should be an understanding or an Agreement to show that Mr. Cyrus joined as Executive Chairman with a liberty to handle the affairs of the company as per his wish, but no such indication or something in writing reflecting that Mr. Cyrus was given free hand to run the affairs of the company as he wishes. 563. The very idea Mr. Cyrus assumed in his mind that he was given free hand to run the affairs of the company is incongruous to the corporate governance and corporate democracy. Until before one-man company has come into under Companies Act, 2013, there should not be less than two persons in the Board of Directors and they should come to an agreement to take a decision in respect to any of the affairs of the company. Such being the ethos of the company structure, Mr. Cyrus could not even by imagination expect free hand in running the affairs of the company. 564. For Mr. Cyrus started his journey as an Executive Chairman under the impression that he was given free hand or would be given fre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d a deal with them in the past. When people working together for a long time, trust level will also keep increasing, of course there would be one-two issues where things happen otherwise also. With this, we hold that this free hand rule concept is an antithesis to collective responsibility and collective decision making. 566. Section 241-242 is a jurisdiction where ordinary jurisdiction could not reach, for that reason only it is called extra ordinary, it is a jurisdiction not about declaration of what is legal and what is illegal, it is a jurisdiction to test the fairness of actions. Under this jurisdiction, Advocates committed to put forward the cause of their clients may take sides to justify the case of their clients, but whereas Court cannot take sides, more specially in this jurisdiction, what action is done in relation to the affairs of the company is important, not who has done what. If such action is proved in relation to the affairs of the company then it has to be seen whether it has been done in the course of conducting the affairs of the company or not, if that is so, then to prove that such action is oppressive/prejudicial to the interest of the shareholders and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eement, oral or written, with explicit terms or with expectations with which they started working together. These terms, conditions and expectations normally known to each other right from the beginning, if they are not known to each other, one person cannot later surprise other with his assumed expectations. Fairness is as simple as this. The action which is not fair or unfair should be prejudicial to the interest of a member. Normally the actions which are prejudicial to the company are siphoning, acting in conflict with the interest of the company, etc. Of course, if you go to the fundamentals of prejudice to the company are also based on unfairness. What all I say is mere unfairness of the action is not enough it must be prejudicial either to the Petitioners or to the company. It may be said that prejudicial action will not amount to have caused harm to the aggrieved, but such action is potential enough to cause prejudice to a member or company. For that reason only, the heading of this Chapter is also mentioned as Prevention of Oppression and Mismanagement , so that if at all any action is prejudicial, potential enough to cause harm to the member or the company as envisag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsidiaries is essential or not, I must say most of the companies are not at all subsidiaries of Tata Sons they are only associate companies or having shareholding by Tata Sons, If at all we go by this argument, since Mr. Cyrus continued as a Non-Executive Chairman of most of the group companies, he is more answerable than anybody else to the issues of the group companies. However, the Petitioners having raised the group companies issues without making them as Respondents, adjudication on such business decisions without making the bodies taken such business decisions is nothing but deciding issues without hearing the party who actually conducted the affairs of such group companies. The Petitioner proceeded with this case for more than one year, argued on maintainability, argued on waiver, argued on main petition but has not filed any application for impleadment of those group companies as parties to this proceeding. In view of these reasons, non-joinder of such parties is fatal to this case. It is, as per Section 241 also, necessary to implead the company whose affairs have been impugned in the proceeding. It is one fatality out of many fatalities writ large in this case. 568. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot like Civil Court that once it is in violation an order is invariably to be passed, knowing well business will have so many complexities, the discretion is still left to the Court to pass a relief only on satisfaction of it. Every equity relief is a discretionary relief; it has to be in alignment with justice to be done in the facts of that case. 570. What situations were in existence at the time Mr. Tata entered into Corus were known to him likewise what happened in Nano everybody knows. It is not that all business judgements would click and pump in money into the company, some fail, some succeed. Sometime before when maintainability issue was decided it was already said no magic wand is present in the hands of Mr. Tata. They are all past and concluded acts. Right, they may be continuing still now, but Mr. Cyrus did all along about the same issues which he yelled out as legacy issues. Is there any one instance where Mr. Tata said no to the proposal raised by Mr. Cyrus. Not even one, if at all he said no to something Mr. Cyrus proposed, then there would be an occasion to see who has to take a call whether a majority has to take a call through its vote or the Executive Chairman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dge, in looking for the additional ingredient of the subservient role or the surrender of discretion by the Board, had imposed a qualification beyond that justified by the statutory language; and that on the facts found by the judge, D and H were both shadow directors of the company and were fit to be a director of the company and disqualification orders were made against them. 574. On reading the above judgement, we have observed that it is not a case filed under Section 459 of the Companies Act, 1985, nor under Insolvency Act, it is only a case decided under Section 6 of the Company Directors Disqualification Act, 1986 for the deliberate deception of and concealment from ASTA of this involvement in the management of the company; the deception of Civil Aviation Authority, and trading whilst insolvent. Since the persons referred in that case being involved in doing something unlawful, they were punished under the Act mentioned thereof. Even as I mentioned above, though not named as Shadow Director, the people doing such things are being covered under the caption of officer who is in default in Companies Act, 1956 as well as Companies Act, 2013. Identifying somebody as a shadow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its group companies such as writing a mail on 25.10.2016 making personal allegations against directors discussing every issue in respect to Tata Sons and Its group companies addressing to Tata Sons directors, but this information has not remained restricted to the directors, though it has been labelled as confidential, this has simultaneously come in the media. For instance, the answering respondents counsel submits, the petitioners did not redact the references to the proposed transactions involving Tata ATA Life Insurance Co. Ltd. and PNB Metlife Insurance Co, India Ltd., which led to protest by PNB Metlife Insurance Co. India Ltd. regarding the manner in which confidential details of an impending business transactions were made public and has exposed Tata Sons to potential legal actions on account of breach of the non-disclosure agreement with PNB Metlife. Besides this, the counsel says Mr. Cyrus on his own, provided information to Income Tax Department after he was removed as Executive Chairman, even after the assessment for the relevant year has been closed on 31.12.2016. When this was put to Mr. Mistry why such information was sent to Income Tax Authority, his advocate on 05. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idential information was admittedly come from Mr. Cyrus s mail id, the burden lies upon Mr. Cyrus to prove that it was not leaked from his side, but no such efforts has been made by either by the petitioners or by Mr. Cyrus to prove that this information was not leaked by him. According to law, a fact admitted as done results into another action, such other action presumed to be remained in the special knowledge of the person done first act, it could be inferred as done by him only as envisaged under section 106 of Indian Evidence Act unless it has been disproved that fact of leaking information is proved as done by somebody else. In view of the same, for Mr. Cyrus has not made any effort to show that somebody else leaked that email, it is to be construed that it is done by Mr. Cyrus only. Here in this case, since the letter dated 25.10.2016 came from Mr. Cyrus through email and the same not been disproved that it has not been leaked from his end, it has to be held that it was leaked by him only. With such presumption, we hereby hold that the information letter dated 25.10.2016 about hotel issue, Tata Capital issue, DoCoMo issue, Airlines issue, is leaked by Mr. Cyrus to the media, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot related to Mr. Tata and Mr. Soonawala, when somebody goes into such assumption, then only it appears to them as interference. As we all know, Mr. Tata is the Chairman of majority shareholders of the company, Mr. Soonawala is one of the Trustees of the Trust, for their interest being more than anybody else, as long as their suggestions are not fraught with malafides, it has to be treated as the advice and suggestions for the benefit of the company not as an interference. This company has run for more than 100 years; it was headed by Mr. Tata for more than 12 years. Tatas dedicated not only their fortunes but their lives as well for the good of the society by giving everything to the Trusts, Mr. Cyrus and the petitioners should have been more careful in making allegations against the Trusts and the people working for it. Whenever any 241-242 proceedings are initiated, it should not be to dig out mountain to get a mole as to whether any actions are there falling under section 241 or 242, it must be manifest enough to any bystander to feel that something harm has been done to the economic interest of the aggrieved member, it must be unconscionable conduct, not by holding out some su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 241 of Companies Act 2013. (c) We have not found any merit to hold that proportional representation on Board proportionate to the shareholding of the petitioners is possible so long as Articles do not have such mandate as envisaged under section 163 of Companies Act, 2013. (d) We have not found any merit in purported legacy issues, such as Siva issue, TTSL issue, Nano car issue, Corus issue, Mr. Mehli issue and Air Asia issue to state that those issues fall within the ambit of section 241 and 242 of Companies Act 2013. (e) We also have not found any merit to say that the company filing application under section 14 of Companies Act 2013 asking this Tribunal to make it from Public to Private falls for consideration under the jurisdiction of section 241 242 of Companies Act 2013. (f) We have also found no merit in saying that Mr. Tata Mr. Soonawala giving advices and suggestions amounted to interference in administering the affairs of the company, so that to consider their conduct as prejudicial to the interest of the company under section 241 of Companies Act 2013. (g) We have found no merit in the argument that Mr. Tata and Mr Soonawala acted as shadow direct ..... X X X X Extracts X X X X X X X X Extracts X X X X
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