Thread by @barandbench

TATA v MISTRY [DAY 7]

Hearing to resume before Supreme Court in sometime.

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TATA v MISTRY

Bench assembles. Hearing commences.

Shyam Divan starts arguments.

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TATA v MISTRY

What was happening was that contrary to what is provided under Companies Act under which directors should act independently, proposal for such pre-consultation was going around: Divan

TATA v MISTRY

Divan is tracing various letters, emails and what transpired in board meeting which eventually led to Mistry's removal as Executive Chairperson.

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TATA v MISTRY

There is a complete breach with respect to statutory provisions. Three sections of Companies Act have been breached: Divan.

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TATA v MISTRY

Section 166 - on mandate that Directors have to exercise independent judgment

S.118(10) - secretarial rules to be followed which was not in this case including giving of notice

S.149 - which mandates board has to manage company, not majority shareholder: Divan

TATA v MISTRY

What happened was illegal, wrong and completely oppressive: Divan

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TATA v MISTRY

Was Cyrus Mistry the Managing Director? CJI Bobde asks.

Salve says there is no contract as such and it was by operation of law that he becomes MD. Once he was removed as Executive Chairman, he ceased to be MD.

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TATA v MISTRY

According to the Articles, when company has appointed me, it is only company which can remove me.

Same process of appointment has to be followed for removal also: Divan.

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The actions were against foundational principles of decency. They were burdensome, prejudicial and oppressive: Divan

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Every director was required to act in good faith and independently but they failed to do so: Divan

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Probity is much more than making financial profits. It has been so stated in the celebrated judgment of Needle Industries: Divan.

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Proportional representation and representation of minority shareholders on board are well established statutory principles. Directors should act in good faith of the company and its shareholders: Divan

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TATA v MISTRY

Section 10(1) of Companies Act 2013 says Articles of company will have to be subject to the Act.

This means you cannot have Articles mandating pre-consutation in a board managed company: Divan

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TATA v MISTRY

Shyam Divan concludes his arguments.

Bench takes a 10 minute break.

Senior Counsel Jamal Dwarkadas will argue in behalf of Cyrus Mistry after the break.

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TATA v MISTRY

Bench reassembles. Hearing resumes.

Jamal Dwarkadas commences on behalf of Cyrus Mistry.

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TATA v MISTRY

I have 12 balls and 40 runs. I l try and be Hardik Pandya: Dwarkadas on the limited time allotted to him.

TATA v MISTRY

Lack of financial probity is not the only ground on which just and equitable winding up of company can take place. It must be infraction of legal or proprietary right of a member: Dwarkadas

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TATA v MISTRY

My another point is what is the true legal scope and meaning of articles 104, 121 , 121A:

My fourth point is role and duties of nominated directors: Dwarkadas

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NCLAT has found that it was Cyrus Mistry's attempt to gain clarity by placing a governance structure before the board at the meeting scheduled for Oct 24, 2016 which was the principal cause of removal: Dwarkadas

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TATA v MISTRY

It is not a question of who suffered loss, who suffered more, who suffered loss. The person complaining oppression must show that he has been forced to submit to a conduct which is prejudicial to him affecting his legal and proprietery rights: Dwarkadas

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TATA v MISTRY

Dwarkadas citing Article 121B. It is the process which enables Tata to nominate director on board. It does not mean those directors should not function independently, he says.

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TATA v MISTRY

My learned friend said they can pack the board because they have majority. That cannot mean the directors can sacrifice independence: Dwarkadas

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TATA v MISTRY

Dwarkadas concludes. Salve begins rejoinder submissions

I will show you one document which makes complete nonsense of Mistry's case: Salve.

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TATA v MISTRY

The whole crescendo is built on a littany of wrong statements. After his removal as Exe. Chariman, Mr. Tata offered that he can continue on board. But he walked out of board and wrote a nasty email: Salve.

He did not walk out from Board, he was removed: Sundaram.

TATA v MISTRY

We have never argued that Directors can compromise the interests of the company. Only one director voted against his removal as Executive Chairman.

There was no illegality. All this is much ado about nothing: Salve

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TATA v MISTRY

The so called Governance structure proposed by Mistry himself envisaged a role for Tata Trusts in Tata Sons. It said that Tata Sons should have visibility of Tata Sons strategy: Salve

Read the full sentence, it says in matters affecting dividends: Sundaram

TATA v MISTRY

You were reading only half sentences. Now I am giving back in the same measure: Salve

Bench rises. Hearing concludes. One week given to parties to file written notes.

Judgment reserved.

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