2018 (7) TMI 1397

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..... 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, 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 a .....

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..... which was not the case under old Act.
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, Adv. Mr. Ruzbeh Mitry, Adv. Ms. Sonali Jaitley, Adv. Mr. Manik Dogra, Adv. Mr, Rohan Jaitley, Adv. Mr. Gurjan Shah, Adv. Mr. Parag Sawant, Adv. Mr. Akshay Doctor, Adv. Mr. Abhishek Venkataramanan, Adv. Mr. Dhawal Kothari, Adv. Mr. Ravi Tyagi, Adv. Mr. Shubhanshu Gupta, Adv. Ms. Sorya Kapoor, Adv. Ms. Rini Badoni, Adv. Mr. Debashish Chouhan, Adv And Desai & Diwanji,, For The Respondents : Dr. Abhishek Manu Singhvi, Sr. Adv. Mr. S.N. Mookherjee, Sr. Adv Mr. Ravi Kadam, Sr. Adv. Mr. Zal Andhyarujna, Adv. Mr. Prateek Seksaria, Adv, Ms. Ruby Singh Ahuja, Adv. Mr. Dhruv Dewan, Adv. Mr. Nitesh Jain, Adv. Mr. Arjun Sharma, Adv. Mr. Rohan Batra, Adv, Ms. Reena Choudhary, Adv. Mr. Tahira Karanjawala, Adv. 14 r. Arjun Pall, Adv. Mr. Avishkar Singhvi, Adv. Mr. Sahil Monga, Adv. Mr. Anupam Prakash, Adv. Mr. Jeet Karia, Adv. Ms. Ayusmita Sinha, Adv. Ms. Shivangi Agarwal, Adv. Ms. JuhiMathur, Adv. Mr. Shailesh Paria, Adv. Ms, Sishika R .....

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..... ian 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 compare this empire with any other empire, because empires come and gone, but this company, despite problems like this, remains survived till date, I wish and hope it will further grow because growth of rt is also the growth of this nation. 5. Another uniqueness of this case is, perhaps no other Tribunal might have heard any case as many days as this fledgling Tribunal heard it - hearing went on for more than one month almost on daily basis from morning to evening, on the top of it, the petitioners' Senior Counsel Mr. Aryama Sundaram and Mr. Cyrus (R11) Senior Counsel Mr. Janak Dwaraka Das, the Respondents side Senior Counsel Dr. Abhishek Manu Singhvi, Mr. Sudeepto Sarkar, Mr. S N Mookerjee, Mr. Ravi Kadam, Mr. Mohan Parasaran, and the counsel Mr. Zal Andhyarjuna, put their heart and soul in enlightening this Bench on every shade of the law on oppression and mismanagement by navigating us through English and Indian law. The counsel Mr. Somashekhar Sunder .....

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..... he 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 added in this Court, Indeed, and there was no way out, we also had the advantage of listening to learned and long drawn-out, intelligent and often ingenious arguments, advanced and dutifully heard by us. In the name of justice, we paid due homage to the causes of the high and mighty by devoting precious time to them, reduced, as we weref at times to the position of helpless spectators. Such is the nature of our judicial process that we do this with the knowledge that more worthy causes of lesser men who have been long waiting in the queue have blocked thereby and the queue has consequently lengthened. Perhaps the time is ripe for imposing a time-limit on the length of submissions and page-limit on the length of judgments. The time is probably ripe for insistence on brief written submissions backed by short and time-bound oral submissions. The time is certainty ripe for brief and modest arguments and concise and chaste judgments. In this very case we heard argumen .....

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..... bjectives 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 remembrance, this history has not been all through disputed by the petitioners, yet I have taken utmost responsibility in giving these details, because it is, as it is, not born out of pleadings, The situation necessitated us giving the background of Tatas to get a flavor of the values with which this family cherished and to see whether Tatas do something to have personal gain for enrichment? 9. We all knew that oppression and mismanagement issues are not to weigh up the validity and invalidity of the actions complained of, it is more about the unfairness and prejudice intended to cause harm to theinterest of the members of the company, as to companies are concerned, their sole objective being to earn profits, interest can be understood as economic interest of the members. So to understand the applicability of this doctrine of prejudice, we have to go step by step through the elements of this doctrine within the ambit given u/s 241 of the Companies Act 2013. 10. T .....

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..... gh 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 it short, after the death of Jamsetji, his younger son Sir Ratan Tata became the Chairman of the company and made his father's dream of building Iron and Steel Company reality and that is the company where Tata family owned 11% of the total shares of the Tata Iron and Steel Company. He contributed to aid Mahatma Gandhi's struggle of giving Indian a life of dignity in South Africa, he is the person set up illustrious Indian Institute of Science as a Joint venture with Government of India and Government of Mysore which has become launching pad and hub of scientific research in India and Asia. Tata Steel has become the first company to introduce pioneering labour welfare policy such as medical aid, formation of works committee, leave with pay, workers' provident fund and workmen's accident scheme and ex-gratia payment for road accidents while attending to duty and these policies over a period of time has become law in India, He passed away in the year 1890 writing a will "if I ha .....

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..... ing 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 lectureships or giving scholarships * Award fellowships in any branch of science or assist students to study abroad either by payment of lump sums grants or by payment of periodical sums * Give aid to any other charitable institutions or objects endowed by the settler in his lifetime, or by the grandfather, father or both of the settlers. 16. Mow this Trust has 27.99% shareholding in the company doing various philanthropic works as mentioned above. The greatness of this family is they have not limited themselves to simple charity but for the sake of larger wellbeing of human society; they have reached out to philanthropic service. 17. Upon the death of Sir Dorabji in 1932, Sir Naoroji Saklatvala, one of the founder's nephews, became chairman of the Tata Group, On his death in 1938, Jehangir Ratanji Dadabhoy Tata (1904-93), whose father, R.D. Tata, had been a cousin and partner of the founder, became chairman. J.R.D. Tata founded Tata Airlines (1932), which was in 1953 nationalized and split .....

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..... 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 the subcontinent in 1932 by launching the airline now known as Air India. That was the first of many path-breaking achievements that JRD, who guided the destiny of the Group for more than half a century, came to be remembered for. Ratan Tata (1991-2012): Ratan M Tata was the Chairman of Tata Sons, the promoter holding company of the Tata group, since 1991. He was also the Chairman of the major Tata companies, including Tata Motors, Tata Steel, Tata Consultancy Services, Tata Power, Tata Global Beverages, Tata Chemicals, Indian Hotels and Tata Teleservices, During his tenure, the group's revenues grew manifold, to tailing over $83 billion in 2010-11. Tata also serves on the board of directors of Fiat SpA and Alcoa. He is also on the international advisory boards of Mitsubishi Corporation, the American International Group, JP Morgan Chase, Rolls Royce, Temasek Holdings and the Monetary Authority of Singapore. Cyrus Mistry (2012-2016): The selection of Cyrus Mistry, a non-executive director on the Tata Sons board as .....

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..... r 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 limited company. For turn-over of one crore rupees envisaged in 1956 Act has not been reiterated under Companies Act 2013, now it has become evident under new regime, if company remains with characteristics of private company despite paid up capital is more than one crore rupees, such company under new regime will can become private company. As this company by virtue of its articles is private limited company, the company, by saying so, has filed a Petition u/s 14(1) of Companies Act, 2013 for conversion of Public limited company into private Limited company and the same is pending before this Bench, Since section 465 of Companies Act 2013 not yet been notified, further previous provisions have not been declared as repealed, the company says since it is in all respect private limited company under new regime, it has stated that it wants to retain its original status as private limited company. This is where this company stands today. 23. Shareholding pattern of the company as follows: Total equity shares 404,142 (Rs. 1,000 each) .....

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..... ing where the Petitioners differing with Trusts in any respect. 25. But today, it has come to such a pass that the Petitioners have filed this Company Petition against Mr. Tata, doyen of the company and the Trusts. So, these Petitioners today stand against the Trusts saying they have caused prejudice to the interest of them. In the Company Petition these Petitioners have been stated as single largest individual group next to the Tata Trusts, partner of the company but projected as minority shareholders, having a stake of ₹ 1,00,000 crores in a more than one hundred billion-dollar Company. There can be many ways to project the personality, all may be right, but the position relevant to this case is, the Petitioners holding above 18% shares in the company is a minority without any special rights in the Articles of Association. These Petitioners are not the founder members of the company, they have only come in the year 1965 by acquiring equity of 18.37% from erstwhile shareholders, who also had no rights 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 &# .....

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..... He has also received honorary doctorates from several universities in India and overseas. 31. 3rd Respondent namely Mr. Amit Ranbir Chandra has been appointed to the Board of the company on 26.3.2016 as a nominee of Tata Trusts under Article 104B of the Articles of Association of the company before joining as Director in this Company. He worked in Bain Capital Equity until before 2008, as head of Global Market and Investment Banking and Managing Director at DSP Merrill Lynch Ltd. one of the India's leading investment Bank. He also worked in social sectors for nearly 15 years and he has the privilege of serving many NGOs, now divided his time between corporate world and social sector. When he was appointed, his nomination was heartily accepted by Mr. Cyrus. 32. 4th Respondent namely Mr. Ishaat Hussain, Director of Tata Sons,is one of the few Tata veterans who worked closely with four chairmen during his 36-year tenure at the group - JRD Tata, Ratan Tata, Cyrus Mistry and M Chandrasekaran. He 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 .....

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..... d sustainable economic and human performance. He is the co-author or co-editor of 16 books. He was a visiting faculty member at the London Business School in 1996. 36. 8th Respondent namely, Mr. Ranendra Sen, also known as Ronen, is an Independent director on the board of Tata Sons. He has also served on the board of Tata Motors as a non-executive independent director from 2010 to 2012. Mr. Sen was India's Ambassador to the United States from 2004 to 2009. He was also India's Ambassador to Mexico (1991-92), to Russia (1992-98), and Germany (1998-2002), and served as High Commissioner to the United Kingdom (2002-04). From 1986 to 1991, he was Foreign and Defence Policy Advisor to successive Prime Ministers and had several assignments as special envoy of the Prime Minister for meetings with Heads of State or Government. 37. 9th Respondent namely, Mr. Vijay Singh, a retired IAS officer of Madhya Pradesh cadre (1970 batch), is a nonexecutive director of Tata Sons. He has handled 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 A .....

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..... re than 100 Tata operating companies with aggregate annual revenues of more than US S100 billion. He joined the board of Tata Sons in October 2016 and was appointed Chairman in January 2017. 42. 14th Respondent namely, Mr. Noshir. A. Soonawala (at some places referred as "Noshir" and at some places as "Soonawala", a Commerce Graduate from the University of Bombay and a Chartered Accountant from the Institute of Chartered Accountants of India, serves as Member of Group Corporate Centre at The Tata Group, Deputy Chairman of Tata Tea Ltd. and Vice Chairman of Tata Sons Limited. He served as Finance Director of Tata Sons Limited from 1968 to June 2000. Having worked with the ICICI, the World Bank and the International Finance Corporation, Washington, Mr. Soonawala has wide exposure in the field of Finance, He has 40 years' experience of financial management and business management. He started his career as a Senior Project Officer (finance) with ICICI and was deputed to 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 Afric .....

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..... sity, He is also a Law Graduate of Mumbai University. Furthermore, he has done Advanced management Programme from Harvard Business School. For several years, he was Executive Assistant tc Mr. Ratan Tata, the former Chairman of the Tata group, Prior to his association with Mr. Tata, Venkat was Head of Business Support at the Qatar Foundation, a non-profit based in Doha. He had also worked in Videsh Sanchar Nigam Limited, Mumbai (VSNL), now known as Tata Communications and the Gujarat State Finance Corporation based in Ahmedabad. He has also been a Member of the Board of Air Asia India Private Limited. 49. 21st Respondent namely, Dr. Amrita Patel, Trustee of Sir Dorabji Tata Trust, 50. 22nd Respondent namely, Mr. V. R. Mehta, Trustee of Sir Dorabji Tata Trust, an Honors degree holder in Engineering, aged 30 years, was an Independent Director on the board of Tata Sons for five consecutive years for a term up to 31st March, 2019, presently he is a Trustee 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 A .....

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..... atorily to be placed before the Board of the company,, by these changes, the Articles of Association became a device for superintendence and control of the company by Mr. Tata and Mr. Soonawala, such kind of superintendence ultimately reduced nominee directors of the Trust on the Board of the company as agents to these two, and by virtue of this interference, they failed discharging their fiduciary duties as directors of the company. Under the Article 104, the trustees of the Trust are entitled to nominate three Trustee Nominated Directors; under Article 121, all decisions of the Board of Directors of the company would need affirmative consent of majority of the Trusts Nominated Directors, Under Article 121-A, such decisions have to be mandatorily brought to the Board of Directors of the company, once it comes to the company board, the Trusts Nominated Directors being majority, by using Article 121, they could call shots. By this arrangement, 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 .....

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..... p capital of the company, no quorum shall be constituted in General Meeting of the company, unless at least one authorized representative jointly nominated by Tata Trust is present in such meeting. Likewise, under Article 104-B also, it has been set out that as long as the Trusts collectively hold 40% of the paid up capital of the company, the Sir Dorabji Tata Trust and Sir Ratan Tata Trust, acting jointly shall have right to nominate l/3rd of the Directors on the board as also to remove any person so appointed and in his place to appoint another person as Director, in furtherance of it, under Article 118, it is set out that so long as Tata trust collectively hold at feast 40% of the paid up equity capital, for selecting Executive Chairman, shall be constituted to recommend the appointment of Chairman on the Board and the Board may appoint such recommended person as Chairman to the Board, The said Article also sets out the constitution 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 incu .....

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..... wise, the same are hereby paraphrased as below; 64. Overpriced and bleeding Corus acquisition; The Company is the promoter of Tata Steel Ltd, (TSL) holding 31.35% of its paid up equity capital, with that right, in the year 2007, Mr. Tata led the purchase by TSL of Corus Group PLC (Corus) for a sum in excess of USD 12 billion at a substantial premium, the value of it was more than 33% of its original offer price, by which, the shares of Tata Steel Ltd, on Indian Exchanges came crashing down, because the transaction was not in the best interest of Tata group. Mr. Tata abused the power vested with him as Chairman of Tata group in acquiring Corus at heavily inflated price leading to blockage of funds of the TSL. By doing so, TSL required to infuse substantial funds in the Corus which has plants in UK and Netherlands. Post to the aforesaid investment, the plants in Netherlands were fairly successful, however, UK plant continued 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 .....

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..... ne equity share face value of ₹ 10 for the price of only ₹ 17, this term sheet was subsequently followed by share subscription agreement dated 24.02.2006 between TTSL and Sterling, by which, Sterling received preferential allotment of 520 million equity shares at a through away price of only ₹ 834crores as against the shares issued to a Singapore owned company called Temasek Holdings @ ₹ 26 per share. Pursuant to the share subscription agreement, Sterling paid a sum of ₹ 782crores and converted warrants to get a total of 520 million equity shares at the price of ₹ 17 per equity share. By this price difference in between the shares issued to Siva through Sterling and the shares issued to Temasek @ ₹ 26 per share, the difference of windfall that came to Siva was around ₹ 468crores. When Siva himself was on record stating that he was given special treatment owing 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 .....

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..... ation, in the Board Meeting dated 15.9.2016 Mr. Cyrus apprised the Board that Sterling was unwilling to contribute its proportionate share in the award amount, and obtained approval of the Board to initiate legal proceedings against Siva and Sterling for recovery of the said amount, it happened on 15,9.2016, to the surprise of Mr. Cyrus, on 19.9.2016, the company, TTSL and DoCoMo received a legal notice from Siva as a counter blast to the decision taken in the Board Meeting dated 15.9.2016. The point the Petitioners highlighted here is Siva would not have come to know of Board decision in the meeting held on 15.9.2016, had it not been informed by somebody from inside to Siva incidentally making him to put the company on notice about the proportionate payment to be made to the award amount. 70. In addition to the above benefit, the Petitioners verily beiieve that an amount of approx. ₹ 600crores 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. Ta .....

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..... Asia deal, therefore he attempted to brush this transaction under the carpet as being non-material. The petitioners have further alleged that the aforementioned ₹ 22crores fraudulent transaction was routed through hawala transaction to avoid coming under regulatory scanner. The Petitioners submit that these dealings by the company at the behest of Mr. Ratan Tata involved transactions with one Mr. Ha mid Reza Maiakotipour who has been classified as "Suspected and UN - Sanctioned Alleged Global Terrorist" by the Government of the United States of America. The Petitioners believe that details of the dealings of Air Asia Ltd with such third parties is contained in the Forensic Report issued by Deloitte. Hence, acting upon the instructions of Mr. Tata, Tata Croup in its dealings with Air Asia have indirectly been financers of terrorism and Mr. Tataf by his acts, has caused irreparable harm to 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 .....

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..... t even asking any explanation from him, removed him as executive chairman, which is a clear act of oppression coupled with mismanagement of the affairs of the company. The purported reason for such removal was, the board of directors had 'lost the confidence'' in the leadership of Mr. Cyrus, which is in sharp contrast to the applauding the performance of Mr. Cyrus as recently as 28.6.2016 by the Nomination and Remuneration Committee. In fact, on 28.6.2016, the said committee not only lauded the performance of the executive chairman but also recommended for hike to his remuneration. As to Mr. Cyrus' performance that was so good up to 28,6.2016, has all of sudden become bad leading the directors to remove Mr. Cyrus as Executive Chairman on the footing they lost confidence in him. On hearing such proposal from nominee directors, Mr. Ishaat Hussain and Mrs. Farida Dara Khambata abstained from voting 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 director .....

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..... therefore it is evident that decision to initiate legal proceedings against Siva was one of the trigger points for removal of Mr. Cyrus. To save his old friend from litigation, Mr. Tata exerted his influence over the trust directors to ensure the removal of Mr. Cyrus as Executive Chairman. 74. Endorsement by Independent Directors: Initially after removal of Mr. Cyrus, he was supported by many independent directors of Tata Group companies refusing to agree with the unexplained and inexplicable removal of Mr. Cyrus and they stood behind him on his continuing as non-executive Chairman of seven listed Tata Group companies i.e. Indian Hotels Co, Ltd.(IHCL), Tata Chemicals Ltd. (TCL), Tata Steel Ltd. (TSL), Tata Motors Ltd. (Tata Motors/TML), Tata Global Beverage Ltd.(TGBL), Tata Consultancy Services Ltd. (TCS), and Tata Power Co. Ltd. (TPCL), but subsequently, all of them turned their loyalty 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 oblite .....

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..... he interest of the company and the public shareholders of various Tata group companies. To submit that there is lack of probity and fair conduct from the respondents' side, the petitioners relied upon Rajahmundry Electric Supply Corporation Ltd. v. A. Nageshwar Rao, AIR 1956 SC 213 and para 19 from S.P. Jain v. Kaiinga Tubes Ltd., AIR 1965 SCI 535. By referring those cases and facts of this case, for there being lack of probity from the majority, and the petitioners having lost confidence in seeing Mr. Tata and Mr. Soonawala conducting the affairs of the company prejudicial to the petitioners, it would become a foundation for winding up on just and equitable rule. 78. On the premise of these facts, the petitioners sought for appointment of an administrator to look after day-to-day affairs of the company with such powers as may be necessary to take such decisions and actions in 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 .....

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..... te on which Mr. Tata was unjustly enriched; for appointment of a forensic auditor to re-investigate the transactions executed by AirAsia India with entities in India and Singapore to ascertain whether any proceeds have been diverted to any secret bank account of Mr. Venkatraman and to submit a report to this Hon'ble Tribunal; such that this Hon'ble Tribunal can pass such further orders as may be necessary so as to recover from Mr. Venkatraman, the loss that has been caused inter alia to the Petitioners; and such findings of the audit should be referred by the Hon'ble Tribunal to the Serious Fraud Investigation Office of the Ministry of Corporate Affairs, Government of India; for striking of Articles numbered 86, 104(B), 118, 121 and 121A in their entirety and in so far as Article 124 of the Articles of Association of the company is concerned, the following portion of the said article, 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 matter .....

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..... ike out Articles numbered 86, 104(B), 118, 121 and 121A in their entirety and in so far as Article 124 of the Articles of Association of Respondent No, 1 is concerned, the following portion of the said article, 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 appointment 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 Respondent No. 1; and substitute these articles with such articles as the nature and circumstances of this case may require; 81. The reliefs not pressed in the memo are (A) supersession of the Board of 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 affair .....

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..... rs and others, he further says, his removal in fact has become a cause of action to interdict oppression and mismanagement in respect to the affairs of the company. He says that soon after his removal many of the remedies initiated by Mr. Cyrus have been stalled and some actions been triggered such as releasing more funds to Air Asia Ltd, without ascertaining the depth of the fraud discovered pursuant to forensic audit, preempting negotiations in respect to restructuring in relation to Tata Steel investment in the UK and Europe, no action for recovery of ₹ 694crores due from Mr. Siva on account of put option exercised by NTT DoCoMo, whereas Tata group companies have been made to cough up their shares, non-implementation of decision of the board of directors of the company to cut losses in respect to Mano project, jettisoning the corporate governance guidelines 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 .....

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..... a nasty handwritten letter dated 30.1.2015alleging that there had been no discussion of the issue and the Articles of Association had been breached, according to Mr. Tata, before such an issue was cleared by the underlying operating company (TML) approval of Board of Directors of the company would have to be taken. He says, Mr. Tata threatened that he would "revert with more precise assessment of the potential breaches, but it may be worthwhile to discuss this when you meet with Noshir (R14- referred as "Soonawala") and me next week", to which he replied to Mr. Tata through a letter dated 04,02,2015 reminding him that these facts had already been explained to him, along with, he already conveyed to Mr. Tata that there had been no business plan or projection of cash-flow for the company towards such causes, the outflow required for this purpose had in fact 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 Direct .....

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..... a Group. He says that the breakdown in governance of the company at the hands of Mr. Tata and Mr. Soonawala came to a flashpoint this year without giving any chance to give way to new thinking and new blood, forgetting they have retired from the company pursuant to retirement policies they themselves had put in place to let in new thought process in the Tata Group; they dug their heels in and create an environment of ambiguity, refusal to let go and tyrannical breakdown of rule of law and its replacement with the rule of men. 92. Mr. Cyrus has alleged Welspun to impress upon this Bench as to how the interference of Mr. Tata and Mr. Soonawala in respect to Welspun transaction has become an impediment in going ahead with Welspun transaction, saying that despite presentation was made to the Board of Directors of the company in the year 2016 itself on how 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 .....

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..... ta Trusts; (h) Various decisions relating to Tata Teleservices Ltd. ranging from the dealings with Mr. C. Sivasankaran; put option exercised by NTT DoCoMo in the year 2014; entertaining entreaties from Mr. Sivasankaran and justifying his expectations pressuring Respondent No. 1 on how to handle litigation involving NTT DoCoMo in the year 2016; (i) Refusing to actually litigate against Mr. Sivasankaran's companies etc.; (j) Scenarios under which bidding for spectrum must be done by Tata Teleservices Ltd.; (k) Strategic decisions of Tata Motors Ltd, including demand of specific cost data and other commercially sensitive and unpublished price-sensitive information by Respondent No. 20 directly from officials of Tata Motors Ltd.; (l) Communications with Augusta Westland on the future of the joint venture in the defence industry; (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( .....

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..... st three years, the profit after tax of Tata group companies grow by 34,6% annually over the past three years, the Tata Brand value has increased by USD 5 billion, without increasing net debt, the Tata Group in the last three years, undertook capital expenditure by approx, USD 25 billion, thereby building product asset to prepare for the future and filing 2000 Tata group patents in the last year alone, which is an increase of nearly 100% from the position three years ago. 97. With this, Mr. Cyrus submits that it is a clear case of oppression and mismanagement against not only the petitioners but also against the company, therefore grant the reliefs as sought by the petitioners. Reply to the petition on behalf of Tata Sons: 98. The company says that this petition is primarily filed to espouse the cause of Mr. Cyrus 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 opera .....

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..... e board, he would always be available if the directors needed his guidance clarifying that he would like to make a dean break and have no carryover of his role. 102. As to articles are concerned, shareholders of the company passed an unanimous resolution on 13th September 2000 introducing a right to Tata Trusts to jointly nominate "one-third of the prevailing number of directors on the Board" so long as the Trusts own and hold in aggregate at least 40% of the paid-up ordinary share capital of the company (Article 1048) and that all "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 all the directors appointed pursuant to article 1048 present at the meeting" (Article 121). This article was subsequently amended by unanimous 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 o .....

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..... new growth businesses, reluctance to embrace the articles of association, growing trust deficit between the Board of Directors and Mr. Cyrus. 105. As to mistrust is concerned, the company says, Mr. Cyrus failed to put into effect the strategy for managing large and complex group such as Tata group, as committed by him in the detailed note of October 2010 tendered by him to the selection committee, it was on that strength, Mr. Cyrus was selected. He was in dearth of proper interface for communication between the trusts, the board of the company and the operating companies, which led to breakdown of communication between three constituents, proving to be detrimental to the interest of the Tata group as a whole. It took at least two years' time to Mr. Cyrus to avoid conflict of interest in between their companies 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 gr .....

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..... n excess of USD 1 billion, because Tata Power has already ₹ 40,000crores debt apart from non-resolution of tariff issue of its Mundra Project. In addition to this problem, Mr. Cyrus, without placing it before the Directors of the company, agreed for such an execution, this was only brought to the notice of Directors of the company on 31.5.2016 informing that Tata Power was in advanced stages of finalization of this acquisition and the definitive agreements were to be signed imminently- He claimed that the note circulated to the Directors of the company is enough requirement under the Articles, despite being aware that the financing structure of this acquisition would necessitate Tata Power to raise debt, approval for which would be required from the Board of directors of the company. In this background, 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 .....

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..... Group, the company says, Tata Steel acquisition of Corus Group plc. for an aggregate consideration of USD 12 billion, is the largest overseas acquisition by Indian corporate, making Tata Steel the world's sixth largest steel producer. The launch of Mano Car by Tata Motors, is a revolutionary aimed at changing the landscape of Indian Passenger car market. Siva group is a Consultant to TTSL as an equity investor. The company re-entered into an aviation business through joint ventures with two of Asia's leading airline carriers in the low cost segment and premium full service business. As to Mr. Mehli is concerned, it has nowhere been said in the Company Petition that Mr. Cyrus was a director on the board of Tata Power from the year 2002 approving many of the transactions, Tata Power entered into with 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 p .....

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..... which Cyrus group was privy either in the position of director or in the position of shareholder, The company submits that these petitioners have received dividend of ₹ 872crores from the year 1991-20l6from the company, but now these petitioners conveniently ignored the historical facts as if they were not aware of all those things. 114. The company submits that the petitioners have cherry picked certain business decisions predicating Mr. Tata has taken certain decisions during his tenure which the petitioners consider imprudent and non-judicious which have allegedly caused loss to the company. When they say Corus and Nano are instances of bad business deal, why they have not referred Tetley acquisition and immensely successful Jaguar Land Grover acquisition and phenomenal rise and success 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 ser .....

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..... of the Faculty at Harvard Business School, and he became the 10th Dean of Harvard Business School on 01.07.2010, Their expertise has already been explained in the introductory paras, therefore for the sake of brevity, it has not been discussed again. 117. It is denied that the removal of Cyrus as chairman of the company is wholly illegal, ultra-vires and constitutes suppression of the petitioners and it is against the interest of the company, It is submitted that the removal process does not suffer from any impropriety and it is in complete conformity with the provisions of the Act and moreover, it has never been challenged by Mr. Cyrus, not sought any relief either for declaring removal of Mr. Cyrus as invalid or for reinstatement of Mr. Cyrus, since the Petitioners could not have sought 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 th .....

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..... g shareholders of Tata Steel (including the company). The rights issue was fully underwritten by the company. Mr. Cyrus was on the board of directors of the company at the time when the company agreed to subscribe to shares in the rights issue and was a party to the decision. Neither were there any deliberations at the board meetings of the company, nor do the board minutes of Tata Steel indicate that Mr. Cyrus had objections to the decision by the company to provide funds to Tata Steel for the Corus acquisition. The Petitioners and Mr. Cyrus were aware of this transaction and did not object to it, at the time when the decision was taken. The company even filed the relevant minutes of the meeting of the Board of Directors of the company in relation to funding of Corus Acquisition as 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 v .....

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..... d well in fiscal 2008 (the first year after the acquisition). The consolidated EBITDA of Tata Steel UK Holdings Limited for the period ended 31 March 2008 was USD2, 190mn (as against USD1, 553mn in Fiscal 2009), It is submitted that every operating business has its positive and negative aspects and the Petitioners campaign to present a one-sided story is evident from the fact that they have chosen to ignore statements made by Mr. Cyrus in the course of his tenure regarding the improvement in the operations of Tata Steel. It says it should be noted that in the "Chairman's Statement" to the Annual Report of Tata Steel for the Financial Year 2012-13, Mr. Cyrus himself stated that: "the operational capabilities in Europe have also been strengthened on the back of investments made in 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 .....

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..... which are under the control of the board of directors of Tata Steel and the company is not in a position to comment on the same. As is evident from the extracts from the Annual Reports of Tata Steel for the financial years 2012-13 to 2015-16, the company says, the adverse macroeconomic conditions faced by the global steel industry were beginning to reverse and the operations of Tata Steel Europe were showing uptrend. 121. As to Corus issue, the company says, it is evident that the Petitioners' attempt to impugn the Corus acquisition as a non-judicious corporate action is misconceived. The acquisition of Corus was a decision taken by the board of directors of Tata Steel, acting in the best interests of Tata Steel. The price paid for the Corus acquisition was discovered 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 .....

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..... company. As to attribution of Mr. Tata's emotional attachment for continuation of Nano project, the company says Mr. Tata has never raised any objection for closure of this project and he could not have even prevented also if any such decision taken because he was not the director on the board of The company. It is a fact that soon after demise of Mr. Karl Slym, M.D. of Tata Motors in January 2014, Mr. Cyrus continued for about two years as the head of Tata Motors, in that tenure also Tata Motors invested further in the Tata Nano so as to develop newer variants of the Nano such as GenX Nano, therefore the history says that Mr Cyrus cannot attribute that the project is not being shut on account of emotional reasons involving Mr. Tata. As to the allegation that Mr. Tata 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 c .....

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..... n the secondary sale of TTSL shares to DoCoMo to enable them to monetize as part of their investment at huge profit, While the company obligated the Siva group to taken various obligations with respect to put option liability and other indemnity qua DoCoMo, Shapoorji Group was not asked to undertake any such similar obligations. Apart from Sterling, Shapoorji Pailonji family also sold shares to DoCoMo. The Company submits that the Petitioners projected as if Sterling alone got the advantage of this without mentioning the fact the same advantage was also availed by the very same petitioners. As to undertaking provided by the company in favor of Standard Chartered Bank, the company submits, it is a matter of record that the company provided the undertaking on 24,02.2006, 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 .....

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..... ch payment to be made by to Batelco (Bahrain Telecommunications Co.), perhaps, in this context, Mr. Siva was attempting to obtain an exit from TTSL by selling its shares to Tata group, out of which, the Petitioners now try to spin a conspiracy theory to falsely manifest that the transactions between TTSL and Siva group were done "solely at the behest of and under the dictate of Mr. Tata", to which, the company says that the e-mail dated 08.10,2013 written by Mr. Tata to Mr. Cyrus has been used as a trump card to show that Mr. Tata was instrumental in facilitating Mr. Siva to invest in TTSL, but the fact of the matter according to the company is, the petitioners have glossed over the fact that Mr. Tata did not himself deal with Siva, it was only projected on selective 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 .....

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..... he same. But by seeing response from Tata Power on 4.1.2017, the company says that all contracts awarded to Mr. Mehli are pursuant to following requisite process in awarding of the contracts and necessary approval from the board/committee/management was taken as required as per the schedule of authority prevailing at various times detailing how painting contracts to Mr. Mehli's company were awarded by following competitive biddings, as to reserves of Mr. Mehli's companies are concerned, it cannot be attributed that profits of Mr. Mehli's Company has gone high is only because of getting contracts from Tata Power. As per the petitioners' averment itself, this increase of reserves of him in manifold is in long tenure of about 20 years, therefore the growth 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 .....

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..... ions with one Hamid Reza Malakoutipoor, who has been classified as "suspected and UN sanctioned alleged global terrorist" by the United States of America, the company denies the allegation of the Tata group acting on the instruction of Mr. Tata to indirectly finance terrorism to cause harm to the age-old image of the Tata group. These petitioners went to an extent to attribute linking Mr. Tata to a terrorist entity without having any material with them. The company says, when this allegation is put against the forensic report given by Deloitte, it has nowhere been mentioned any of these allegations hurled at the most reputed person like Mr. Tata, except saying this embezzlement indicted the ex-CEO along with aforesaid two companies- Therefore, no fault 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 .....

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..... approved the resolution permitting the board to consider the matter which was not specifically included in the agenda of the board meeting, thereafter the board of directors passed the resolution to remove Mr. Cyrus as chairman. The company therefore submits that it is not a requisite that unless an agenda item is not included it could not be taken up for passing resolution. The company submits that actions of Mr. Cyrus after his replacement as Chairman clearly exposed his "scorched earth strategy" to leak sensitive information to outsiders. It is submitted that Article 121B provides right to any director to request the board of directors to consider particular matter at a board meeting by providing 15 days' notice, but it does not mean that conferring 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 Chairma .....

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..... hreat to withdraw its guarantee against its group companies, the company submits, it is a vague allegation without support of any material; therefore, such allegation is not only unfounded but also highly deprecated. 134. In respect to the allegation of breach of insider trading regulations, the company at the outset submits that this allegation cannot form the subject matter of this petition u/s 241 of the Companies Act, 2013, apart from it, the company denied the trustees directly calling for "unpublished price sensitive information" from the listed Tata operating companies. The petitioners, who are alter ego of Mr. Cyrus, have now been saying that Mr. Tata and Mr. Soonawala interfering not only with the affairs of the company but also with 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 .....

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..... allegation against Prof. Lord Kumar Bhattacharya, the company says, it is pertinent to mention that Prof. Lord Kumar Bhattacharya is an academician, who has made life peer and member of the House of Lord in 2004, in fact it was Mr. Cyrus who approached Lord Bhattacharya to deliberate and discuss matter concerning the Tata group in Europe including the discussions for closing the company operations in UK, in such circumstances, the petitioners or Mr. Cyrus cannot point any finger at Lord Bhattacharya as has been attempted, Lord Bhattacharya has not derived any pecuniary gain or taken advantage of any information provided to them, which information was provided to him by Mr. Cyrus or at his behest to seek advice and direction. Denying the 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 .....

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..... for guidance when necessary with a clarification that he did not wish for his shadow to loom over the group without carrying over his previous role as Chairman, of course, he said that he decided to take clean break from the company. Ever since he retired, he redirected his focus and energies on his other pursuits, passions and interests devoting more time to the Trusts activities focusing on nutrition and prosperity immersing himself in identifying young entrepreneurial talent, in the pursuit of it, till date he made investments in over 50 startups since December 2012, earlier in the year 2016, he founded in association with Dr. Vijay Kelkar and Mr. Nandan Nilekani, a technology enabled financial inclusion vehicle Avanti Finance, 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 wa .....

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..... part from TCS, continuously declined from approximately ₹ 1000crores in 2012-13 to approximately ₹ 780crores in 2015-16 but the later included additional interim dividend of ₹ 100cores which would have normally received in 2016-17 reflecting clear decline in the total profits of those operating companies, likewise, he has given other figures how expenses have increased in the tenure of Mr. Cyrus . 142. Shortly after his replacement as chairman, Mr. Cyrus embarked upon a motivated campaign to publicly disparage, malign and ridicule the company and Mr. Tata in particular by leading confidential and sensitive information of the company to outsiders including his family members which is very much unbecoming 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 .....

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..... l owners to FFC in June 1975, by which, he became tenant for lawful consideration by which he was acknowledged as tenant of Bakhtavar apartment and continued there as tenant up to 2000. In the year 2001, by way of tripartite deed of transfer, FFC (then known as Forbes Gokak Ltd,) sold this apartment to M. Pallonji & Co. Ltd, for a consideration of ₹ 2crores, for he had tenancy rights over the said property, in the same transfer deed, he surrendered his tenancy rights in that apartment in favor of the Pallonji company for a lawful consideration of ₹ 3crores, which is annexed as Exhibit-R2/2 of the reply of Mr. Tata. It is a tripartite agreement with necessary permission with due disclosure and after having fair 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 petitioner .....

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..... oved after examining the commercial viability of this project. When this project was launched, there was a demand for approximately 300,000 potential owners who made payment almost full for the cars. But Tata Motors could not fulfill this demand due to the challenge to the land acquisition faced at Singur, West Bengal. He says it is a known fact that these development in respect to land acquisition was beyond the control of Tata Motors and also Mr. Tata, however finally the project was relocated to Gujarat on timely intervention of the then Gujarat Chief Minister, by which already one year was lost resultantly Tata Motors could not fully capitalize on the initial market enthusiasm for the Nano and this inordinate 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 naiv .....

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..... et of prototypes/samples of gliders that were supplied, there was no further engagement of Tata Motors with Jayem Auto towards development of an electrical concept, therefore, the allegation of any alleged conflict of interest on Mr. Tata's part is entirely bereft of truth. In fact, the disclosure in respect Mr. Tata having shareholding has been made on his own to Mr. Cyrus much before this Petition was filed, this was informed not only to Mr. Cyrus but also to the Board of the company in order to avoid any misgivings, Copies of these letters are marked as Exhibit R- 2/6 (Colly). 149. As to allegations in respect to Corus Acquisition, he submits that the board minutes of Tata Steel board meetings reveals that 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 furth .....

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..... aunch a new model of Nano, composition of proposed interim steering committee with Tata Motors, plans to diversify portfolios of Tata Companies issues, dealing with DoCoMo, the challenges faced by Tata Steel Europe, appointment at key managerial persons such as Managing Director of Tata Motors, Chairman of Tata International, Omen Directors on the Board of Tata Motors. He says Mr. Cyrus on his volition also shared confidential information such as Tata shares preliminary proposition for proposing interest in Silver Stone as he was "keen" that Mr. Cyrus team should "make a presentation""to him to seek" his guidance on which way to proceed. He says he was even personally asked by Mr. Cyrus to join Board Meetings 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., shareholdi .....

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..... the same therefore is liable to be dismissed with costs. 153. R3 Reply; It is Amit Ranbirchandra (Mr. Amit), appointed as Nominee Director in the Board of the company on 26.8.2016 on behalf of the Trust under Article 104B of the Articles of Association filed this reply for he has been shown as R3in the Petition, Since it is important to say who he is, he has stated that he has been the Managing Director of Bain Capital Equity since 2008, before that as the Head of Global Markets and Investment Banking and Managing Director at DSP Merrill Lynch Limited one of the leading investment Bank, while doing so, for having believed in giving back to the society that nurtures the people, he has been actively involved 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 .....

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..... minutes dated 15.9.2016 reflecting his suggestions on the business plan mentioned above. As to allegation of collusion between Mr. Mitin Nohria, he has stated they have independently held their business reputation in different walks of life, sometimes both of them disagree with each other perspective because they have, he says, always conducted themselves with utmost professionalism, dignity towards their opinions, therefore, he has taken strong exception to the Petitioners suggestions that he was in cahoots with Mr. Nohria. He submits that Mr. Cyrus as well as the Petitioners have downplayed that the decision to replace Mr. Cyrus was taken by majority of the board with 7 out of 8 Directors (not 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 .....

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..... rds either as a Chairman or the Director, in fact, Mrs. Rohika C. Mistry until recently also on the Board of Pratham NGO which he chairs therefore he says none of these associations have in any manner affected his objectivity or independence on any board he has served, so this allegation of collusion is based on some factually incorrect assumptions on commonality of boards. Accordingly, he has sought for dismissal of this Company Petition against him. 157. It is Mr. Nitin Nohria, the George F. Baker Professor of Administration and became the Dean of Faculty at Harvard Business School (HBS) on 1.7.2010. He says that he has been on the Board of the company since 6.9.2013. As to the allegation of 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 te .....

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..... horough discussion was required in respect to group company issue before having formal approval. In the board meeting, having Mr. Cyrus vehemently objected to the language Mr. Vijay proposed to enter into the minutes regarding Wellspun issue when Mr. Vijay communicated that seeking approval for Welspun transaction from the company was in breach of the terms of Articles of Association, to get over the situation, Mr. Vijay and Mr. Nohria requested an opportunity to talk to Mr. Tata to see if they could find the language that would be acceptable to Mr. Cyrus. After having spoken to Mr. Tata, they were able to come up with a language that Mr. Cyrus could accept, and finally on the suggestion of 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 .....

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..... Mr. Cyrus as well as the company and its Group Companies whenever any financial issue has cropped up. Now it has been shown as interference with the affairs of the company and its Group Companies. 161. He said while perusing the petition he noted some uncharitable allegations against himself and Mr. Tata, though he does not wish to draw the proverbial sword at such misconceived and entirely baseless allegations, it does pain him to see how no stone is being left unturned to sully the name of this grand institution at the instance of those who were sworn to honor the same. He says that there is ample material to show that how Mr. Cyrus made requests asking him to accompany Mr. Tata to 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 .....

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..... ext of his role of a Trustee, whose duty is to protect its major investment in the company which is a valuable asset of the Tata Trusts. He says that bare perusal of these notes will clearly indicate these were advisory in nature and such advisory could not be construed as "directions" or "instructions" from him as alleged. He says that to the best of his knowledge he has not sought information, on his own from the listed operating companies during last four years of Mr. Cyrus' tenure, if any information was provided regarding listed operating companies, it was only to seek his guidance and advise at the behest of senior officials of such companies given his long association with the 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 o .....

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..... did his Law from Mumbai University, MBA from Sri Sathya Sai University, later completed his Advanced Management Program (AMP) from prestigious Harvard Business School, he says he had the honor of knowing Tata since 2002 during his association with Videsh Sanchar Nigam Ltd, a company that was bought over by Tata Group in early 2002, initially he started his life with Tatas as Executive Assistant to Mr. Tata, his association started with Air Asia India Ltd. (AAIL) in the year 2012 and continuing as Nominee of the company on the Board of AAIL. He denies all the allegations made by the Petitioners as well as Mr. Cyrus against him, specifically mentioning that the alleged fraudulent 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 .....

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..... as already been said in detailed about the objectives of the Trust, I don't think I need to repeat the averments in this regard. Sir Dorabji Tata in the year 1932 settled the Trust bearing his name and beneath his stake in the company to the Trust, this has also been dealt with in detail for the sake of brevity, it has not been discussed again as to how much work this Trust doing to the Society, 171. He says, the basic allegations against the Trusts are the Articles of Association of the company, which have been duly approved by the Petitioners and Mr. Cyrus, are being used as tools of oppression for appointment of Nominee Directors to act on the instructions of the 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 1 .....

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..... an Emeritus of the company on the recommendation made by Mr. Cyrus likewise even Mr. Soonawala was asked to continue as Financial Advisor and to aid his expertise to the company as well as its operating companies, which have now become interference to the petitioners and Mr. Cyrus. 173. Mr. Venkat recounts that these amendments admitted by the Petitioners and Mr. Cyrus at the time of amendments or addition are "good intentioned" and for "securing the interest of the Trusts" but now they have been seen as being "converted into a regime forenabling in control", He says that the rights of the Trusts are valid and law puts no limitation on their rights therefore, he 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 all .....

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..... gs necessary for the due performance of duties put on the Trustees. 176. Finally, Mr. Venkat says that the Petitioners as well as Mr. Cyrus tried to impress upon this Bench as If Mr. Cyrus accepted the offer to become the Chairman of Tata Trust on being assured by Mr. Tata that he would be given a free hand, but to fortify this allegation, he says, no evidence has been placed to that effect, inasmuch as the two documents, i.e. the resolutions passed at the board and shareholders meeting of the company at which Mr. Cyrus was appointed as Chairman and the letter of appointment issued by the company to Mr. Cyrus, they do not reflect that either Board or the 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. C .....

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..... ng Respondents saying that this petition is nothing but a ruse by Mr. Cyrus to publicly express displeasure at being treated in the course of loss of his office. Mr. Cyrus along with his family owns entire equity share capital of the petitioners as set out in the Company Petition. Denying that the Petitioners herein are alter ego of Mr. Cyrus, in truth, the Petitioners say, the company is the alter ego of the Tata Trust, it is evident that the company acting in collusion with the Trust issued notice for holding EoGM on 6.02.2017 for the removal of Mr. Cyrus from the Board of the company. The petitioners again reiterated that Mr. Tata would micro manage 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 .....

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..... ed between Mr. Tata and Mr. Cyrus, it is clear that Mr. Tata was at all times attempting to compel Mr. Cyrus to toe his line. 182. As to the Petitioners or Mr. Cyrus acquiescing to the decisions taken by the Board until before the removal of Mr. Cyrus, they submit that Mr. Cyrus was battling constant interference and coping politely with the onslaught of interference by Mr. Tata and Mr. Soonawala. They submit that merely by consenting to the decisions taken by the Board does not follow that the majority shareholders get perpetual immunity from the oppressive conduct. The majority of the shareholders i.e. Tata Trusts has abused the Articles of 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 a .....

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..... th them professionally with a view to protecting the legacy, has become blatant mismanagement and oppressive conduct, The petitioners deny that the grievance of the petitioners is against the wisdom of management of the company to enter into transactions, because the grievance is not against entering into transactions but it is against the current proclivity to persist with carrying on loss making business, which amounts oppression as set out in the Petition. 187. As against the reply of the company saying that the veto power lying with Tata Trusts was never physically used, the Petitioners submit that not using veto power is of no relevance, 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 A .....

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..... o progress on strategic plan presented in 2014 or to implement the action on the hotspotsidentified therein,, in fact Mr. Tata was offended by the term hotspots, saying so they deny the strategy provided by Mr. Cyrus should not have been construed as more of cash flow statements and needed to include summary of e-business strategy as well as high level micro assumption that the plan is more sensitive to as alleged. 191. In respect to Mr. Amit Chandra, who has been shown as worked in Bain Capital, that company has gone into losses for want of even basic due diligence which is very much available on public domain. The Petitioners 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 p .....

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..... on of Mr. Cyrus as director of Tata Group Companies, the Petitioner denies that the issue has brought to a close it does not hurt the group operating companies because he resigned from the group companies out of embarrassment. The Petitioners submit that of course this petition does not seek to enforce insider trading regulation but to articulate the disregard the Respondents have towards the law. Likewise, the attempt to characterize old decisions as being the one assailed when it is abundantly clear that it is the failure to deal with the old decisions that have been incontrovertibly proven wrong despite best efforts of 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 de .....

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..... t achievements are wholly irrelevant to the determination of issues in the instant case. The Petitioners submit that their grievance is that Mr. Tata as the Chairman of the Trusts, sought to interfere in the affairs of the company by instructing the Trusts nominated directors to steal the decisions of the company to suit the objectives of Tata Trusts, which constitute oppression on the minority shareholders, Mr. Tata being an invitee in the position of Chairman Emeritus to Board Meeting is quite different from demanding the conduct of pre-board meeting discussion to stage manage and floor manage the conduct of board meeting 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 confid .....

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..... llege that it would be open to Mr. Soonawala to provide advice or refrain from doing so, but without advise being sought, if Soonawala is to demand that his advice to be taken, that would constitute control. 196. The company has failed to provide a plausible reason as to why Mr. Cyrus was removed without following the due process including constitution of selection committee as has been mandated by the Articles. The petitioners denied this petition as directorial dispute in the disguise of "an action in public interest". To prove that Mr. Tata has dictated minutes, the petitioners have referred some correspondence, 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" .....

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..... ormation in violation of SEBI norms. 199. The petitioners annexed EOGM notice dated 05.01.2015 along with explanatory statement for removal of Mr. Cyrus as the director of the company and a letter written by Mr. Tata to Mr. Cyrus on 02.09.2016 along with email correspondence in between Vasani and Compliance Officer of Tata Motors, the company and its group companies, the effect of all these documents would be discussed when the issues involved in this case are discussed. 200. It is a rejoinder filed by the Petitioners to the reply filed byMr. Tata, wherein they submit the same what they have said in the 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 .....

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..... same that Mr. Amit was appointed as director on the board of the company without any orientation programme in August 2016 and became a competent man to outvote Mr. Cyrus from the position of Chairman in the second meeting he attended, The Petitioners submit that he does not know anything about the business Mr. Tata was doing because he failed to state independent reason for voting in favor the removal of Mr. Cyrus from the position of Chairman. 203. As to reply given by Mr. Ajay Gopalkrishna Piramal (R5), thepetitioners submit that he has been brought to the company as an independent director, against 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 dra .....

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..... have all concerted into a group to work against Mr. Cyrus, therefore their voting against Mr. Cyrus in the board meeting dated 24.10.2016 could not be termed as independent of the influence from Mr. Tata. 206. On the reply given by Mr. N.A. Soonawala (R14)r the Petitioners submit, the averments in his reply are false, Mr. Cyrus only sought strategic advice and guidance out of difference and respect for their experience and knowledge of the Tata Group. Exploiting such decency, the petitioners submit, it is evident that Mr. Soonawala as did Mr. Tata, dictated terms to how 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 rem .....

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..... 0.06.2016, Mr. Nohria and Mr. Vijay Singh stepped out of an ongoing board meeting of the company to get a nod from Mr. Tata and Mr. Soonawala for the said transaction. This has even been recorded in the minutes that Mr. Nohria and Mr. Vijay Singh accorded their support only after discussing the proposal with Mr. Tata and Mr. Soonawala, which indicates that these nominee directors were not imparting independent judgment except following the diktat of Mr. Tata and Mr. Soonawala. The petitioners submit, nothing is further required to state these two were/have been acting as shadow 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 reve .....

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..... ntire investment was conceived and made". The time when he was non-executive member of board of directors, he was not fully aware of the complexities, it was only during his tenure as Chairman, he realized the extent to which the policy and decision making of the company was given by extraneous factors, such as Mr. Tata showing favoritism towards his friends, his personal affinity for flying and the airline industry, and his obstinate refusal to back down from his unworkable public promise to deliver a car under ₹ 1,00,000. 210. Mr. Cyrus submits that the acts of oppression 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 ex .....

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..... y to get clarity on these issues because it is otherwise a source for tension and confusion for all involved." 212. Another email dated 04.02,2015 sent by Mr. Nohria to Mr. Cyrus on the manner in which Mr. Tata would react to a proposed business decision in one of the operating companies is hereby mentioned which as below; "All these issues raise concern that I think we need to surface and address. The separation of leadership of the TT and Tata Sons is more significant than anyone has fully comprehended on internalized. Even though, the memorandum and Articles 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. .....

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..... d various issues that have already been pleaded in the previous pleadings except to the extent additions that have come in this rejoinder. 217. As to the rejoinders filed to the replies filed by other Respondents by the Petitioners as well as Cyrus Mistry, the same being almost repetition of the issues already dealt with in in thepleadings already dealt with, for the sake of brevity, they have not been reproduced. If and when any of the point out of thesepleadings are necessary for deciding any issue before this Bench, they will be taken into consideration 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 wit .....

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..... ngs (Japan Company) was issued TTSL shares at ₹ 26 per share. The acquisition price of TTSL shares for both Siva and Temasek was within the price band of ₹ 17 to ₹ 40 per share as approved by the board of TTSL and unanimously by the shareholders at the EGM of TTSL. The petitioners also acquired TTSL shares at ₹ 15 per share three months before Siva's acquisition. 221. When NTT - DoCoMo, in the month of November 2008, came into TTSL as a strategic investor investing 26% investment in the company, Sterling as well as, Mr. Cyrus'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 .....

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..... el-operating licenses. I understand he has also been seeking rescheduling of his loan from Tata Capital. He has asked for a meeting with you and in view of the help he gave us in bringing down acquisition prices in TTSL's history, I hope you will consider agreeing to his request for a meeting." 223. It is a fact that TTSL contracted with Siva Group since 2003, as a proof to it, minutes of the Board Meeting of TTSL dated 21,1.2003 discloses that benefits and cost savings have accrued to TTSL by way of such engagement with Siva Group. 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 .....

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..... eved from the Executive Chairman position in the year 2012; therefore, it could not be treated as past action of the persons presently dealing with the affairs of the company. Had it been the case that Mr. Tata did not permit Mr. Cyrus to recover dues from Siva, it is understandable that Mr. Tata trying to put his weight in favor of Siva in not paying share value paid to NTT DoCoMo. 228. No material has been placed either by the petitioners or by Mr. Cyrus saying that the petitioners moved some action against Mr. Siva for 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 pr .....

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..... o is more than the gain Siva group got from selling shares to NTT DoCoMo. For all these transactions that happened in the year 2006 have become oppressive and prejudicial to the interest of the petitioners' u/s 241, we have not seen any action that could be called as unfair warranting invocation of jurisdiction u/s 241. Moreover, Mr. Tata retired as an Executive Chairman in the year 2012 ever since Mr. Cyrus continued until before his removal. 231. Another allegation the petitioners made is that when Mr. Cyrus caused 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? No .....

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..... rores to Mr. Siva, it is evident from the correspondence in between Mr. Cyrus and the officer of Tata Capital, that Siva group pledged TTSL shares with Tata Capital to get a loan of ₹ 200crores, due diligence has been done for providing such loan to the Siva Group. When Siva group failed to make payment, Tata Capital invoked the pledge over TTSL shares and acquired the same @ ₹ 23. In the correspondence in between Mr. Pravin Khadle and Mr. Cyrus, it is evident that Tata Capital converted Siva's loan 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 b .....

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..... gs go well, business go well, at times even if both the parties are on ad idem, by virtue of market conditions, social conditions, time, natural calamities, business failures, every such failure cannot be measured up on judicial scale. Dealing with equity itself is risk. 237. When any case is filed u/s 241, the basic element that is requisite to be shown in the case of oppression and mismanagement is, unfairness of the management against the members who are not in a position to take a call in respect to the 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 .....

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..... e never been put to test to find out the veracity of the correspondence relied upon by the petitioners and Mr. Cyrus. On the contrary, Mr. Vasani filed an affidavit disputing the e-mail correspondence of him filed by Mr. Cyrus. 2. A Board meeting of the company was held on 06.12.2012 presided over by Mr. Tata as Chairman and wherein Mr. Cyrus participated as Dy. Chairman in passing a resolution to incorporate this joint venture for entering into aviation business. In the said meeting, it has 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 t .....

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..... ndia completely left the corporate governance to winds and it is full of regulatory infractions and it has become like a department of Air Asia Berhad and not as a joint venture. 242. Over the allegations made by the petitioners and Mr. Cyrus, the respondents side has placed the board meeting of the company held on 6.12.2012 to deny that the decision for starting this joint venture was thrown upon Mr. Cyrus as fait accompli, on perusal of the minutes of the said board meeting, it is evident that 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 t .....

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..... m denying it, but unfortunately today the petitioners and Mr. Cyrus have made all kinds of allegations with impunity flouting all legal principles. They stated as if they did not take active part in AirAsia incorporation, as if Mr. Cyrus did not preside over meeting on 15,09.2016 in further funding it, they went ahead to make a scurrilous statement, without a shred of paper, that Mr. Tata Funded one Terrorist through hawala with diversion of AirAsia India funds. 246. Without going any further, 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 .....

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..... documents filed by the answering Respondents, it appears that it is true that Mr. Kemple of FFC wrote letter to Mr. Maval Tata on 8.10.1968 that Mr. Tata would occupy Bhaktawar until further notice on the understanding that should he decide to vacate Bhaktawar the flat would revert to Forbes for occupation of the member of the FFC staff with an agreement that Mr. Tata would be responsible for all outgoings in connection with that flat, In the same letter, it was mentioned that 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 th .....

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..... over the possession of the premises to the purchaser, When this property was sold to MPCL, the valuation report dated 12.5.2000 issued by Dr. Roshan H Nanavati undertaken prior to the sate valuing the Bhaktawar apartment providing a ratio of 30:70 for splitting the sale consideration between the landlord and the tenant, but the actual consideration of ₹ 5crores was split in the ratio of 40:60 payable to landlord and the tenant Mr. Tata. This was put to registration, tax 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. Th .....

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..... t Tata Power gave contracts to Mr. Mehli without making any due diligence and without the approval of the Board. 254. The Petitioners and Mr. Cyrus submit that for having Mehli developed close intimacy with Mr. Tata for Mr. Tata and Mr. Mehli happened to be residents of Bhaktawar Building since long, and Mehli having helped Mr. Tata in buying agricultural land at Alibaug, Tata Power from the year 1993 onwards awarded long term contracts spanning across 20 years to various 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 .....

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..... sed and concluded several years ago therefore they are time barred and hit by delay and latches. 258. The answering Respondents, basing on the information given by Tata Power on 4.1.2017, submit that in respect to 1993 dredging contract for dredging at cooling water jetting for Trombay, it was awarded by Tata Power to MPCL for 8 years choosing MPCL from amongst three vendors who quoted namely S.K. Dhonde, Sunder Underwater and MPCL. Thereafter it was extended 5 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 .....

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..... ces. 263. As to letter dated 4.5.2013 written by Mr. Mehli, relied upon by the Petitioners and Mr. Cyrus to state that Mr. Mehli pressurized Tata Power to persists with dealing his own company, as we have gone through this letter, we have noticed that when Tata Power made MBPT completely stopped the storage of coal within their premises, Mr. Mehli wrote this email airing his grievance regarding the issue of storage of coal raising his objection to Tata 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 .....

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..... th the affairs of the company resulting to causing prejudice to the interest of the company or oppression/prejudice to the interest of the petitioners? 265. Before going Into nitty-gritty of the factualities relating to these issues, I must place that Tata Motors Ltd., the company manufacturing various cars and other motor vehicles of Tata, is not made as respondent in this case, nor even directors of Tata Motors are made as respondents 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 .....

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..... f the company and majority. 1 must be candid that the deliberations in this order are overlapping on one another, indeed they are sporadically dealt with wherever need arose. 267. It need not be said separately that Mr. Tata has not been in the management of either Tata Motors or the company ever since he retired from the company. If we read section 241 to raise a grievance under the said section, it is imperative that the actions complained 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 .....

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..... turing of wide range of automotive components, systems and prototype since 1969 and Tata Motors has been engaged in doing business with Jayem Auto since 2004 for carrying out engine performance improvements by other OEMs and suppliers for local and global market. The aforesaid note was of 6.8.2012, when Mr. Tata was Executive Chairman of the company. Besides him, Mr. Cyrus was also present when the visit was made to Jayem Auto 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 .....

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..... is rot in the knowledge of Mr. Cyrus. If payment is to be made to some business partner is delayed, it is quite natural asking the respective company to make it fast. As to Mr. Tata's indication of investing ₹ 60crores in a special vehicle, it cannot be touted as an indication of Mr. Tata investing money in Jayem Auto. In fact, in respect to the special vehicle which was discussed in the letter dated 15.09.2013, 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 compan .....

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..... that has been passed till the date of filing Company Petition except the minutes of the meeting dated 25.10.2016. Can it be said that a shareholder voted in favor of a resolution could subsequently make a dispute over the said resolution except in the circumstances mentioned under Contract Act? 278. Mr. Cyrus made an allegation that Tata Motors had to take nearly ₹ 4,000crores write-down arising from easy 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 commerc .....

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..... s letter, can it be said that Mr. Tata visiting Jayem Auto is to have some personal benefit to him or to cause some loss to TM? It is not that TM sensitive information is given to Mr. Tata and Mr. Tata trying to take sensitive information to Jayem Auto. What all happened is, since Dr. Tim has reported to Mr. Cyrus, for that, Mr. Cyrus himself must have asked Dr. Tim to present these projects to Mr. Tata, after 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 ascerta .....

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..... ta Trusts, by virtue of Article 121(A), Tata Sons is bound to provide information of the Tata Group companies to Tata Trusts prior to bringing the same before board of directors of Tata Sons. Another surprising aspect is there is no material saying Tata himself asking some information, it has been voluntarily provided by Mr. Cyrus or by his officers, may be by virtue of Article 121(A) or by virtue of their 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 caus .....

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..... transparent? Is it the case that Jayem taking money and not providing services? When long relationship is there in between two businesses, to sustain themselves, they sometime provide loan to each other, sometimes one company may provide loan to other company, if it is not reflected in the record and if it is not paid by such parties, then only there could be a chance to attribute aspersions on somebody 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 the .....

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..... would be issues with which you would be involved operationally as you are in fact the de-facto CEO or Executive Chairman of the company. While Tata Motors has turned away the Ola cabs proposal as being inferior, I hope for your sake and for that of Tata Motors that the Uber proposal for a similar number of vehicles, which Tata Motors is pursuing, does indeed get concluded. 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 selli .....

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..... rabbed the business. Whether Mr. Tata ignored Mr. Cyrus and directly had a deal with Ola? It is not so. Ultimately, what happened Is his anxiety has remained as suggestion only. Business has not come to TM. 292. The petitioners and Mr. Cyrus sounded that since Mr. Tata had an idea to invest his money in Jayem Auto, he initially supported it like anything, thereafter made 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 .....

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..... us 295. Whether Tata Steel acquiring Corus in the year 2006, thereafter Corus, owing to various external reasons, such as 2008 recession and China steel business impact over steel industry, causing losses to Tata Steel could today become a cause to attribute to Mr. Tata that he has become an obstacle to Mr. Cyrus, in his tenure from December 2012 to October 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,, thi .....

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..... s Group Plc with a resolution to submit an indicative offer of up to 500 pence per share, then on 18.10.2006, the board of directors of Tata Steel granted in principle approval for part financing the Corus acquisition. Mr. Cyrus also attended this meeting and approved the resolution. This was formally approved by the board of directors of Tata Steel 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 commercia .....

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..... s director, he continued approving every resolution of Tata Steel, for entering into auction thereafter confirming the acquisition share price of 60S pence per share. 302. For Mr. Cyrus having approved all these resolutions, since he could not say today that acquisition of Corus itself is bad,, the petitioners and Mr. Cyrus have come out with 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 .....

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..... sion 306. Whether action of passing a special resolution and fifing an application for conversion of the company, without altering any of the articles of the company so as make it private from public u/s. 14 of Companies Act, 2013 and continuation of Article 75 amounts to conducting the affairs of the company in a manner oppressive/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 Co .....

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..... he provisions in the new Act relating to public and private have already been notified. For the notified provisions having dealt with the repealed provisions analogous to the new provisions, there cannot be any argument to say that since Section 465 of Companies Act, 2013 has not been notified, the old provisions will 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 .....

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..... g - (i) persons who are in the employment of the company; and (ii) 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: Provided that where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this clause", be treated as a single member: Provided further that - (A) Persons who are in the employment of the company; a .....

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..... e at the respective timings mentioned above. In these amendments, Section 43A(1A) is the section that says if turnover is more than ₹ 1 crore, even if it is a private company, it has to be treated as deemed public company, the text of section is as follows: Section 43A (1A) : "Without prejudice to the provisions of sub-section 1, where the average annual turnover of a private company, whether in existence at the commencement of the Companies (Amendment) Act, 1974 or incorporated thereafter, is not, during the relevant period, less than (such amount as may be prescribed i.e. ₹ 1.00 crore), the private company shall, irrespective of its paid up share capital, become, on and from the expiry of a period of a period of three months from the last day of the relevant period during which private company had set average annual turnover, a public company by virtue of this sub-section: Provided that even after the private company has become a public company, its Articles of Association may include provisions relating to the matters specified in Clause 3 of Sub-section 1 of Section 3 and the number of its members may be, or at any time be reduced, below seven. Section 43A (2 .....

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..... te company on or after the commencement of Companies (Amendment) Act, 2000, such company shall Inform the Registrar that It has become a private company and thereupon the Registrar shall substitute the words 'private company" for the words "public company" in the name of the company upon the register and shall also make the necessary alteration in the Certificate of Incorporation issued to the company and its Memorandum of Association within four weeks from the date of application made by the company (b) after sub-section (10), the following sub-sections shall be inserted, namely Section 43A (11): Nothing contained in this Section, except sub-section (2A), shall apply on and after the commencement of the Companies (Amendment) Act 2000". 321. On giving combined reacting to Section 43A (1A), Section 43A (2), Section 43A (2A)- (Amendment notified on 13.12.2000) and Section 43A (11)- (Amendment notified on 13.12,2000), we are given to understand that sub-section 11 has been brought into declaring that Section 43A shall not apply on and after the commencement of the Companies (Amendment) Act, 2000, i.e. from 13.12.2000, except sub-section 2A that has simultaneously come into exi .....

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..... pany under Section 43A. Therefore, mere non applicability of Section 43A from 13.12.2000 will not make them as public because by virtue of their characters, they have to be treated as public companies with private characteristics. Had those companies not been converted as public by operation of law Section 43A, they would have remained private only. 325. Since newly inserted Sub-section 11 has categorically stated that Section 43A is not applicable from 13.12.2000, therefore, in all respects the companies converted to public by virtue of Section 43A are given liberty, by virtue of section 43A (2A), to get back to their original status, i.e. "private", or to remain as deemed public companies as stated under sec 43A because nothing has been stated that the companies registered u/s. 43A until before 13.12.2000 have become public or private. Since timeline for becoming private has not been mentioned in the amended legislation, it cannot be treated that its characteristics of private have become redundant for having not availed recourse u/s. 43A (2A). As to sub-section 4 of Section 43A, since this sub-section has not been included under sub-section 11, it cannot be said that because co .....

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..... er shareholders respectively at a fair value, but by virtue of turnover clause in Section 43A (1A) of 1956 Act, with effect from 17.8.1988, Gharda became a public company as its turnover exceeded the limit prescribed there under. When the Company Petition was filed before Company Law Board in the year 2009 on some information that second Respondent in this case was proposing to sell his shares, committing breach of the pre-emption Agreement contained in Article 57, on such prayer Company Law Board granted ad-interim injunction restraining Second Respondent from alienating his shares without permission of Company Law Board, upon which, when an appeal was filed, the Hon'ble High Court of Bombay held that once it is held to be a public company, its shares are freely transferable and the Articles could not restrict transfer of shares as they are contrary to the statute. 330. On which, the holding of Hon'ble Supreme Court is that if Parliament really wanted to put an end to the existence of all (deemed public companies/43A companies), Parliament would have deleted all references to the hybrid companies in the Act, but Section 111(14) still continues to make reference to Section 43A. Th .....

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..... taken from the Government that such and such company is a public company or a private company, but the basic definition to say which company is what company,, one has to go back to Section 2(68) only. Even after Companies Act, 2013 has come into existence, for the characteristic being same as that of old enactment, this company is still construed to be a private company, the only tag that has been put to this company by the legislation under the old enactment, i.e. under Section 43A (1A) (which was said as not applicable from 13.12.2000) has to be taken out from the records of ROC, for which only, their company has filed an application to make it private. 334. Since the Petitioners Sr. Counsel Mr. Aryama Sundaram argued for Companies Act, 2013 has come into force in a staggered manner from 1.4.2014 and having all provisions in respect to Articles have been notified, though Section 465 has not been notified, 1956Act has to be considered as impliedly repealed. And by considering so, for this company has been continuing as a public company, whatever Articles which are dealing with characteristics of private company, more specially Article 75, dealing with restriction on transfer of s .....

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..... to be construed as applicable. 337. Sr. Counsel Mr. Mohan Parasaran has further relied upon the same case which the Petitioners relied upon to say public company cannot become private, i.e. Ram Parshotam Mittal v. Hillcrest Realty Sdn. Bhd., [2009] 8 SCC 709 at page 724, para 73, for the records of the Registrar of Companies is not an indicator to say which company is a private company which company is a public company, it has to be seen whether it falls within the definition of private company or public company as defined in the Companies Act. The same being held by the Hon'ble Supreme Court in the case above, he has referred the para which is below: "73. We are unable to agree with the contention canvassed on behalf of Motel Queen Road that till such time as the records of the Registrar of Companies were not altered to show that Hotel Queen Road had become a public company, it could not be treated as such. It is not the records of the Registrar of Companies which determines the status of a company but whether it fails within the definition of a "private company" or "public company" as defined in Sections 3(1)(in) and 3(1)(iv) of the Companies Act. On the other hand, the record .....

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..... the Company may at any time by Special Resolution resolve that any holder of Ordinary shares do transfer his Ordinary shares. Such member would thereupon be deemed to have served the Company with a sale-notice in respect of his Ordinary shares in accordance with Article 58 hereof, and all the ancillary and consequential provisions of these Articles shall apply with respect to the completion of the sale of the said shares. Notice in writing of such resolution shall be given to the member affected thereby. For the purpose of this Article any person entitled to transfer an Ordinary share under Article 69 hereof shall be deemed the holder of such Share." 341. This Article has been there in the Articles of Association ever since this company has come into existence, i.e. from the year 1917 onwards, till date, this provision has never been invoked against the Petitioners. The petitioners have come into this company as shareholders somewhere in the year 1965 knowing fully well restriction of transfer of shares is present in the Articles of Association, It need not be separately reiterated that the shareholders of a company are bound by the Articles of Association, so is the case with t .....

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..... ether different, former one is in relation to seeking declaration that alteration of Articles 74 is in violation of Section 6 and Section 9 read with Section 283 of the Companies Act, 1956, whereas here the case is not in respect to an alteration of an Article in violation of the provisions of law, moreover, it is a settled proposition of law that oppression and mismanagement deals with fairness of the actions of the parties not in relation to whether action is lawful or unlawful, It has been vividly held in a judgement the Petitioners themselves relied upon, i.e., Seth Mohanlal v. Sayaji Jublee Cotton & Jute Mills [1964] 34 Com Cas 777, therefore, the ratio decided in that case is not applicable to this case, moreover, the issue involved in that case is in respect to requisition for re-election whereas here it is in respect to restriction over transfer of shares, in Cricket Club case, It is about seeking alteration of an Article here no such alteration has been sought to any of the Articles, In the present case, the company is not a public limited company like Cricket Club of India therefore this ratio is nowhere applicable to the present case. 345. The Petitioners Counsel furthe .....

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..... iation is a contract between the shareholders and the company and once it is a contract, the shareholders are bound by it because rights and obligations emerge from such contract, in this case also, the petitioners having come into the company despite knowing that the shareholders are bound by Article 75 which has been in existence as on the date they have come into the Company, the same shareholders cannot expect a right more than what has been accrued to them by virtue of articles of association. 348. The respondent counsel further relied upon V.B. Rangaraj v. V.B. Gopalakrishnan and others [1992] 1 SCC 160, Sambu Charan Bhattacharya v. The Statesman Ltd, [1993] ILR 1 Cal 1272, Claude-Lila Parulekar v. Sakal Papers [2005] 11 SCC 73, Gothami Solvent Oils Ltd. v. Smt. Mallina Bharathi Rao [2001] 105 Comp Cas 710 (AP), to say that the restriction on the transfer of the shares of the company is not a unique phenomenon to this company alone, it has been recognised by the Hon'ble Supreme Court and Hon'ble High Courts that a restriction on the transfer of shares is one of the fundamental characteristics of a private company. 349. As to restriction in article 75 over transfer of shares .....

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..... , lead to an inference of mutual irreconcilability if the later set of provisions is by itself a complete code with respect to the same matter, In such a case the actual detailed comparison of the two sets of provisions may not be necessary. It is a matter of legislative intent that the two sets of provisions were not expected to be applied simultaneously." 353. It has already been discussed while discussing some other case saying that if the provisions are in conflict with each other, then this concept of implied repeal comes into existence here Tata Sons by operation of law under Section 43A (1A) has become Public Limited Company retaining private company characteristics, the only provision that has been shown as not repealed is section 43A (2A) and 43A (11) of 1956 Act on the ground till date section 465 of the Companies Act, 2013 has not been notified. Section 43A (2A) or 43A (11) are not in conflict with any of the provisions of the Companies Act, 2013 more particularly with Section 2 (58) and section 2 (70) of Companies Act, 2013, Under the old regime as well as new regime, the definition for private company is almost the same, the only thing is that Tata Sons has not appli .....

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..... d as public company. 357. To make long into short, instead of discussing what is the deliberation went on this issue in the Needle supra, we say it is not applicable to the present context because in Needle Industries, it is in relation to issue of shares therefore the context arose to say how the company is to be considered in a scenario where shares are renunciated in favour of any non-member of the company, but whereas Tata Sons has not come out with any rights issue similar to Needle Industries scenario, that ratio cannot be taken into consideration to say that this company is public in nature henceforth we have not found any merit to apply that ratio to this company. 358. The Petitioners Counsel relied upon Peterson Dafen Tinplate Company Limited v. Llanelly Steel Company (1907) Limited case to say that the Resolutions in conferring an unrestricted and unlimited power on the majority of the shareholders to expropriate any shareholder they might think proper at their will and pleasure could not be bonafide are genuinely for the benefit of the company as a whole and was not such a power as could be assumed by the majority. 359. At the outset it should be dealt with that this .....

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..... th the ratio already discussed from the citations placed by the Petitioners side, therefore it is hereby held this ratio as well is also not applicable to this case. 363. On the contrary, the Respondents also relied upon Needle Industries supra taking para No.154 from the judgement to say that the privileges and exemptions of a private company are very much available to Section 43A company as well for which the Respondents relied upon the following para; "Private companies enjoy certain exemptions and privileges which are peculiar to their constitution and nature. Public companies are subjected severely to the discipline of the Act. Companies of the third kind like NILL< which become public companies but which continue to include in their articles, the three matters mentioned in sub-clauses (a) to (c) of Section 3(l)(iii) are also, broadly and generally, subjected to the rigorous discipline of the Act. They cannot claim the privileges and exemptions to which private companies which are outside Section 43-A are entitled." 364. On examination of every aspect, we are of the view that this argument of the petitioners' counsel on this point is preposterous primarily on three ground .....

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..... ainant member or other members, here, an application under Section 14 is in no way can be construed as action to cause prejudice or oppression against the Petitioners, therefore filing an application under Section 14 to get back its original status will never become a cause of action to invoke Section 241. 365. As to interplay of old and new enactment, as I said earlier, section 43A has never been repealed, it has only been said in section 43A (11) that section 43A, except (2A), will not remain in force from 13.12.2000, for section 43A has not been repealed in the year 2000, it cannot be said that section 43A companies registered before 13.12.2000 would not continue as deemed public companies, its time limit has been mentioned under section 43A{2A) of 1956 Act, Repeal Provision Sec 465 has not yet been notified, therefore, we don't find any interface between old and new enactment. For this company has become deemed public company by operation of law, and there being no other definition to private company under new Act other than old definition, it cannot be called that it has to be treated as public company. 366. On having the Petitioners Counsel quoted one order passed by Hon'bl .....

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..... egate of the Sir Dorabji Tata Trust and the Sir Ratan Tata Trust shall prevail, " "104. General Provisions A. Number of Directors …………………………… B. Nomination of Directors So long as the Tata Trusts own and hold in the aggregate at least 40% of the paid up Ordinary share capital, for the time being, of the company, the Sir Dorabji Tata Trust and Sir Ratan Tata Trust, acting jointly, shall have the right to nominate one third of the prevailing number of Directors on the Board and in like manner to remove any such person so appointed and in place of the person so removed, appoint another person as Director. The Directors so nominated by the sir Dorabji Tata Trust and the Sir Ratan Tata Trust shall be appointed as Directors of the Company Explanation: the words acting jointly' used in this Article shall mean that the Sir Dorabji Tata Trust and the Sri Ratan Tata Trust shall together nominate such Directors. In the case of any difference, the decision of the majority of the Trustees in the aggregate of the Sir Dorabji Tata Trust and the Sir Ratan Trust shall prevail. "118. Appointment of Cha .....

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..... similarly situated holding companies, and any alterations to such strategic Plan; (b) an annual business plan structured to form part of the strategic plan, that should include proposed investments, incurring of debts, debt to equity ratio, debt service coverage ratio, projected cash flow of the Company and any alterations to such annual business plan" (c) the incurring or renewal of any debt or other borrowing by the Company, which debt or borrowing causes the cumulative outstanding debt of the Company, to exceed twice its net worth or which debt/borrowing is incurred/ renewed at a time when the cumulative outstanding debt of the Company has already exceeded twice its net worth, if not already approved as part of the annual business plan; (d) any proposed investment by the Company in securities, shares, stocks, bonds, debentures, financial instruments, of any sort or immovable property of a value exceeding ₹ 100 Crores if not already approved as part of the annual business plan; (e) Any increase in the authorised, subscribed, issued or paid up capital of the Company and any issue or allotment of shares by the Company (whether on a rights basis or otherwise); ( .....

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..... be deemed to have served the Company with a sale-notice in respect of his Ordinary shares in accordance with Article 58 hereof, and all the ancillary and consequential provisions of these Articles shall apply with respect to the completion of the sale of the said shares. Notice in writing of such resolution shall be given to the member affected thereby. For the purpose of this Article any person entitled to transfer an Ordinary share under Article 69 hereof shall be deemed the holder of such Share." 371. The company on 13.09.2000, unanimously, including father of Mr. Cyrus (Mr. P.S. Mistry) approved modifications to the Articles of Association of the company in its 82nd Annual General Meeting, inter alia including following changes: (1) a right for two Tata Trusts, namely, Sir Dorabji Tata Trust and Sir Ratan Tata Trust, to jointly nominate "one-third of the prevailing number of Directors on the Board" so long as the Tata Trusts own and hold in aggregate at least 40% of the paid up ordinary share capital of Tata Sons (Article 104B); and (2) that all "matters before any meeting of the Board which are required to be decided by a majority of the Directors shall require the affir .....

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..... heir explanation for assailing the continuation of these Articles is that they have been converted into tools of oppression and device to enable purported charities to run business without being amenable to good governance, which is wholly against public policy and public interest, therefore they are to be struck off from the Articles. Now the onerous duty of this Bench is to test as to whether such argument stands to merit or not. 375. Sr. Counsel appearing on behalf of the petitioners submit that with the change in various laws over the past two decades, the focus has turned to ensure that the affairs of the company being conducted in a manner which is in the interest of the company consisting of shareholders, both majority and minority. 376. The petitioners counsel has submitted a novel argument saying that various regulations that have come into existence regulating the affairs of the company have brought a paradigm shift to the old concept of majority shareholders taking a march to conduct the affairs of the company with inclusion of the concept of independent director and the duties of directors apart from making section 241 wide open for the protection of minority sharehol .....

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..... the current equity shareholding the petitioners is in excess of 15%, the petitioners should have the right to nominate at least two directors accordingly, the right to affirmative vote (as contained in Article 121) and quorum requirement (as contained in Article 115) must be changed in Favour of the petitioners and the directors nominated by them and not the Trust nominated directors. He further submits that the shareholders of a company indeed have the power to appoint the board of directors, however, once they are appointed, the duty to govern the company gets fastened to the board of directors, by further adding to it, by section 166, the directors are bound by law to take into account the interest of all stakeholders. The petitioners' counsel submits that in the matters to be decided by the board of directors, the intention should be that the entire board of directors should apply its mind to the matters placed before it and the collective wisdom of the board of directors is the fulcrum and the sine qua non of good management of a company, but by giving an affirmative vote to the Trust nominated directors, the whole process has become farce, because by virtue of Article 121, t .....

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..... n any Tata company, if not already approved as part of the annual business plan, shall be placed before the board of directors of the company, before any of the group company (mentioned in Article 121A-(h))has decided in respect to making any investment exceeding ₹ 100 crores. On reading this minutes, it is clear that no board meeting took place to take a call over this Welspun acquisition which was costing around ₹ 9000 crores. As per Article 121-A(h) of the Articles of the Company, such issue should have come before the Board of the company prior to Tata Power company had taken a decision to acquire such project, because it is the Company that has to provide debt to finance acquisition, Though papers appear to have been sent to the Trust nominee directors, Mr. Cyrus did not hold any board meeting before Tata Power Company signed the documents in respect to Welspun transaction on 12.06.2016 itself. Since the investment was huge in thousands of crores that too since money had to go from Tata Sons, it was the bounden duty of Tata Sons to hold its board meeting to take a decision as to whether such investment was to be made or not, but Tata power company had already signe .....

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..... rector to approve the resolution. Can giving such direction to the Trusts nominee directors to proceed with resolution amounts to interference with the affairs of the company? We have to observe that Mr. Cyrus went ahead with Welspun proposal without taking prior approval of either the Trusts nominee directors or the majority shareholders i.e. Trusts who nominated Trust nominee directors. 386. Whose action in this episode is prejudicial? Is it Mr. Cyrus's action or the action of Mr. Tata saying to go ahead with the resolution is prejudicial? For the petitioners have filed this company petition, we have not gone any further over this issue leaving it to the wisdom of the petitioners as to realise that the action of Mr. Cyrus is prejudicial to the interest of the company, or Mr. Tata. 387. Another star argument of the petitioner counsel and Mr. Cyrus's counsel is that the liberty given to Mr. Tata by Mr. Cyrus has been taken as licence to give advices as left, right, and centre without even being solicited. The petitioner counsel submits, it is not their case that Mr. Cyrus never sought advice and guidance of Mr. Tata as Chairman Emeritus, he says, the interference of Mr. Tata went .....

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..... e, we have been pulling through trying to answer each and every point raised by either side. 393. As to the Articles of Association, the respondents counsel rightly said that none of the Articles have been opposed by these petitioners or Mr. Cyrus at any point of time in the past, indeed all the Articles were unanimously approved by the petitioners, as to Article 75 is concerned, it has already been said this article has been there since incorporation, therefore article that was good for 100 years and good for these petitioners for more than 50 years, has all of sudden become monster only when Mr. Cyrus was removed as Executive Chairman of the company. When no rights or expectations have been conferred upon these petitioners with respect to the covenants of the Article 75, these petitioners could not raise any objection to continuation of this Article-75 on the ground it is oppressive against the petitioners. 394. Normally, oppression and mismanagement petitions will be filed in myriad situations such as allotment of shares, siphoning of funds, dilution of shareholding, insertion of new articles, depriving the rights already in existence, selling of assets, passing resolutions wi .....

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..... em because the corporate democracy in the present regime has become secondary to the corporate governance, therefore the majority rule has no place in the present regime. To establish this argument, the petitioners counsel has navigated us through section 149, 166 and schedule 4 (code for independent directors) of the Companies Act, 2013. Let us see what the text of sec 149 & 166 and schedule 4 says: 149. Company to have Board of Directors (1) Every company shaft have a Board of Directors consisting of individuals as directors and shall have- (a) a minimum number of three directors in the case of a public company, two directors in the case of a private company, and one director in the case of a One Person Company; and (b) a maximum of fifteen directors: Provided that a company may appoint more than fifteen directors after passing a special resolution: Provided further that such class or classes of companies as may be prescribed, shall have at least one-woman director. (2) Every company existing on or before the date of commencement of this Act shall within one year from such commencement comply with the requirements of the provisions of sub-section (1). (3) Every .....

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..... as may be prescribed, whichever is lower, during the two immediately preceding financial years or during the current financial year; (e) who, neither himself nor any of his relatives - (i) holds or has held the position of a key managerial personnel or is or has been employee of the company or its holding, subsidiary or associate company in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed; (ii) is or has been an employee or proprietor or a partner, in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed, of- (A) a firm of auditors or company secretaries in practice or cost auditors of the company or its holding, subsidiary or associate company; or (B) any legal or a consulting firm that has or had any transaction with the company, its holding, subsidiary or associate company amounting to ten per cent, or more of the gross turnover of such firm; (iii) holds together with his relatives two per cent. or more of the total voting power of the company; or (iv) is a Chief Executive or director, by whatever name called, of any non-profit organisation t .....

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..... director on the date of commencement of this Act shall not be counted as a term under those sub-sections. (12) Notwithstanding anything contained in this Act, - (i) an independent director; (ii) a non-executive director not being promoter or key managerial personnel, shall be held liable, only in respect of such acts of omission or commission by a company which had occurred with his knowledge, attributable through Board processes, and with his consent or connivance or where he had not acted diligently. (13) The provisions of sub-sections (6) and (7) of section 152 in respect of retirement of directors by rotation shaft not be applicable to appointment of independent directors. Schedule IV [See section 149(8)] CODE FOR INDEPENDENT DIRECTORS The Code is a guide to professional conduct for independent directors. Adherence to these standards by independent directors and fulfilment of their responsibilities in a professional and faithful manner will promote confidence of the investment community, particularly minority shareholders, regulators and companies in the institution of independent directors. I. Guidelines of professional conduct: ………&he .....

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..... sufficient attention and ensure that adequate deliberations are held before approving related party transactions and assure themselves that the same are in the interest of the company; (10) ascertain and ensure that the company has an adequate and functional vigil mechanism and to ensure that the interests of a person who uses such mechanism are not prejudicially affected on account of such use; (11) report concerns about unethical behaviour, actual or suspected fraud or violation of the company's code of conduct or ethics policy; (12) acting within his authority, assist in protecting the legitimate interests of the company, shareholders and its employees; (13) not disclose confidential information, including commercial secrets, technologies, advertising and sales promotion plans, unpublished price sensitive information, unless such disclosure is expressly approved by the Board or required by law, IV. Manner of appointment: …………………………… V. Re-appointment: …………………………… VI. Resignation or removal: ……& .....

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..... management from action plans and internal controls to performance management and corporate disclosure. This has initially been invoked in UK but it has come into focus in India after the failure of many high profile corporates more specially M/s. Satyam Computer Services episode involving fraud and financial irregularities. In pursuance of the same, Clause 49 of the Listing Agreement as described by SEBI between the stock exchanges and the listed companies and mandated induction of independent directors on their board w.e.f. January 1, 2016. This has become a watershed event for the institution of independent directors. After several rounds of discussions and debates by the standing committee and Ministry of Corporate Affairs while preparing Company Bill 2009-2011, induction of independent directors in listed companies and public companies has finally become legislation in the Companies Act, 2013. It has also been expressed that independent directors, inter alia, play their designated role to nurture the financial health of the company and to protect the interest of various stakeholders, particularly the minority shareholders. 399. Since it is the intendment of the legislation to .....

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..... le to the minority, that is not the objective of section 241 & 242 of the Act. 402. A director should not make an attempt to achieve any undue gain or advantage either to himself or to his relatives, if he found guilty of any such things, he shall be liable to pay an amount equivalent to that gain to company. A director is not supposed to assign his office to anybody. On the top of it, a penal sub-section is also included for violation of anyof the duties aforementioned, if violated, he shall be punishable with a fine not less than ₹ 1,00,000 rupees extendable to ₹ 5,00,000. On analysis of these two new sections inserted in Companies Act 2013, both have to work for the benefit of its members as a whole and in the best interest of the company and other stakeholders and they have to exercise their independent judgment. 403. In the given case, is it the case that the independent directors and Trust nominee directors in the company have not worked or discharged their duties as enunciated u/s 149/166 of the companies? The petitioners have not placed minutes of any other meeting except minutes of the meeting taken place on 24.10.2016 where Mr. Cyrus was removed as Executive .....

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..... ted a search for a man fit to be appointed as Executive Chairman of Tata Sons in the place of Mr. Tata for he was in the offing to retire. Thereafter in the second sentence, the petitioners themselves stated that "after an unsuccessful initial exploration, Mr. Tata and his friend Bhattacharya approached Mr. Cyrus to be a candidate to the Chair". By this sentence, can it be said that Mr. Cyrus was taken as Chairman by virtue of their group shareholding in Tata Sons? In the following sentence, it has been further emphasized even though he initially declined, for the selection committee was unable to locate a suitable candidate, he accepted the offer to become the chairman. Therefore, by reading this para, it cannot be by any stretch of imagination, could be construed that Mr. Cyrus was made as Chairman on the ground that their group company has 18.34% shareholding in the company. Fitness being the criteria to recommend Mr. Cyrus to the post of Executive Chairman by the selection committee, how could his removal by the board of Tata Sons would become a grievance to minority shareholders? When that is not the grievance of minority shareholders, the petitioners could not even make it an .....

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..... of these answering Respondents? For that matter, Mr. Cyrus was answerable to the shareholders of the company that is what corporate governance says. Does it mean that shareholders mean only minority shareholders? Is it that majority will not come into count when accountability is an issue? If you take Welspun issue, who is the man flouted not bringing Welspun issue to Tata Sons Board before TPCL took a decision to go ahead with Welspun acquisition? If at all corporate governance does not mean that having five years' plan, demarcating roles of Tata Sons and Tata Trust, Basic idea of the corporate governance is to have transparency, accountability and fairness. Has it been said anywhere that so and so thing happened in the company is devoid or transparency? Moreover, this argument of Corporate Governance is in fact applicable against Mr. Cyrus because he is the person continued in the management. However, since there is no Company Petition from the Respondent side before us asking a relief that Mr. Cyrus had run the company in violation of Corporate Governance, we cannot be on that point. 409. One basic concept that one should not forget when dealing with an issue, here as I said, .....

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..... persons elected to govern the people in case of political democracy. In case of the company, the persons elected as Chairman/CEO, likewise Board of Directors are to govern the funds of the company. It is not out of context to refer Section 244 of Companies Act to say that corporate management is only to govern the funds of the company. If you read this Section, it is very much evident that in the case of companies other than Section 8 companies, share capital is taken into consideration to initiate action under Section 244. Before that, if you see the election of Board of Directors, the criteria for voting is equity. Such being the case, it is inconceivable even to contemplate that by virtue of introduction of corporate governance, corporate democracy is taken to back seat. It has to be understood that majority comes into rule basing on corporate democracy, and such rule shall be in accordance with rules of corporate governance. Governance is only a part of democracy. 410. If you go little bit backwards, election of somebody to work on behalf of them has come into existence to give an ease to run an institution. It is not that, since somebody is elected to represent them and safe .....

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..... rticles of Association already in existence or whoever becomes a subscriber for constitution of Articles of Association at the time of incorporation will be bound by those Articles of Association. When they are bound by such Articles, can the shareholders of a company raise a grievance saying that compliance of Articles is unfair or prejudicial to the interest of them, It is basic ethics of human being, that a person enters into an agreement with another is bound by such agreement, so is the case of shareholder who is bound by the Articles of Association. Therefore, law does not permit shareholder to seek any remedy under law against Articles save and except in the cases where it falls under the exceptions given under the Contract Act, i.e. competency of the parties, coercion, undue influence, misrepresentation and mistake (mistake as stated in the Contract Act, not otherwise) or such article which is repugnant to Companies Act. It is also known to everybody, if any of the persons bound by an Agreement raises any issue under any of the heads mentioned above, heavy duty lies upon him to prove the same. Here it is not the case of the Petitioners that these Articles should not have bi .....

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..... ortionate to the share capital invested by the shareholders. This entire chapter has come into existence to have corporate democracy in the company. By virtue of this election, it is quite obvious that majority will get control over the company which is called Majority Rule. 417. In this Company, i.e. Tata Sons, the majority shareholders, i.e. Tata Trust instead of electing majority Directors, they have come out with a different method of controlling the company. As we all know, the Board of Directors of the Company is the body that managed the company. Instead of bringing entire board from their side, Tata Trusts inserted a provision to have 1/3rd of Directors on the Board with an affirmative vote so that no resolution would be passed without their vote. Instead of having positive control over the company, for their own reasons, they have opted for a negative control over the company by having affirmative vote. Though the result of these two ways of control is not exactly the same, but it is for sure that no resolution would be passed unless majority accepts such resolution. The Trusts otherwise can have full control over the company by virtue of their majority; but because of th .....

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..... Board Directors to decide about 5-year strategic plan, annual business plan, debt restructuring, company's investment in securities, shares, stocks, bonds, debentures, financial instruments of any sort or immovable property of a value exceeding ₹ 100 crores, if such investment has not been approved as part of the annual business mentioned in clause B of this Article, for increase of share capital, for alienation or encumbrance of properties. 422. Apart from these rights, another right the Board is conferred with to exercise is in relation to any matter affecting the shareholding of the Tata Trusts in the company or the rights conferred upon Tata Trust by the Articles of the company or the shareholding of the company in any Tata Company, The words "any Tata company" means various Tata companies mentioned in Article 121A. 423. In Clause (h) of this Article, it has been categorically mentioned that the Board of Directors shall resolve in respect to exercise of the voting rights of Tata Sons at the General Meetings of any Tata company, including the appointment of a representative of the company u/s 113 (l)(a) of the Companies Act, 2013 in respect of a General meeting of any Ta .....

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..... relating to conversion. That discussion may be read as part of this discussion so as to say per se existence of Article 75 is not oppressive against the interest of the Petitioners, In respect to restriction in Article 75, Tata Sons' counsel relied upon Gothami Solvent Oils Ltd. v. MallinaBharathi Rao [2001] 105 Company Case, paras 14& 15, SambuCharan Bhattacharya v. The Statesman Ltd. [1993] ILR 1 Cal 1272, para 23 & 24 and N.C Sanyal v. Calcutta Stock Exchange [1971] 1 SCC SO, para 11, 13 & 14, to say that provisions akin to Article 75 empowering a company to cause a compulsory transfer of its members shareholding have been found to be perfectly valid and binding. 426. On the Petitioner Counsel referring Section 235 of the Companies Act, 2013 for saying that as to public companies in case any restraint over the transfer of shares is to be recognised, it has to be only as stated in Section 235 of the Act, When we have gone through this Section, we have noticed that if any of the shareholders not assenting to the Scheme approved by not less than 9/10th in value of the shares whose transfer is involved, the transferee company, as per law is entitled to give notice to the dissentin .....

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..... on of any of the laws in force, they have to seek civil remedy before Civil Court, of course, how much it stands after passing 100 years is a million-dollar question. In any event per se existence of this Article in the Articles of Association will never amount to causing or likely to cause any prejudice against the Petitioners or oppressive against the Petitioners. 428. In addition to the argument of the petitioners' counsel, Mr. Cyrus Counsel Mr. Janak Dwarkadas, Sr. Counsel, referred Re. H.R. Harmer Ltd. [1959] WLR. 62 - Harmers case referring the following paras that decisions have to be taken by validly elected board. For which, he has taken out two paras from Harmer, which are as follows. "I think that there may welt be oppression from the point of view of member-directors where a majority shareholder (that is to say, a shareholder with a preponderance of voting power) proceeds on the strength of his control, to act contrary to the decisions of, or without the authority of, the duty constituted board of directors of the company." Lord Romer in Harmers case has held that; "Members are entitled to expect that their board shall perform its functions as a board and that th .....

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..... ther used to deal with the affairs of the company without even consulting any of the directors, more specially his children. To ascertain the same, instead of mentioning all the incidents, we mention one instance i.e. Mr. Edward, who was with the company from far before this company was incorporated, was summarily thrown out from the company. The reason for the purported dismissal was the father's annoyance because Mr. Edward had written a letter to Bernard about collection of postage stamps and had not referred it to the father in that letter. Likewise, when the secretary of the company protested for using the company money for his wife's expenses, the father replied that he was the company and the secretary was to do as she was told, in another incident in the board meeting, he refused to renew the service agreement of one Mr. Buck whose service was of immense value at that time, so many incidents, of like nature, were mentioned reflecting autocrat approach of the father ignoring the prospects of the company as well. Here, one more fact, I should mention that the nominal capital of the company was $50,000 divided into 39,000 preference shares of £1, 10,000 "A" ordinary shar .....

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..... taken by the father on the premise he was whole and sole of the company, the company started degenerating and its prosperity getting drifted. This father was not even in a position to hear what was being said to him and his memory power was also lost. In this case, father did not allow his sons even to have board meeting to discuss over the issues of the company. Taking the whole episode into consideration, it was held that father rode roughshod over his sons and everybody else and dictated the general conduct of the company affairs and its policy with an intolerant disregard to the wishes of his co-directors and indeed in some instances, in disregard of the company's best interest. It is further held that the most dangerous and most oppressive form of conduct is, the habit that the father had of going behind properly constituted decision of the board and taking it on himself to countermand them. The Court felt that such conduct cuts at the very root of proper company procedure and makes it virtually impossible for the business of a company to be carried on. 431. This judgment has been heavily relied upon by the Petitioners as well as Mr. Cyrus to say that Mr. Tata and Mr. Soonaw .....

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..... here any incident where nominee directors outvoted the resolution proposed by Mr. Cyrus?. In Harmer, father had no economic interest, whereas the Trusts, in this case, have economic interest five times to the interest of the petitioners. Therefore, the findings in Harmer case are of no help to say that Mr. Tata and Soonawala have done something wrong to the company. 435. The petitioners counsel and Mr. Cyrus counsel tried to take out the aforesaid italic paras from the judgment to project that relying on voting power, the proprietary interest of the minority shareholders cannot have failed to be effected and oppression is to be considered as made out. In Harmer's case, it has been highlighted again and again father had only voting power against the beneficial interest of his sons. It has also been said that father considered himself as board without even giving an opportunity to hold even meeting. Not only that, he used to dismiss the people, renew the tenancy which were already terminated by the board. By doing such acts, he had caused irreparable loss to the company. This has been termed as interference by the father in Harmer case. 436. Now, the petitioners' counsel and Mr. Cy .....

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..... of the petitioners that Mr. Tata and Mr. Soonawala gave some wrong advice to causing unlawful loss to the company or to ensure some unlawful gain to provide to somebody else?. Does Mr. Tata or Mr. Sooonawala have their own companies in conflict with the interest of the company or its group companies?. 439. Though it is not requisite to mention that the power lying in any of these Articles is not exercised by the answering Respondents at any point of time till date, it is a fact no occasion arose to invoke powers under any of the meetings so far happened, It is true that affirmative right and board deciding the issues of Tata Group companies have come into existence only after Mr. Tata retired from the company because when Mr. Tata was the Executive Chairman of Tata Sons, the person manning Tata Trust and Tata Sons was one and the same. Therefore, since the man in the driving seat of Tata Sons at that point of time being the man heading Tata Trust, there was no occasion to have any apprehension to the Trusts to contemplate that there would be danger to the rights of the majority, i.e. the Trusts. When the Executive Chairman post went into the hands of the person who does not belon .....

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..... ument of the answering respondent saying that this petition is in the nature of directorial complaint is blatantly false and oblique attempt to divert the attention for the core issues raised by the petitioners vide their petition. The petitioners though not sought reinstatement of Mr. Cyrus as Executive Chairman, they have focused on saying that the underlying reason forhis removal as Executive Chairman as well as director was nothing but retribution for the incisive attempts at stopping the acts of the mismanagement and restoring transparency and integrity in the functioning of the company and its group companies. 445. The grounds, according to the petitioners, to say that this action of removing Mr. Cyrus as Executive Chairman on 24.10.2016 is oppressive are as follows; i. The said board resolution and removal of Mr. Cyrus is contrary to the Articles of Association and in particular Article 118 of Articles of Association. ii. The said board resolution and removal of Mr. Cyrus is contrary to and in breach of shareholder resolution of 01.08.12. iii. The said board resolution and removal of Mr. Cyrus are at the behest of Tata Trusts and the participation of Tata Trust's nomi .....

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..... etc. to say that for Mr. Cyrus tried to clean up all these legacy issues, since the same being inconvenient to the answering respondents, the petitioners counsel submits that the nominee directors surprised Mr. Cyrus as well as the petitioners by coming out with an unforeseen agenda on the very day of board meeting i.e. on 24.10.2016 for the removal of Mr. Cyrus as Executive Chairman of the company. 448. On 24.10.2016 when meeting was held for taking up various issues such as cover note on Tata Teleservices, presentation on Tata Teleservices, for updating of Accounts of Air Asia India, execution of summary of Air Asia, about annual business and other various agenda items but at 11th hour before board meeting was to be held, the Chairman Mr. Cyrus was informed that Mr. Tata would be joining the board meeting and before commencement of consideration of items, Dr. Mitin Nohria mentioned that Tata Trusts had asked its nominee on the board of the company to bring a motion to the board of the company. No sooner had Dr. Nitin Nohria mentioned about bringing a motion, Mr. Amit Chandra mentioned that at the meeting of the Trusts directors held earlier in the day, it was agreed to move a mo .....

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..... e discomfort to the answering respondents when Mr. Cyrus tried to dean up the books of the company by taking steps against the issues causing loss to the company. 450. To which, the respondents counsel replied that it is a directorial complaint therefore it cannot be raised in a petition filed u/s 241 because the directorial dispute will not have nexus with the shareholders' proprietary rights, therefore, the same cannot be agitated or entertained in a petition u/s 397/398 of the Companies Act 1956 or sec. 241 of the Companies act, 2013. It has been said that the provisions of the Chapter oppression and mismanagement cannot be used to agitate complaints regarding loss of office or directorship. They have further stated removal of director could become grievance u/s 241 only when a vested right is conferred upon the minority shareholders to participate in the management of the company. 451. As to the argument of the petitioners that the board of directors did not exercise its independent judgment while taking the decision regarding the replacement of Mr. Cyrus as the Chairman of the company, they say it is self-evident in the minutes of the board meeting held on 24.10.2016 reflect .....

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..... ment is to be made on the recommendation made by the committee that has to be done only as mentioned in Article 121 where affirmative vote has been given to the nominee directors of the Trusts. As we all know, whenever any selection is required to choose one out of many or to search or identify somebody competent to such an assignment, then only selection process will come into existence. It is the convention that takes place whenever anybody has taken for any assignment, because pick and choose is in the hands of the body that takes in somebody for some assignment. But when it comes to removal of such person, there cannot be such convention of constituting selection committee, because what selection would be done for removal?. Selection committee is only a recommending authority. Decision of appointment will always lie in the hands of appointing authority. Here in this case appointing authority is the board of directors. As we all know, appointing authority is the competent authority to remove the person appointed by such authority- Therefore, we have not seen any merit in saying that since he was appointed on the recommendation made by the selection committee; he could not be rem .....

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..... escribe a longer period", in the following paragraph of secretarial standard it has also been stated that "each item of the business requiring approval of the meeting shall be supported by a note setting out the details of the proposal, relevant material fact that enable the directors to understand the meaning, scope and implications of the proposal and the nature of concern or interest, if any, of any director in the proposal, which the director had earlier disclosed". It has been answered by the answering respondents counsel that in the same secretarial standard in para 1.3.10 it has been stated that "any item not included in the agenda of a board meeting may be taken out for consideration with the permission of the chairman and with the consent of the majority of the directors present in the meeting, which shall include at least one independent director, if any". 457. As to this point is concerned, including an agenda item with short notice is not new, here the chairman himself being interested, the board has validly elected some other director as Chairman of the meeting to transact the business of that meeting. Merely because of holding a meeting with short notice or inclusion .....

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..... of the Dy. Executive Chairman has already been conferred upon the Board underArticle119. Once anybody has been re-designated from one post to other post, then necessarily it should be construed that the person given another assignment is to be treated as vacated the earlier position, the same is the thing happened in this case, therefore these petitioners today could not say that for there being a resolution on 18.12.2012 appointing him to continue for five years up to 31.03.2017, the board should not remove him as executive chairman before 31.03.2017. In view of the reasons, we have not found any merit in this point saying that Mr. Cyrus should have been permitted to continue until 31.03.2017 for he was appointed as Dy. Executive Chairman by the shareholders on 01.08.2012 w.e.f. 01.04.2012, In addition to this, if we see the Welspun issue, Ola and Uber issue and other issues, it can be inferred that trust deficit started growing in between them, which does not go well in a company of that size. It is a decision taken by the competent body to end this trust deficit and to move forward, moreover, since the petitioners themselves said that they are not on reinstatement of Mr. Cyrus t .....

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..... to be taken in the spirit that it has been mentioned in respect to commercial transactions. On this background, can it be said that the shareholders, who were required for appointment could not vote at the time of removal, if that is the case, it is nothing but mockery of corporate democracy, therefore, we don't find any merit in this argument saying that the Trust nominee director should have abstained themselves from on the proposal moved by them, Accordingly, this issue has been decided against the petitioners and M, Cyrus. 463. As to the argument that real reason for removal of Mr. Cyrus was because he was attempting to rectify certain irregularities and stop mis-governance of Tata group, the respondents counsel has submitted that this contention is bereft of any merit because as to taking legal action against Siva group, it is Dr. Nitin Nohria, (Trusts nominee director) who proposed at the board meeting on 15.09.2016 to initiate arbitration proceedings against Siva group, as to institutional frame-work is concerned, the answering respondents counsel submit that the proposed governance guidelines, which were said to be brought in by Mr. Cyrus, were in fact proposed in consult .....

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..... w a decline from 60% (in 2012) to around 40% (in 2016) under Respondent No. 11's chairmanship. (@ Para 25, Pg. 11, RNT Reply to CPM's Reply to the Petition). Likewise, there was drop in market share from 13.1% in 2012 to 5.2% in 2017 in the passenger vehicle segment of Tata Motors (@ Para 20, Pg. 74, TSL's Reply to the Additional Affidavit dated 31 October 2017) What is worse, Respondent No. 11 used the public relations services of the Tata Group and attempted to portray that he had 'inherited' these problem hotspots. * The indebtedness of portfolio companies increased without corresponding growth in profits (@ pg. 337 of TSL Reply to the Petition). * Respondent No. 11 was in favor of write-offs/provisions in group companies to push problems under the carpet without making a conscious attempt to turn around business operations (@ pg. 339 of TSL Reply to the Petition) * Respondent No. 11 modified the composition of the board of directors of several companies to ensure that he was the only common director between many operating companies (like IHCL) and the company in order to wrest control over the companies and reduce the company' ability to influence these companies in spite .....

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..... vernance within the four corners of the Companies Act, while doing so the majority will have right to exercise their right within the parameters, the only safeguard that is to the minority shareholders u/s 241-242 is, if at all the actions of the majority or the management causing oppression or prejudice to the interest of the petitioners or to the company, then they can invoke this jurisdiction. It cannot become a bugbear in the hands of the minority shareholders to stifle the freedom of functioning and freedom of management lying with majority. By seeing some actions of Mr. Cyrus as executive chairman, it appears he felt that the majority exercising their right for the benefit of the company and its group companies perhaps perceived as the interference by the majority. The word interference itself denotes that if anybody gets into some others business then it can be called as interference. Here, Mr. Tata and Mr. Soonawala have been committed to the growth of the company and its group companies for the last several decades, with the same spirit though their age is not on their side, have been looking into every aspect upon which an advice is sought, at times when they felt that si .....

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..... answering Respondents linked it to (1) email dated 25.10.2016 alleging Mr. Cyrus leaked confidential information to outsiders, (2) Mr. Cyrus reciprocating to the letter sent by DCIT. 471. The petitioners Counsel says, as to letter dated 25.10.2016, it has been captioned as "confidential" addressing to the Directors of the company asking them as to on what reasons he was removed as Executive Chairman of the Company and putting his side of version to the Directors of the Company, discussing various issues in respect to the performance and pitfalls of the company. 472. As to the letter sent to Income Tax Authorities, the Petitioners' Counsel explains that letter has been written responding to the notice under 5ection 133 (6) of the Income Tax Act calling for certain information regarding relationship between the Trusts and the company, the Counsel submits this information being in relation to the Trusts, even if any disclosure happened in respect to the said information, it could not be taken as disclosure of information relating to the company. 473. The Petitioners Counsel further submits that since there had been representation on the Board from the Petitioners' side since long .....

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..... man Prasad Bagri and Ors. v. Bagri Cereals Pvt. Ltd. [2001] 4 SCC 420 to say that the petitioner to be successful, he has to prove not only that it is just and equitable to wind up the company, but also that such winding up would unfairly prejudice the petitioning shareholder, in the event the petitioner fails to make out such a case, the petition is liable to be dismissed. 477. We agree with the principle aforementioned by further saying that just and equitable ground for winding up which was precondition for considering such winding up would unfairly prejudice the petitioning shareholder is now not only applicable to the conduct oppressive/prejudicial to the interest of the member complainant but also in the cases where the conduct prejudicial to the interest of the company, in a way that the jurisdiction in respect to mismanagement which was earlier wide open has been narrowed down by laying down a precondition to prove facts which would justify the making of winding up order on the ground that it was just and equitable that the company should be wound up, which was not there earlier. The major change in the present enactment is addition of prejudicial remedy in respect of the .....

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..... t, it was limited to public companies, now it has been extended to private companies as well. Such right could be asserted only when such right has been incorporated in the Articles of Association, in this company no such article is incorporated to provide any seat to the petitioners, this cannot become a ground to set against the removal of Mr. Cyrus as Director of the company. 481. To establish that it is a sovereign prerogative of the company to appoint or remove a director from office and the shareholders are not required to provide reasons for seeking removal of Director, the company Counsel relied up Life Insurance Corporation of India v. Escorts Ltd [1986] 1SCC 264 Paras 95, 96, 99, 100" which are as follows; "95. A Company is, in some respects, an institution like as State functioning under its 'basis Constitution' consisting of the Companies Act and the memorandum of Association. Carrying the analogy of constitutional law a little further, Gower describes "the members in general meeting" and the directorate as the two primary organs of a company and compares them with the legislative and the executive organs of a Parliamentary democracy where legislative sovereignty res .....

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..... he Directorate and appoint others in their place. The holders of the majority of the stock of a corporation have the power to appoint, by election, Directors of their choice and the power to regulate them by a resolution for their removal. And, an injunction cannot be granted to restrain the holding of a general meeting to remove a director and appoint another. 96. In Shaw S Sons (Salford) Ltd. v. Shaw 1935 2 KB. 113, Greer, L.J. expressed: "The only way in which the genera! body of the shareholders can control-the exercise of" powers vested by the articles in the Directors is by altering the articles or, if opportunity arises under the articles, by refusing to re-elect the Directors on whose action they disapproved. 99. Again in Bentley-Stevens v. Jones, 1971 (2) All E.R. 653, it was held that a shareholder had a statutory right to move a resolution to remove a Director and that the court was not entitled to grant an injunction restraining him from calling a meeting to consider such a resolution. A proper remedy of the Director was to apply for a winding-up order on the ground that it was 'just and equitable' for the court to make such an order. The case of Ebrahimi v. Wes .....

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..... ts concerning each item of business to be transacted at the meeting including, in particular, the nature of the concern or the interest, if any, therein, of every director, the managing agent if any, the secretaries and treasurers, if any, and the manager, if any. This is a duty cast on the management to disclose, in an explanatory note, ail material facts relating to the resolution coming up before the general meeting to enable the shareholders to form a judgment on the business before them. It does not require the shareholders calling a meeting to disclose the reasons for the resolutions which they propose to move at the meeting. The Life Insurance Corporation of India, as a shareholder of Escorts Limited, has the same right as every shareholder to call an extraordinary general meeting of the company for the purpose of moving a resolution to remove some Directors and appoint others in their place. The Life Insurance Corporation of India cannot be restrained from doing so nor is it bound to disclose its reasons its reasons for moving the resolutions." 482. By reading these paras, it is ascertainable that corporate democracy is almost akin to the parliamentary democracy existing .....

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..... chase his shares in the company or sell their shares to him as the Court should think Fit, alternatively for an order under Section 222 (f) of the Companies Act that the company is wound up. On hearing the same, the original Court judge refused to make an order under Section 210 but held that the father and the son had done Ebrahimi a wrong that has been abuse of power and breach of good faith which partners owed to each other to exclude one of them from participation in the business in which they had embarked on the basis that all should participate in its management and that accordingly, it was said that Appellant has made out a case for winding up order under Section 222(f) of the Companies Act, 1948. 485. Over which, when it was appealed, it was allowed holding that in a case of quasi partnership company, the exercise by majority in general meeting of the power under the Articles and Section 184(Removal of Directors) of the Companies Act, 1948 to remove a director from office and consequently to exclude him From participation in the management and conduct of the business did not form a ground for holding that it was just and equitable that the company should be wound up unless .....

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..... e a firm on any of the following grounds, namely: - (a) to (f)………………… (g) on any other ground which renders it just and equitable that the firm should be dissolved." 488. This theory of relating this concept of "just and equitable" in the Partnership Act to the Companies Act in relation to quasi partnership companies, has been well discussed in this case. It was held that in this Westbourne Company, when the members of the company are in substance partners or quasi partners, the winding up may be ordered if such facts are shown as could justify the dissolution of partnership between them. The common use of words "just and equitable" in the company and partnership law supports this approach. To show the consistency of applying this just and equitable concept, the House of Lords referred cases from Symington v Symington's Ltd, [1905] 121, In re Yenidje Tobacco Co Ltd, [1916] 2 CH 426, Loch v. John Blackwood Ltd, [1924] AC 783, Thomson v. Drysdale, [1925] SC 311, In re Lundie Brothers Ltd, [1965] 1 WLR 1051, In re Expanded Ftex Ltd, [1966] 1 WLR 514, Baird v. Lees, [1924] SC 83, Elder v. Elder & Watson, [1952] SC 49, In re Leaden .....

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..... ich are the basic principles of partnership because if confidence with which they come together is lost or if any member is removed from the management, the man aggrieved would suffer like anything, for this reason alone, these principles are applied to the companies which have come into existence in partnership lines- It is not said in this case, that these principles are applicable to all companies, as to Ebrahimi supra, it has culminated into reasoning that to apply just and equitable concept, there shall be prerequisites as mentioned in the para above quoted which are akin to partnership principles. Before dealing with a case under this provision, we have to see as to whether any expectations are in existence in favour of the shareholders, if so, whether they have been flouted or not and such flouting has been done to cause prejudice or oppression to the respective members is essential before invoking section 242 to grant relief. 491. In Ebrahimi supra what Petitioner has asked is for an order directing the Respondents either to purchase his shares or to sell their shares, but it appears the appellant having failed to show that the conduct of majority is oppressive and also th .....

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..... is seen in Ebrahimi is whatever profits coming to the company were going to directors in the form of remuneration, removing a director in a situation like that, is nothing but depriving such person from the basic objective of incorporation of company that is availing profits of the company. For saying so, it has also been said that the company was making profits. All these principles like quasi partnership concept, just and equitable concept - a concept to sequel to partnership, are to be dealt with depending on the facts of the case, but not to set it against the concept of corporate democracy. 495. The principle that has been held in Ebrahimi i.e. to recognize individuals with rights, expectations and obligations underlying the company is applicable in the cases based on partnership companies, family companies and small companies, the reason behind applying just and equitable concept to these kind of companies is, in such companies there will be an understanding to have equal participation in the management, accruing expectations basing on personal relationship involving mutual confidence and restriction upon the transfer of shares. In such situations, section 210 is applicable .....

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..... t found any merit in saying that removal of Mr. Cyrus as Director of the company is oppressive or prejudicial to the interest of the Petitioners. Henceforth, this issue is decided against the Petitioners. 499. As to the argument of the Petitioners' Counsel stating that for having Section 241 under the Companies Act, 2013 replaced Section 397 and 398 of the Companies Act, 1956 with an alternative "prejudice test", "oppression test" as earlier required need not be established for seeking relief under Section 241, the Petitioners' Sr. Counsel Mr. Aryama Sundaram, R11 Counsel Mr. Dwarkadas, from the Respondent side, Sr. Counsel Dr. Abhishek Singhvi, Mr. Sudipto Sarkar, Mr. S. M. Mukherjee, explained interplay of various provisions under the old enactment and new enactment and English Companies Law. 500. The primary argument on behalf of the Petitioner side is the word "prejudicial" introduced in Section 241 significantly enhanced the scope of protection afford to the shareholders in as much as in the advent of the Companies Act, 2013, "acts which may not strictly qualify as oppression", secondly, introduction of the concept of "class of members" in Part B of sub-section 1 of Section .....

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..... t that has been followed till date in respect to oppression has invariably to be followed to prove as to whether the actions impugned are oppressive against the interest of the petitioners or not. 504. On perusal of the section 241 against the ratio in respect to oppression consistently followed by Indian courts, it has to be accepted that a new dimension has been given to section 241 to invoke oppression and mismanagement jurisdiction if the aggrieved proves that the acts complained of are either oppressive or prejudicial to the interest of the petitioners. When new statute has come into existence with a different mandate it is not that whole ratio covered by earlier judgements is required to be followed. Now in the present dispensation the complainant/aggrieved is at liberty to prove that the actions complained of are either oppressive or prejudicial to the complainant's or any other members' interest. It has not just come like that in section 241, it has been taken out from section 994 of English Companies Act 2006. This is a change that has come by the recommendations made by the Jenkins Committee in England, therefore it can't be said that prejudicial act means burdensome, ha .....

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..... e Companies Act, 1956 i.e. from 1964 to 2000, when the Public Trustee was abolished; b. The Articles of Association would not be misused by the Trustees of the Tata Trusts to undermine the Board of the Company by demanding pre-consultation and pre-approval on all matters including matters which do not have any bearing on the interests of the Tata Trusts, before it is tabled at the Board of R-1; c. The Board of Directors of R-l would act independently and the trust nominees would apply their independent judgment and not become spokespersons for the trustees of the Tata Trusts; d. That material decisions concerning R-l would be taken after due consultation with the representative of the SP Group. For example, when R-l proposed a rights issue in July, 1995, it was undertaken after consultations with the SP Group recognizing the fact that it was "a large shareholder of the company." e. That the Board of R-l would always have a nominee from the SP Group - this is evident from the fact that the Petitioners have been presented on the Board of R-l for 35 years, i.e. from 1980-2004 and thereafter from 2006-2017; and f. That Company would always continue to function as a public com .....

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..... herefore, make them accountable to the company and the recovery be done from them. On which, the Court dismissed the suit holding that when a company is wronged by its directors, it is only the company that has standing to sue on two rules; Firstly, the proper plaintiff rule is that wrong done to the company may be vindicated by the company alone; Secondly, the majority rule principle states that if the alleged wrong can be confirmed or ratified by simple majority of members in a general meeting, then the Court will not interfere. 1. Ultra vires and illegality: The directors of company or majority shareholding may not use their control of the company to paper over actions which would be ultra vires the company, or illegal. 2. Actions requiring a special majority: If some special voting procedure would be necessary under the company's constitution or under the Companies Act, it would defeat both if that could be sidestepped by ordinary resolutions of a simple majority, and no redress for aggrieved minorities to be allowed, 3. Invasion of individual rights such as expectations and entrenchment rights in Articles of Association, etc. 4. "Frauds on the minority": Fraud in the c .....

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..... change of oppression remedy to unfair prejudice remedy is in Scottish Cooperative Society case when it was laid down that for granting relief against oppressive action, such action must be burdensome, harsh and wrongful. Simultaneously, in Elder v. Elder and Watson Ltd., 1952 SC 49, Lord Cooper said that the essence of the matter seems to be that is the conduct complained of at the lowest involve a visible departure from the standards of the fair dealing and violation of the conditions of the fair play on which every shareholder who entrusts his money to a company entitled to rely. By saying different yardsticks being taken by Courts in respect to oppression remedy, to make this remedy more protective, in Jenkins Committee, it was recommended to cover the acts which are oppressive or unfairly prejudicial to the interest of the complaining member. By this recommendation, an amendment has come into English Companies Act 1980, 1985, finally in the year 2006 settling it as action causing unfair prejudice to the interest of members generally or some part of its members, Side by side another change has also come into English companies Act demarcating shareholder action from derivative a .....

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..... hen it comes to section 994, it applies when a member if excluded from the management of quasi partnership company, when there is an understanding for provision of management in the articles or agreement, when an excessive remuneration or dividend has been taken and when serious mismanagement like the assets of the company are used for the personal benefit of the majority shareholders, when criminal conduct of the management is proved and when removal of an auditor, It is not that this unfair prejudice concept is not in flexible, reliefs of like nature could be included because there is no clear cut definition for it, it all depends on the facts of the case. Ordinarily, no relief could be passed u/s 994, if there has been no breach of the terms on which the complaining member has agreed to and it has also established that mere breakdown of trust among quasi partners will not be a basis for a successful petition - the breakdown must be related to conduct which is unfair and prejudicial, 519. A commercial misjudgment cannot become a ground to raise a plea of unfair prejudice, In Re a Company [1987] BCLC 8 at 14, it has been said, members are at liberty to claim legitimate expectatio .....

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..... whereas under 1956 Act, "just and equitable" ground was not required to be fulfilled for passing a relief u/s 398 dealing with mismanagement in the company. 523. Now under English law to seek a derivative claim, prima facie test has to be passed, but the same is not the case in India, in English law 'just and equitable ground' was done away from 1980 onwards but that is still remained in our law even in 2013 Act. Under English law, it has been made difficult to make a derivative claim because the Court will not take cognizance of the same unless the case filed under section 260 passes prima facie test. For derivate action petition has to be filed against the director only on the ground set out in the section 260 of English Companies Act, 2006. 524. In this ambivalent situation, our law has not been the same as that of English law, we can only take out broad guidelines into consideration to deal with cases filed u/s 241. As to oppression and mismanagement remedy, in England it has been largely applied in the case in partnership companies, small companies. In our country, as against partnership companies in England, most of our companies are family companies. The features of partne .....

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..... companies Act, In company, members (shareholders) may come and go but the company goes on forever. It is one of the fundamentals of company's existence. Unlike in partnership, it is perpetual in succession; company's life is not determined by the longevity of its members, shareholders, promoters, directors, employees or anyone else. Despite being so, this just and equitable clause present in Partnership Act (section 39) (in England as well as in India) has been inserted as one of the clauses for winding up of companies to meet a situation that arise in quasi partnership companies and family owned companies, knowing that their structuring is somewhere in between a company and partnership. Otherwise, there could not be any chance to have such principle in company law, because company is perpetual in succession with independent entity, which Is not the case in partnership. 529. As to this point is concerned, it has been clarified in Ebrahimi case, how just and equitable concept is applicable to the cases u/s 210 of English Act. When we read the paras below mentioned, this just and equitable ground is applied in small companies or private companies, in such company, depending on the o .....

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..... nsfer of shares, the restriction is only limited to the extent of selling shares to the company. As to application of third element also that could arise only when confidence is lost or a member is removed from the management by virtue of the right that has accrued under second element enunciated in Ebrahimi. To apply third element taking exclusion from the management ground, it has to be proved that his right of continuation in the management has been curtailed. In the given case no such right of participation in the management is ever present to the petitioners in the company. To visualize every aspect that has been dealt with above, the relevant paras from Ebrahimi have been placed below: "My Lords, in my opinion these authorities represent a sound and rational development of the law which should be endorsed, The foundation of it alt lies in the words "just and equitable" and, if there is any respect in which some of the cases may be open to criticism, it is that the courts may sometimes have been too timorous in giving them full force, The words are a recognition of the fact that a limited company is more than a mere legal entity, with a personality in law of its own; that th .....

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..... . This is also known fact that oppression and mismanagement concept is an exception to the majority rule, therefore applicability of it has to be limited to the extent as enunciated in the statute or else any person who has even one share also, through waiver route, can cause havoc to the companies running business. 535. This concept is not a declaratory concept, if you see the heading of the chapter, heading of the chapter is prevention of oppression and mismanagement, so relief will be preventive, not declaratory as to action impugned before court. It is to arrest malafide happening in the company. So to invoke this jurisdiction, company must be a going concern, there shall be an action in progress, and it shall be oppressive or prejudicial to any of the members complaining or on behalf of whom the complaint has been made. After having complied with all these characteristics above mentioned, the Tribunal, before granting any relief, must come to an opinion that the proved facts would justify winding up of the company on just and equitable ground. Therefore, we should always remain very cautious in passing order u/s 241-242, because it is basic principle, that whoever invested mo .....

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..... with Ramaswami and on his death his son Venkatachalam, Nand Gopal and Ethiraj, Natarajan was a "promoter director"; the court had found that the co-venturers had arrived at an understanding that each would have a representative on the Board; there was in reality a "practical deadlock" and/or "gridlock" in the management and affairs of the company; relief was justified in this case as majority had usurped the assets of the company for its personal use, because it itself is an act of mismanagement under Section 398 of the Act. In this case, the Hon'ble High Court has come to a conclusion that the complainant is a promoter of the company indeed continuing as director of the earlier company with which resulting company was merged i.e. First Respondent in that case, the complainant has not been re-nominated in the company as sought by him, therefore he has been provided exit from the company despite holding non re-nomination of Mr. Natarajan is unfair. 539. In view of the same, we hereby hold that Ethiraj ratio not applicable to this case for the facts of it are different and no such situation trying to cause prejudice or oppression to the petitioners. Moreover, as we already held that .....

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..... interference to the affairs of the company. Any executive chairman, for that matter, to all big companies will act, as a face of the company, but that does not mean that he is whole and sole and the majority will remain at the beck and call of him. 543. The best example to prove that Mr. Cyrus tried to convey his way is highway is Welspun issue, where Mr. Cyrus on behalf of Tata Power entered into acquisition of an asset costing around ₹ 9,000 crores even before Tata Sons passing a resolution as mentioned under Article 121A of AoA, which is nothing but bypassing the approval that was to be taken from the board of Tata Sons before entering into any understanding with other parties, the reason behind it is, Tata Sons is an investment company, ultimately money has to go from Tata Sons, that means, acquisition in Tata Power is intrinsically connected to the economic interest of Tata Sons. As to when Mr. Tata wanted to take some space on rent from Tata Motors Ltd., initially they said that they would give that place at World Trade Centre, after having negotiations completed, Tata Motors communicated to back out from the deal. Initially, Tata Motors itself offered the space to Ta .....

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..... mpanies from the array of the parties is not correct, over which, when division Bench of Hon'ble High Court of Madras reversed the order of Hon'ble Single Judge by restoring the order passed by CLB, on this order, when parties went to Hon'ble Supreme Court of India, clarified that the subsidiary company against whom the Appellant has not made any allegations in the petition and no relief has been sought for against need not be added as parties, however, the subsidiary companies already arrayed as respondents should be added as parties and the Appellants shall be at liberty to argue on the ground in the said petition and the prayer regarding mismanagement of the company in question in case the corporate veil is lifted. It is not a main petition that was decided, when the CLB deleted the names of subsidiary companies from the array of the respondents of the Company Petition, the petitioners proceeded before Appellate authority, here no other company has been made as party whose affairs have been impugned before this Bench. This is the final hearing, not on an application, for the petitioners consciously has not made the group companies or subsidiary companies as parties to this Compa .....

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..... other manner whatsoever, and that byreason 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 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 that the affairs of the company are being conducted as aforesaid or that by reason of any material change as aforesaid in the management or control of the company, it is likely that the affairs of the company will be conducted as aforesaid, the [Tribunal] may, with a view to bringing to an end or preventing the matters complained of or apprehended, make such order as it thinks fit. Section 402- Powers of [Tribunal] on application under Section 397 or 398- Without prejudice to the generality of the powers of the [Tribunal] under section 397 or 398, any order under either section may provide for - (a) the regulation of the conduct of the company's affairs in future; (b) the purchase of the shares or interests of any members of the company by other m .....

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..... anner prejudicial to its interests or itsmembers or any class of members, may apply to the Tribunal, provided such member has a right to apply under section 244, for an order under this Chapter. (2) The Central Government, if it is of the opinion that the affairs of the company are being conducted in a manner prejudicial to public interest, it may itself apply to the Tribunal for an order under this Chapter. Section 242- Powers of Tribunal: (1) If, on any application made under section 241, the Tribunal is of the opinion - (a) that the company's affairs have been or are being conducted in a manner prejudicial oroppressive to any member or members or prejudicial to public interest or in a manner prejudicial to the interests of the company; and (b) that to wind up the company wouldunfairly prejudice such member ormembers but that otherwise the factswould justify the making of a winding-up order on the ground that it was just andequitable 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. (2) Without prejudice to the generality of the powers under sub-section (1), an order un .....

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..... The Tribunal may, on the application of any party to the proceeding, make any interim order which it thinks fit for regulating the conduct of the company's affairs upon such terms and conditions as appear to it to be just and equitable, (5) Where an order of the Tribunal under sub- section (1) makes any alteration in the memorandum or articles of a company, then, notwithstanding any other provision of this Act, the company shall not have power, except to the extent, if any, permitted in the order, to make, without the leave of the Tribunal, any alteration whatsoever which is inconsistent with the order, either in the memorandum or in the articles. (6) Subject to the provisions of sub-section (1), the alterations made by the order in the memorandum or articles of a company shall, in all respects, have the same effect as if they had been duly made by the company in accordance with the provisions of this Act and the said memorandum or articles so altered. (7) A certified copy of every order altering, or giving leave to alter, a company's memorandum or articles, shall within thirty days after the making thereof, be filed by the company with the Registrar who shall register .....

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..... ny and the provisions of this Act shall apply to the memorandum or articles as so altered or added to accordingly. (4) An office copy of any order under this section altering thinks fit for or adding to, or giving leave to alter or add to, a company's memorandum or articles shall, within fourteen reduction of the days after the making thereof, be delivered by the company to the registrar of companies for registration; and if a company makes default in complying with this subsection, the company and every officer of the company who is in default shall be liable to a default fine. (5) In relation to a petition under this section, section three hundred and sixty-five of this Act shall apply as it applies in relation to a winding-up petition, and proceedings under this section shall, for the purposes of Part V of the Economy (Miscellaneous Provisions) Act, 1926, be deemed to be proceedings under this Act in relation to the winding up of companies. Part VI- Miscellaneous and General Interests of employees and members Section 75- Power of court to a rant relief against company wheremembers unfairly prejudiced: (1) Any member of a company may apply to the court by petition for a .....

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..... of the court to make any such alteration in breach of that requirement. (6) Any alteration in the memorandum or articles of the company made by virtue of an order under this section shall be of the same effect as if duly made by resolution of the company and the provisions of the Companies Acts shall apply to the memorandum or articles as so altered accordingly. (7) An office copy of any order under this section altering, or giving leave to alter, a company's memorandum or articles shall, within 14 days from the making of the order or such longer period as the court may allow, be delivered by the company to the registrar of companies for registration; and if a company makes default in complying with this subsection, the company and every officer of the company who is in default shall be liable on summary conviction to a fine not exceeding one-fifth of the statutory maximum for every delivered. (8) In relation to a petition under this section, section 365 of the 1948 Act (general rules for winding up) shall apply as it applies in relation to a winding-up petition. (9) This section shall apply to a person who is not a member of a company but to whom shares in the company hav .....

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..... on in the memorandum or articles, the company does not then have power without leave of the court to make any such alteration in breach of that requirement. (4) Any alteration in the company's memorandum or articles made by virtue of an order under this Part is of the same effect as if duly made by resolution of the company, and the provisions of this Act apply to the memorandum or articles as so altered accordingly. (5) An office copy of an order under this Part altering, or giving leave to alter, a company's memorandum or articles shall, within 14 days from the making of the order or such longer period as the court may allow, be delivered by the company to the registrar of companies for registration; and if a company makes default in complying with this subsection, the company and every officer of it who is in default is liable to a fine and, for continued contravention, to a daily default fine. (6) Section 663 (winding-up rules) applies in relation to a petition under this Part as in relation to a winding-up petition Part 30- Protection of members against unfair prejudice Main Provisions Section 994- Petition by company member: (1) A member of a company may apply .....

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..... 547. The Petitioner Counsel, to say that just and equitable cannot be put in straight jacket formula, relied upon Loch v. John Blackwood (1924) AC 783 by referring the para below: "In Re Bteriot Manufacturing Aircraft Co, (1916) 32 Times L. R. 253 Neville J, made an order for winding up on the ground that the substratum of the company was gone and upon a further ground of proved misconduct by the directors. His observations upon the latter point are apt in the present case: "But there is another ground. Here the company has considerable capital, and it is alleged that there Is misconduct by the directors. It is truly said by Mr. Russell that the mere fact of misconduct is no ground for winding up. The words 'just and equitable' are words of the widest significance and do not limit the jurisdiction of the Court to any case. It is a question of fact, 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, .....

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..... 210 is in my judgement made out. 550. He also referred Ramshankar Prasad v. Sindbri Irion Foundry Private Limited (AIR 1966 Cat 512) reiterating the proposition that has been reflected in Harmer and Re. Albert David Ltd 68 CWN 163 and Hind Overseas Pvt Ltd v. Raghunath Prasad Jhunjhunwala (1976) 3 SCC 259, San gram Singh Gaekwad v. Santadevi Gaewad (2005) 11 SCC 314, Kamai Kumar Datta v. Ruby General Hospital Ltd., MS DC Radharamanan v. MSDC Chadrasbekara Raja, for saying that just and equitable concept is very much applicable to all companies including public limited companies. 551. He has specifically mentioned Hind Overseas (supra) referring the following para to say that the applicability of just and equitable principle depends upon the facts and circumstances of each case, the said para is as follows: "The principle of "just and 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 inf .....

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..... t the repealed provision had received before its repeal (see Sakai Deep Sahai Srivastava v. Union of India (1974) 1 SCC 338 (para 8), Pradip J. Mehta v. Commissioner of Income Tax, Ahmedabad (2008) 14 SCC 283 (Para 20, 25) and Parvathy Am ma & Others v. Krishna n & Anr. 1962 KU 428 (para 8)). 553. We have already seen enough in English Law that this principle of just and equitable concept initially evolved in Partnership Act, the same has been percolated down to India first in the Partnership Act, thereafter, through an amendment to Companies Act, 1913, in the year 1951 as Section 153(c) of the Companies Act 1913. Looking at the change that came in the English Companies Act, 1948 as Section 210.Indeed, this power of winding up on just and equitable ground is a relic of English Partnership Law. The same has first come as Indian 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 .....

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..... (Cohen Committee). 556. If we read Section 210 of the Companies Act, 1945, we can visualize a member can complain if the affairs of the company are being conducted in a manner oppressive to some part of the member (including himself), whereas under Section 153(c), it was said for the first time that a member can complain when the affairs of the company are being conducted not only in respect to oppressive action against some part of the members (including himself) but also in a manner prejudicial to the interest of the company (mismanagement). This provision as to mismanagement was purely an innovation of Indian legislation by virtue of a recommendation made by two Indian Lawyers, i.e. M/s. T. Dwarkadas & Thiruvenkatacharya and Shri N. K. Mujumdar, an officer in the old Ministry of Commerce. What is most important note 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 .....

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..... anner prejudicial to public interest or in a manner oppressive to any member or members (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 any member or members ; and (b) that to wind up thecompany would unfairlyprejudice such member ormembers, but that otherwisethe facts would justify themaking of a winding up order on the ground that it 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 .....

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..... 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. 558. All this was very much present in various judgements Indian Courts dealt with such as Rajamundry Electric Supply Corporation Ltd v. A Nageshwar Rao AIR 1956 SC 213, Seth Mohanlal v. Sayaji 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 .....

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..... re no longer continuing wrongs or is the power of the court confined to the making of an order preventing future oppression or mismanagement? Mr. 5.B. Vakil, learned advocate appearing on behalf of the petitioners, pleaded for the former construction on the ground that such construction would enlarge the power of the court rather than limit it and in support of this plea he relied on the well-known rule of interpretation that in the case of provisions of a remedial nature, which sections 397 and 398 undoubtedly were, the construction to 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 Compan .....

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..... ssive conduct on the part of those in control of the company and this expedient is now embodied in section 210 of the English Companies Act, 1948. Following the enactment of this section the legislature introduced section 153C in the Indian Companies Act, 1913, providing an alternative remedy for putting an end to oppression or mismanagement on the part of the controlling shareholders. The remedy given by section 153C was a more effective and less drastic remedy then the remedy of winding up for if there was oppression or mismanagement, 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 befo .....

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..... ction 397 can be invoked only when the affairs of the company are being conducted in a manner oppressive to a shareholders or shareholders and similarly the remedy under section 398 can be invoked only when the affairs of the company are being conducted in a manner prejudicial to the interests on the company. Of course when I say this I am referred only to the first part of section 398 and leaving out of consideration the second part to which I shall refer a little later. Sections 397 and 398 thus clearly postulate that there must 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 an .....

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..... is, therefore, required is the presentation of occurrence of such prejudicial conduct. These then are the confines within which the remedy provided by sections 397 and 398 operates. But it must be remembered that within these confines the remedy is a very potent and effective remedy, since the power it confers on the court is extremely wide and the court can pass such order as it thinks necessary for the purpose of putting an end to oppression or mismanagement on the part of controlling shareholders. The nature of the order would 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 w .....

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..... are other considerations which weigh with me in taking the view that a past and concluded transaction between a company and a third party cannot be set aside on an application under section 397 or 398. Let us see what are the consequences to which tbe other construction must logically and inevitably lead and then consider whether the legislature could have possibly intended such consequences. The effect of accepting that construction would be that if a transaction has been entered into between a company and a third party as 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 .....

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..... r section 397 or 398, they would be enforcing their own cause of action and not a cause of action belonging to the company. One might well ask the question: Did the legislature intend to confer such a new cause of action on individual shareholders against third parties so as to entitle them to set aside transactions which the company could not? I think not. If such were the intention of the legislature, I should have expected appropriate language and not language indicative only of preventive relief 34, Another question 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 .....

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..... n 397 or 398 extended to making of an order setting aside or interfering with transaction between a company and a third party provided that the other conditions of the section were satisfied. This contention, though at first blush attractive, is, in my opinion, fallacious and for several reasons." 559. Now the interesting part under new regime that Companies Act, 2013, the Section for oppression and the section for mismanagement have been abridged into one section making just and equitable ground applicable to 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 ju .....

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..... rs. Though Executive Chairman takes a lead in taking decisions but every such decision in respect to policy issues or an issue that requires Board of Directors approval, it has to go through the Board of Directors only. Executive Chairman post is not an elected post; therefore, every action of the Executive Chairman is amenable to the Board of Directors. So is the case in Tata Sons also. It is like an Agreement of employment for five years. 562. On reading the plaint and the reply of Mr. Cyrus, it is ascertainable 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 .....

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..... ons at times with strangers, over a period of time, every business will have its own clout around it, its own peripheral businesses, nobody can bring any person from some other planet to prove that the deal is at arm's length. The only test to prove that every deal is at arm's length is as to whether standard due diligence that is required to be taken is taken or not. While doing business transactions, a company cannot keep changing its customers or traders or manufacturers on the footing that they had 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 .....

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..... risdiction, if action is legal, but not fair, since relief being asked basing on the test of fairness, especially when action is legal, Court shall be more careful in granting such relief because over a period of time, it has been umpteen times said what could be fair and unfair in respect to this subject matter. In a layman language it could be said, as I already mentioned once or twice in this order itself, that when any two persons enter into an agreement to do something, they enter into such agreement, 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 unfairn .....

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..... y possibility to deviate from the truth because facts available are assumed facts, not admitted facts- Third party statements cannot be taken as material having evidentiary value for two reasons, (i) his interest is not involved in a dispute between two persons, (ii) he is not before Court of Law to ascertain as to such statement is true and correct, if so, such statement has any relevance over the issue impugned before the Court of Law. Before arriving to a conclusion as to whether impleadment of 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 P .....

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..... under section 241 & 242, not otherwise, not otherwise because company is an entity, whatever goes to the kitty of it, no shareholder will have any exclusive right over the asset of the company, except aggregate rights, which are called shareholders rights. Courts are mindful of the fact that the business judgments are very complex dependent on various external factors, therefore, unless and until all elements that are mentioned under 241-242 are complied with, no relief will be passed. It is not 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 p .....

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..... objectively in the light of all evidence whether any particular communication from an alleged shadow director, whether by words or conduct was to be classified as a direction or instruction; that, while it would be sufficient to show that in the case of directions or instructions from the alleged shadow director the properly appointed directors or some of them task themselves in a subservient role or surrender their respective discretions, it was not necessary to do so; that the judge, 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 .....

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..... tion 241 and 242 of the Companies Act, 2013. In view of the same the ratio above decided is not applicable to the present case. 575. Regarding leakage of Information by Mr. Cyrus to the outside people, the answering respondents submit that soon after Mr. Cyrus was replaced as Executive Chairman of the company, he made unsubstantiated allegations casting aspersions not only on Tata Sons but also other Tata Group companies revealing confidential information of the Tata Sons and 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 .....

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..... companies, because of this rift in between Cyrus and the board of Tata Sons, the business transactions of Tata Sons became public for the letter captioned as confidential simultaneously came to media and the same not been denied either by the petitioners or by Mr. Cyrus, the fact of this information coming out after Mr. Cyrus was removed on 24.10.2016 is undeniable. The only fact that Mr. Cyrus counsel denied is that Mr. Cyrus did not reveal that information. When that confidential 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 el .....

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..... is, when Mr. Cyrus himself was privy to every action in relation to the company, neither Mr. Cyrus nor the petitioners could say that Mr. Tata and Mr. Soonawala giving some suggestions would amount to interference in relation to the affairs of the company, as I already said the meaning of interference, when anybody gets into the affairs of somebody else then it would be called as interference. May be Mr. Cyrus was under the impression that the affairs of Tata Sons are not 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 petiti .....

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..... endation is required before removing him as Executive Chairman. (b) Removal of Mr. Cyrus Mistry from the position of Director is because he admittedly sent the company information to Income Tax Authorities; leaked the company information to Media and openly come out against the Board and the Trusts, which hardly augurs well for smooth functioning of the company, and we have not found any merit to believe that his removal as director falls within the ambit of section 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 consideratio .....

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