The Mumbai Bench of the National Company Law Tribunal (NCLT), in its recent order in the famous Cyrus Mistry versus Tata Sons case, gave a clean chit to Managing Trustee of Tata Trusts Mr. R. Venkataramanan in the Air Asia case even as it maintained that there were no “legacy issues at the 150-year old multinational conglomerate – the Tata group.
Cyrus Mistry and the Shapoorji Pallonji Group had made sensational allegations against Ratan Tata, Venkat and other Tata Trust trustees after the unceremonious ouster of Cyrus Mistry as the executive chairman and director of Tata Sons in October 2016. Mistry had later filed a petition in NCLT under the Company’s Act against the Tatas alleging major corporate governance lapses and irregularities in “legacy hotspots” of the company.
In his petition, Mistry had claimed that his ouster was a result of mismanagement by the board’s trustees and oppression of minority shareholders of the group. His major grievances in the petition pertained to the Articles of Association of the company, bleeding of Corus acquisition and overpriced take over, the doomed Nano car project, Ratan Tata’s relationship with Siva group and its owner, DoCoMo arbitration, unjust investment of Ratan Tata at the cost of the company in aviation projects such as Air Asia, and his own ouster as the Chairman of Tata Sons.
NCLT, however, didn’t find any merit on any of the allegations leveled by Cyrus Mistry, including the legacy issues. “We have not found any merit in purported legacy issues, such as Siva issue, TTSL issue, Nano car issue, Corus lssue, Mr. Mehli issue and Air Asia issue to state that those issues fall within the ambit of section 247 and 242 of Companies Act 2013.”
Mistry blamed Venkat of indulging in diversion of funds from Air Asia India and it was alleged that the money was routed through hawala for terror funding, at the behest of Ratan Tata. Mistry had also alleged that a forensic audit by Deloitte revealed fraudulent transactions worth Rs 22 crore with non-existent parties. Venkat, a director on the board of the airline with 1.5% stake, had found them to be “non-material”.
Venkat, on the other hand, has been fiercely disputing these charges and also filed a Rs 500 crore criminal defamation case against Mistry for “causing irreparable damage to his reputation.”
The NCLT comes as a relief for Venkat as it held that directors of Air Asia could not be made responsible for wrongdoings of the CEO of Air Asia — “regarding the allegation of fraudulent transaction of Rs 22 crores, no doubt, it has come out in forensic investigation conducted by Deloitte revealing that ex-CEO of AirAsia indulged in that fraud, with which none of the directors of AirAsia have been connected, whereby a fraud committed by a CEO cannot be attributed as a fraud committed by the directors of that company.”
Air Asia is a joint venture with Malaysian company, AirAsia Ltd., and the management is run by AirAsia Ltd., “therefore, the directors of AirAsia India Ltd. appointed on behalf of the company cannot be blamed for something happened in that company,” the order said.
The tribunal found that Mistry’s petition was also not maintainable on the ground of “non-joinder of parties” because neither AirAsia India Pvt. Ltd, which was a joint venture with Malaysian company AirAsia Ltd, nor its management were made party to the proceedings.
It came down heavily on Mistry and the SP Group for failing to at least set up a case based on these allegations and for not providing material evidence against the people whom he was blaming of wrongdoing. “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,” it said.
NCLT finally dismissed all allegations flung by Cyrus Mistry against Venkat and Ratan Tata and closed the matter last week, stating that “no case is made out against Mr Tata, Mr Venkat.”
The win at NCLT is perceivably a big trump card for the Tatas and for Ratan Tata’s trusted lieutenant Venkat as Central Bureau of Investigation (CBI) is currently investigating the Air Asia case. Earlier, the CBI had booked AirAsia Group chief executive Tony Fernandes and others for bribing unnamed government officials to obtain a flying permit for his joint venture airline with the Tata group. The CBI first information report (FIR) also named Venkat of lobbying with the government for flight permits violating regulations around foreign airline operators from controlling Indian entities.
In a statement, Venkat had said he as a non-executive director of AirAsia India has been wrongly named as an accused by the CBI on operational matters “where I had little or no role to play”. He said accusations against him find their “root in baseless allegations” made by Mistry and the Shapoor Pallonji Group in “revenge” legal actions.
Also read: NCLT upholds Tata Sons 2016 move sacking Cyrus Mistry as Chairman
