More than three years after the dramatic boardroom sacking of Cyrus Mistry, an appeals court — National Company Law Appellate Tribunal — on Wednesday reinstated him as the executive chairman of the Tata group. The 172-page order, while upholding Mistry’s charges that he was ousted without due process, said the action taken by Ratan Tata and others against the former Tata Sons chairman was oppressive and illegal.
The two-judge Bench headed by Justice S J Mukhopadhyaya declared the October 2016 resolution passed by the Tata Sons board to remove Mistry, a scion of Shapoorji Pallonji family, from his post and all consequential actions taken by Tata Group companies to remove him as director “illegal’’. Mistry was suddenly and hastily removed without any reason and in the absence of any discussion in the board meeting, according to the NCLAT verdict. The order also held the appointment of N Chandrasekaran, the current chairman of Tata Sons, as executive chairman as “illegal”. Chandra was appointed chairman of Tata Sons in February 2017. The court has granted four weeks for restoring Mistry to the post of Tata Sons’ executive chairman.
Soon after the 3 pm order, Bombay House, the Tata headquarters in Mumbai, was a scene of gloom and uncertainty, according to an executive.
About 20 minutes drive away, SP Centre, the office of Shapoorji Pallonji Group, was getting into a celebratory mood. “Today’s judgment is not a personal victory for me, but is a victory for the principles of good governance and minority shareholders’ rights,” Mistry said in a statement early evening. The $110-billion Tata group, busy working the phones and holding meetings with lawyers before challenging the order in the Supreme Court, took time to react. In a carefully worded statement, Shuva Mandal, general counsel, said Tatas were analysing the order. “It is not clear as to how the NCLAT order seeks to overrule the decisions taken by shareholders of Tata Sons and listed Tata operating firms at validly constituted shareholder meetings.’’ ALSO READ: NCLAT order a victory of good governance & vindication of my stand: Mistry
The group will take appropriate legal recourse, he said, while assuring stakeholders that it will continue to “operate in a fair and equitable manner’’. Earlier in the court, Abhishek Manu Singhvi, Tata Sons’counsel said, “all legal recourses will be taken.” The court has asked Ratan Tata and the nominees of the Tata Trusts to desist from taking any decision in advance which requires majority resolution of the board of directors. Tata Trusts, which holds 66 per cent in Tata Sons, had played a critical role to remove Mistry as the group chairman in 2016. In his order, Mukhopadhyay said, “For over 50 years, the Mistry family as the significant minority shareholder of Tata Sons, has always endeavoured to play the role of a responsible guardian of an institution the entire nation is proud of.” He added, “We further hold that the company’s affairs have been or are being conducted in a manner prejudicial and oppressive to Cyrus Mistry and the interest of the company and group companies.”
Corporate governance issues: The appellate tribunal also termed the conversion of Tata Sons Limited from being a public company to private as illegal and oppressive to the minority members and depositors. It asked the registrar of companies to make the required correction.
Tata Sons had sought shareholders’ consent to convert itself to a private company in September 2018, impacting the minority shareholders’ rights to sell their shares.
NCLAT directed the Tata Group to protect interest of all stakeholders in future by consulting the minority shareholders Shapoorji Pallonji Group for appointment of executive chairman, independent directors and directors.
Tata Vs Mistry: A bitter courtroom battle
February 20, 2017: TCS CEO, N Chandrasekaran takes over as Tata group Chairman
September 15th 2017: Tata Sons seeks shareholders consent to convert itself as private company; Mistry opposes the move
July 9, 2018: NCLT Mumbai dismisses Cyrus Mistry’s petition and ruled in favour of Tata Sons; Mistry accused Tata Sons of mismanagement and oppression of minority shareholders’ rights by turning private
August 3, 2018: Mistry moves NCLAT to appeal against NCLT order; seeks a seat on Tata Sons board CLICK HERE TO READ FULL TEXT OF THE NCLAT JUDGMENTALSO READ: