The Supreme Court on Friday, in a big victory for Tata Sons, backed the removal of Cyrus Mistry as the chairman of the Tata Group.
The Supreme Court on Friday, in a big victory for Tata Sons, backed the removal of Cyrus Mistry as the chairman of the over $100 billion salt-to-software conglomerate in 2016 and set aside the company law tribunal order that had reinstated him.
The decision to remove Cyrus Mistry was right, ruled the bench headed by Chief Justice SA Bobde. “All questions of law are in favour of Tata Group,” the judges said.
On December 18, 2019, the National Company Law Appellate Tribunal (NCLAT) had reinstated Mr Mistry as the executive chairman of the conglomerate. Challenged by the Tatas in the top court, the order has now been scrapped.
The Supreme Court had reserved a verdict in this case on December 17.
The removal of Cyrus Mistry as the chairman of Tata Sons in a board meeting held in October 2016 was like a “blood sport” and “ambush” and in complete violation of principles of corporate governance and pervasive violation of Articles of Association in the process, the Shapoorji Pallonji group had told the Supreme Court back then.
Vehemently opposing the allegations, the Tata Group had said that the board was well within its rights to remove Mr Mistry as the chairman.
In 2012, Cyrus Mistry had replaced Ratan Tata as chairman of Tata Sons. However, he was dramatically sacked four years later. The fight between Mr Mistry and Ratan Tata has been one of the most high-profile and publicly fought corporate battles in India.
Mr Mistry, in his reply to the Tatas’ petition challenging his reinstatement by the NCLAT last December, had also demanded that group chairman emeritus Ratan Tata reimburse all the expenses to Tata Sons since his departure in December 2012 in keeping with best global governance standards.
The top court today also directed both Tata Sons and Cyrus Mistry to take other legal recourse on the issue of shares.
This matter involves another commercial dispute in which the financially-strapped Shapoorji Pallonji Group sought to pledge its shareholding in Tata Sons to raise funds. The Tata Group objected to this and won a stay from the Supreme Court. As part of a proposal to help end the dispute, Tata Group says it’s open to buying out the stake held by the Mistry family, its largest minority shareholder.
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