In a big win for Tata Sons, the Supreme Court today backed the removal of Cyrus Mistry as the chairman of the over $100 billion salt-to-software Tata Group in 2016 and set aside the company law tribunal order that had reinstated him.
A bench headed by Chief Justice SA Bobde said the decision to remove Cyrus Mistry was right. “All questions of law are in favour of Tata Group,” said the judges.
The National Company Law Appellate Tribunal (NCLAT) had on December 18, 2019, restored Mr Mistry as the executive chairman of the conglomerate. That order, challenged by the Tata’s, has been scrapped.
The Supreme Court had on December 17 reserved the verdict.
Shapoorji Pallonji Group had told the Supreme Court then that 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.
Tata Group had vehemently opposed the allegations and said the board was well within its rights to remove Mr Mistry as the chairman.
Mr Mistry had succeeded Ratan Tata as chairman of Tata Sons in 2012 but was dramatically sacked four years later. The clash between Mr Mistry and Ratan Tata has been one of the most high-profile and publicly fought corporate battles in India.
In his reply to the Tatas’ petition challenging his reinstatement by the NCLAT last December, Mr Mistry 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 Supreme Court today also directed both Tata Sons and Cyrus Mistry to take other legal recourse on the issue of shares.
This involves another commercial battle 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.
Tata Group says it’s open to buying out the stake held by the Mistry family, its largest minority shareholder, as part of a proposal to help end the dispute.