Not only has the National Company Law Appellate Tribunal (NCLAT) restored Cyrus Mistry to his rightful position as the Chairman of Tata Group, but has also declared the appointment of N Chandrasekaran as illegal.
It has taken three years of a legal battle between Shapoorji Pallonji Scion Cyrus Mistry and Tata Group over the sacking of Mistry due to alleged ‘non-performance’ and because the Tata Sons’ Board and its majority shareholders had “lost confidence in him”.
However, a recent ruling by the NCLAT has ruled in favour of Mistry and granted 4 weeks to Tata, for restoring Mistry to the post of Executive Chairman of Tata Sons. A 172 page order has been passed upholding the charges raised by Mistry against his ouster and it states that action taken by Ratan Tata and others against Mistry is both oppressive and illegal.
Following the sudden ouster, Cyrus Mistry moved NCLAT in his personal capacity while Tata Sons was represented by senior advocates that included Harish Salve, Abhishek Manu Singhvi and others. The reinstatement of Mistry set a pall of gloom over the Bombay House, Tata Headquarters while the Shapoorji Pallonji Group office at SP Center was in a celebratory mood.
Mistry, who owns an 18.4% stake in Tata Sons, through his company, Cyrus Investments Pvt. Ltd was ecstatic at the judgment in his favor and stated that “Today’s judgment is not a personal victory for me, but is a victory for the principles of good governance and minority shareholders’ rights”. The Tata Group on the other hand was in conference with their lawyers prior to challenging the order in the Supreme Court.
Along with the reinstatement of Mistry, NCLAT also ruled against Tata Sons’ decision to convert to a private company from a public one and termed its approval by the Registrar of Companies as being against the provisions of Company Act 2013 Section 14.
Following this ruling, shares of Tata Group along with that of Tata Motors, Tata Global Beverages and Indian Hotels tumbled nearly 3-4 percent. N Chandrasekaran, who replaced Cyrus Mistry wrote to employees assuring them that the proper legal recourse would be taken and asked all employees to “stay focused on their businesses”.