New Delhi: In a big win for Cyrus Mistry, the NCLAT on Wednesday restored him as executive chairman of Tata Sons and ruled that appointment of N Chandrasekaran as the head of the holding company of salt-to-software conglomerate was illegal.
The NCLAT, however, stayed the operation of the order with respect to reinstatement for four weeks to allow Tatas to appeal.
Setting aside a lower court order, the National Company Law Appellate Tribunal (NCLAT) also quashed the conversion of Tata Sons into a private company from a public firm.
Mistry, a scion of wealthy Shapoorji Pallonji family, was in a coup removed as Chairman of Tata Sons in October 2016. He was the sixth chairman of Tata Sons and had taken over in 2012 after Ratan Tata. He was later also removed as a director on board of Tata Sons.
However, Mistry and Tata family patriarch Ratan Tata had reportedly fallen out over key investment decisions, including manufacturing of world's cheapest car Nano.
Mistry, whose family owns 18.4 per cent stake in Tata Sons, challenged his removal in the National Company Law Tribunal (NCLT). The case of oppression and mismanagement against Tata Sons and 20 others, including Ratan Tata, filed by Mistry family entities Cyrus Investments and Sterling Investments - were however in March 2017 dismissed by the NCLT ruling that they were not eligible to pursue the allegations.
Section 244 of the Companies Act, 2013 allows a shareholder of a company to bring an oppression and mismanagement case against the firm if it holds not less than one-tenth of the issued share capital.
On appeal, the Cyrus Mistry firms had secured a partial win at the NCLAT, which waived the 10 per cent shareholding requirement but remitted the matter to the NCLT.
In July last year, the NCLT rejected Mistry's petition to reinstate him and found no merit in his allegations of operational mismanagement and oppression of minority shareholders.
Mistry had approached the appellate tribunal against the verdict of Mumbai NCLT. The NCLAT had reserved its judgment after completion of arguments from both sides in July this year. The judgment was pronounced by a two-judge bench headed by Justice S J Mukhopadhyay on Wednesday.
Will take appropriate legal recourse against NCLAT order: Tata Sons
Tata Sons on Wednesday said it will take appropriate legal recourse against the NCLAT judgement to reinstate ousted Chairman Cyrus Mistry, while stating it was not clear how the order sought to over-rule decisions taken by its shareholders and those of listed group firms at 'validly constituted shareholder meetings'.
NCLAT sets aside conversion of Tata Sons from public company to private firm
The NCLAT has quashed the conversion of Tata Sons - the principal holding company and promoter of Tata firms - into a private company from a public firm, terming it "illegal".
The NCLAT, which ordered reinstatement of ousted Cyrus Mistry as Chairman of Tata Sons, in its order said action taken by the Registrar of Companies (RoC) to allow the firm to become a private company was against the provisions the Companies Act, 2013 and 'prejudicial' and 'oppressive' to the minority members and depositors'.
"The Company (Tata Sons) shall be recorded as ‘Public Company'. The RoC will make correction in its record showing the Company as ‘Public Company," said the National Company Law Appellate Tribunal (NCLAT).
NCLAT also said future appointments of Chairman and other board members of Tata Sons must be done in consultation with the minority shareholder Shapoorji Pallonji Group.
The appellate tribunal has also directed Ratan N Tata, Chairman emeritus, Tata Sons and the nominees of Tata Trust to desist from taking any decision in advance and interfere into the affairs of the holding company.
Chandasekaran writes to Tata employees; asks them to focus on biz, stakeholders' welfare
Tata Sons Chairman N Chandrasekaran asked all group employees to stay focussed on their businesses and welfare of stakeholders in wake of the NCLAT order that raised issue of his appointment as Executive Chairman of the company.
In a message to the employees of the group, Chandrasekaran said Wednesday's "NCLAT ruling, which apart from other things, raises issues on my appointment as Executive Chairman of Tata Sons".
He further said, "I assure you that we have set ourselves on a course that will make the Tata Group stronger and more vibrant than it has ever been before. I urge all employees to stay focussed on their businesses and the welfare of our stakeholders".
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