Tata Group Wins, Cyrus Mistry’s Appeal Dismissed; Supreme Court Sets Aside NCLAT Order

In a big win for Tata Sons Ltd, the Supreme Court on Friday allowed its appeal against the order of the National Company Law Tribunal, which had ordered to to reinstate the ousted Chairman Cyrus Mistry.

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The Supreme Court today ruled in favour of Tata Sons and Ratan Tata, by upholding the ouster of Cyrus Mistry as the Executive Chairman of the salt-to-software Tata Conglomerate. The apex court dismissed pleas filed by Cyrus Mistry and set aside the NCLAT (National Company Law Appellate Tribunal) order. Actor the verdict of SC now Cyrus Mistry cannot become the chairperson of Tata Sons.

The bench headed by Chief Justice of India S A Bodbe, and comprising Justice A S Bopanna and Justice V Ramasubramanian had reserved the judgement earlier in December on various pleas by Tata Sons as well as Cyrus Mistry’s Cyrus Investments Pvt Ltd.

The judgement ended the long legal battle between Ratan Tata and Cyrus Mistry.

The 2019 NCALT judgement which went in favour of Mistry

Mistry had approached the Mumbai-bench of NCLAT (National Company Law Tribunal) earlier in 2017 which ruled that his removal was legal. The NCLAT, in its December 2019 judgment, had held that the proceedings of the Board meeting of Tata Sons held on October 24, 2016, removing Cyrus Mistry as Chairperson was illegal.

It had also directed that Ratan Tata should not take any decision in advance which requires majority decision of the Board of Directors of Tata Sons or a majority in the Annual General Meeting.

Ratan Tata filed a plea in SC which highlighted that the NCLAT granted reliefs that were not prayed for by restoring Cyrus Mistry to his “original position” as the Executive Chairman of Tata Sons and declaring the appointment of Chandrasekaran the incumbent Executive Chairman of Tata Sons as illegal.

The plea highlighted that the tenure of Cyrus Mistry as the Chairman and Director of Tata Sons expired in March 2017 and a direction by the NCLAT to allow Mistry to continue as a functionary beyond the term would be contrary to the articles of association of the company and the established principles of company law.

Shapoorji Pallonji firms in their cross-appeals contended that the NCLAT failed to give certain crucial reliefs to Mistry.

Cyrus Mistry’s Shapoorji Pallonji Group also went to the Apec Court to seek representation on the Tata Sons board. Shapoorji Pallonji Group holds an 18.3% stake in Tata Sons through various subsidiaries but the Supreme Court did not announce any decision on this matter. 

Cyrus Mistry was appointed as the Executive Chairman of Tata Sons in 2012, succeeding Ratan Tata. An Extraordinary General Meeting convened on February 6, 2017, the shareholders voted for the removal of Mistry from the board of Tata Sons. Subsequently, N Chandrasekaran took over as Executive Chairman of Tata Sons.