Highlights:
- The decision to remove Cyrus Mistry was right, according to a bench led by Chief Justice SA Bobde.
- The bench, which included Justices AS Bopanna and V Ramasubramanian, had reserved the verdict on December 17 last year.
- In 2012, Ratan Tata named Cyrus Mistry as his successor and chairman of Tata Sons but was ousted four years later.
In a major victory for Tata Sons, the Supreme Court today upheld Cyrus Mistry’s removal as chairman of the over $100 billion Tata Group in 2016 and overturned a company law tribunal order reinstating him.
The decision to remove Cyrus Mistry was right, according to a bench led by Chief Justice SA Bobde. The judges said, “All questions of law are in favour of Tata Group.”
On December 18, 2019, the National Company Law Appellate Tribunal (NCLAT) reinstated Mr Mistry as the conglomerate’s executive chairman. The order, which had been questioned by the Tatas, has been revoked.
The Supreme Court had reserved its judgement on December 17th.
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The removal of Cyrus Mistry as chairman of Tata Sons in a board meeting held in October 2016 was like a “blood sport” and “ambush,” according to the Shapoorji Pallonji Group, and was in complete violation of corporate governance standards and pervasive violations of the Articles of Association in the process.
The Tata Group has vigorously denied the charges, claiming that the board had every right to dismiss Mr Mistry as chairman.
Mr Mistry took over as chairman of Tata Sons from Ratan Tata in 2012, but was abruptly fired four years later. Mr. Mistry’s feud with Ratan Tata has become one of India’s most high-profile and publicised corporate battles.
Mr Mistry had also demanded that group chairman Ratan Tata to refund all expenses to Tata Sons since his departure in December 2012, in line with best global governance practises, in response to the Tatas’ petition challenging his reinstatement by the National Company Law Appellate Tribunal (NCLAT) last December.
The Supreme Court today also ordered Tata Sons and Cyrus Mistry to pursue other legal options in connection with the shares issue.
Another commercial battle arose when the financially strapped Shapoorji Pallonji Group attempted to collect funds by pledging its shareholding in Tata Sons. The Tata Group protested, and won a stay from the Supreme.
Mr Mistry wants to be represented in the company in proportion to his family’s 18.37 percent stake.
The Supreme Court did not rule on the issue of Tata Sons’ stock valuation.
As part of a proposal to help resolve the conflict, Tata Group says it is open to buy out the Mistry family’s holding, which is its largest minority shareholder.
