On Friday, SC backed Tata Sons’ decision to remove Cyrus Mistry as chairman and set aside the NCLAT order (National Company Law Appellate Tribunal order). The Supreme Court bench headed by Chief Justice S.A. Bobde said how the company’s decision to remove Mistry was right and how “all the questions of law” favours the Tata Group. With the Supreme Court decision, the final act of one of the ugliest boardroom fights in India concludes.
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The Supreme Court in its ruling said, “We find all the questions of law are liable to be answered in favour of the appellants, Tata Group and the appeals file by the Tata Group are liable to be allowed and Shapoorji Pallonji group is liable to be dismissed.”
The apex court also said that the order of the NCLAT from 2019 will be set aside. “Company petition no 82/2016 filed by two companies belonging to SP Group shall stand dismissed. Civil Appeal 1802 filed by Cyrus Investments Limited and Sterling Investment Corporation is dismissed. There will be no order as to costs,” the court said.
After the Supreme Court’s decision, Tata Group chief, Ratan Tata took to Instagram and said how he was grateful for the judgement passed by the Indian Supreme Court.
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Cyrus Mistry was appointed as the Chairman of the salt-to-software conglomerate in 2012. After 4 years, he was removed from the chairman’s position by the board of directors of Tata Group. In February 2017, Mr. Mistry was removed from the board of Tata and Sons by the shareholders of the company at an General meeting.
Post his removal, Shapoorji Pallonji firms, who are the biggest minority stake holders in Tata Sons, and are owned by Mistry, moved to the NCLT over Mistry’s removal. The firms alleged an “oppression” of minority shareholders by the majority. Meanwhile, Tata Sons refuted to the claims and said that the board members were within their right to remove Mistry as the Chairman.
Before the two parties approached the Supreme Court, the case was fought at the National Company Law Tribunal and the National Company Law Appellate Tribunal. Both the sides won one round each after which the Tata Group took to the Supreme Court in January, 2020.
Although the verdict today by the Supreme Court can be considered a big win for Tata Group, it will also ensure that the separation between the two-family groups will be easier now than ever before. Mistry’s Shapoorji Pallonji family is currently the biggest minority shareholder of the Tata Group, with 18.3% stake in its bag. 66% of the entirety of Tata Sons is owned by Tata Trusts that’s overseen by Philanthropist entrepreneur Ratan Tata.
Below is a timeline of all the important incidents in the Tata-Mistry legal battle:
Dec 2012, Mr. Cyrus Mistry is appointed as the Chairperson of the Tata Sons Limited.
Oct 2016: Mr. Mistry is removed from his position by the board of directors of Tata Sons.
Feb 2017: A General Meeting is convened where the shareholders vote Mr. Mistry from the board of Tata Sons.
Feb 2017: Mr. Mistry files a suit against Tata Sons, alleging oppression of minority stakeholders and mismanagement. The suits were filed under the Sections 241, 244 of Companies Act.
July 2018: Mr. Mistry loses the first battle in the war as the CLT rejects his allegations and stayed that Tata’s board of directors and shareholders were within their right to remove him.
Dec 2019: In the first major victory for Mr. Mistry, NCLAT says how his removal was illegal.
Jan 2020: NCLAT’s decision is challenged by Tata Sons in the Supreme Court.
Jan 2020: Supreme Court stays NCLAT’s judgement that Mr. Mistry’s removal was illegal.
Feb 2020: Mr. Mistry files cross-appeal against NCLAT’s judgement. Seeks financial reliefs for his firms.
Sep 2020: Supreme Court rules that Cyrus Mistry’s companies from Shapoorji Pallonji Group will not pledge any of its shares in Tata Sons.
Dec 2020: Final hearing begins in Supreme Court and the decision is stayed.
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