Tata Vs Mistry Judgment Day: All You Need To Know
A battle that started in October 2016, with the ouster of Cyrus Mistry as Tata Sons chairman, concludes today in the apex court.
A battle that started in October 2016, with the sudden ouster of Cyrus Mistry as chairman of Tata Sons, concluded today in the Supreme Court.
A three judge bench of the apex court, led by Chief Justice SA Bobde and including Justices AS Bopanna and V Ramasubramanian determined there was no case of oppression and mismanagement at Tata Sons, as alleged by Cyrus Mistry its former chairman and second largest shareholder.
Read the Breaking News Story: Tata Sons Wins Against Mistry In Supreme Court
Mistry’s family - the Shapoorji Pallonji family with an eponymous business group that spans construction, real estate and engineering business, owns 18.47% of the equity capital of Tata Sons, the main holding company of the Tata Group. 66% of Tata Sons is owned by Tata Trusts, currently controlled by Ratan Tata, the group’s former chairman. Differences between the two, Cyrus Mistry and Ratan Tata, are at the heart of this bitter falling out.
The Supreme Court’s decision was also expected to impact Mistry’s shareholding as late last year Mistry decided to part ways with the Tata Group and proposed a separation plan. The plan was rejected by Tata lawyers in court. The apex court has left that issue open, saying at this stage and in this court, we cannot adjudicate on fair valuation.
This saga, involving India’s storied business group - Tata - has raised complex issues of law and governance.
- What constitutes oppression and mismanagement at a company?
- How far do a tribunal’s powers go when deciding such a case?
- Should nominee directors of a majority shareholder have substantial affirmative powers?
- The legality of Tata Sons’ conversion from public company to private company.
- The fate of Mistry’s directorship on the Tata Sons board.
- And, what this 5-year long battle says about India’s foremost conglomerate, the Tata Group - with over $100 billion in revenue.
Here’s a quick timeline of the developments between Mistry and Tata ending with today’s Supreme Court decision.
July 2018: NCLT Dismisses Cyrus Mistry’s Plea Against Tata Sons
Cyrus Mistry lost the legal battle against Tata Sons Ltd. as the company law tribunal rejected all his allegations and ruled that the parent of India’s largest conglomerate had the right to remove him as its chairman.
Read more here.
December 2019: Cyrus Mistry’s Removal As Chairman Of Tata Sons Board Illegal, NCLAT Says
In an important victory for Cyrus Mistry, the National Company Law Appellate Tribunal ruled that his dismissal as chairman of Tata Sons Ltd. was illegal.
Read more here.
December 2019: Why NCLAT Found Oppression And Mismanagement At Tata Sons
Ruling on India’s biggest corporate feud of the decade, the NCLAT held Mistry’s dismissal as illegal and found that the affairs of Tata Sons were conducted in a manner prejudicial and oppressive to its minority shareholders, namely Cyrus Mistry and his family companies, as well as to the interests of the company itself and its group firms.
Read more here.
December 2019: How The Fight Played Out Over Three Years At NCLT, NCLAT
A chronology of the developments that took place in the Tata-Mistry case before the NCLAT and Mumbai-bench of National Company Law Tribunal.
Read more here.
January 2020: Tata Sons To Push For Urgent Hearing In Supreme Court Today
Tata Sons Pvt. Ltd. is likely to mention in the Supreme Court its petition challenging NCLAT's decision restoring Cyrus Mistry as executive chairman, saying the verdict "undermined corporate democracy" and the "rights" of its board of directors.
Read more here.
January 2020: NCLAT Order A “Recipe For An Unmitigated Disaster”- Tata Sons To Supreme Court
Tata Sons Pvt. Ltd. has moved the Supreme Court against the National Company Law Appellate Tribunal’s judgment to reinstate Cyrus Mistry as executive chairman of Tata Group’s holding company, terming it a “recipe for unmitigated disaster”.
Read more here.
January 2020: All Reliefs To Cyrus Mistry On Hold As Supreme Court Stays Full NCLAT Order
The Supreme Court today stayed the National Company Law Appellate Tribunal’s judgment to reinstate Cyrus Mistry as the executive chairman of Tata Sons and director on the board of group companies. Chief Justice of India SA Bobde observed that the appellate tribunal granted reliefs which weren’t even sought by the ousted chairman.
Read more here.
February 2020: Cyrus Mistry Files Cross Appeal In Supreme Court Seeking More Relief From NCLAT
Tata Sons Pvt. Ltd.’s Former Chairman Cyrus Mistry has moved the Supreme Court for removal of several anomalies in NCLAT’s Dec. 18 order in the Tata-Mistry case, saying his family—Shapoorji Pallonji—deserved more relief from the tribunal.
Read more here.
July 2020: Cyrus Mistry Argues NCLAT Right To Reinstate Him As Tata Sons Chairman
The NCLAT was well within its powers to re-instate Cyrus Mistry as the executive chairman of Tata Sons even if the relief was not specifically sought by him, Tata Sons’ former executive chairman has said in his affidavit.
Read more here.
Even as both sides were filing case papers with the Supreme Court another commercial battle broke out between them. The financially-strapped Shapoorji Pallonji Group sought to pledge it’s shareholding in Tata Sons to raise funds. The Tata Group objected to this and won a stay from the Supreme Court, prompting a parallel legal battle.
July 2020: Brookfield Mulls Investment in Debt of Mistry’s Group
India’s Shapoorji Pallonji Group is in preliminary talks with Brookfield Asset Management Inc. to raise as much as $400 million in structured debt to help repay maturing obligations, according to people with knowledge of the matter. The group was earlier in discussions to borrow as much as $1 billion using part of its Tata Sons Ltd. stake as collateral, Bloomberg News reported in March. The Mistry’s family owns an 18% stake in Tata Sons.
Read more here.
September 2020: Shapoorji Pallonji Group Sends Notice To Tata Sons Seeking Damages
The Shapoorji Pallonji Group, which has been in a bitter legal battle with the Tatas since October 2016, has sent legal notices seeking damages from Tata Sons and its board members for "illegally blocking" the Mistry family's bid to raise funds by pledging shares of the Tata Group’s key holding company Tata Sons.
Read more here.
September 2020: Tata Offers to Buy Out Mistry Family Stake in Shares Dispute
Tata Group, India’s biggest conglomerate, said it’s open to buying out the stake held by its largest minority shareholder -- the billionaire Mistry family -- as part of a proposal to help end a years-long legal dispute between the two parties.
Read more here.
Then came the big, surprise announcement from Cyrus Mistry. He said maybe it was time his family separated from the Tata Group and went on, over the next few months, to propose a separation plan.
September 2020: Time To Separate From Tata, Says Mistry Family
“The current situation has forced the Mistry family to sit back and reflect on the past, present and possible future for all stakeholders. The past oppressive actions, and the latest vindictive move by Tata Sons that impact the livelihoods of the wider SP Group community leads to the inexplicable conclusion that the mutual co-existence of both groups at Tata Sons would be infeasible," said a statement by the Mistry family-controlled SP Group.
Read more here.
September 2020: How To Value Tata Sons And The Mistry Family’s Stake
One part of Tata Sons value is linked to the market value of its investments or stakes in group companies. All listed Tata Group firms had a combined market capitalisation of Rs 7.9 lakh crore as on Sept. 22. That's close to Rs 7.13 lakh crore estimate by Crisil in its August report.
Read more here.
October 2020: Mistry Family Proposes Share Swap To Separate From Tata Sons
The SP Group has proposed:
- A selective reduction of capital at Tata Sons thereby extinguishing shares held by them.
- In exchange, SP Group be granted shares in listed companies of the group.
- Also, cash consideration or shares for brand value, unlisted assets etc.
“The net asset value of 18.37% stake of the SP Group in Tata Sons is estimated more than Rs 1,75,000 crore. Disputes over valuation can be eliminated by doing a pro-rata split of listed assets (share price value is known) and pro-rata share of the Brand (Brand valuation is already done by Tata Group and published). A neutral third-party valuation can be done for the unlisted assets adjusted for net debt (ie: debt less cash).”
Read more here.
December 2020: Supreme Court To Hear Matter On Dec. 8
The Supreme Court said it would hear on Dec. 8 the cross-appeals filed by Tata Sons and Cyrus Investments against the appellate tribunal’s order which had restored Cyrus Mistry as the executive chairman of the over $100 billion salt-to-software Tata conglomerate.
Read more here.
In December 2020, the Supreme Court began hearing the case. The two sides reiterated many of the arguments made at the tribunal and appellate tribunal. The order was reserved. Now, with a month to go for Chief Justice Bobde’s retirement the apex court is pronouncing its decision. This will be the final word in this legal battle. And while a review is available it rarely succeeds in such matters.
Supreme Court Hearings
Dec. 8: Rs 1 Lakh Crore—The Gap Between Tata, SP Group’s Valuation Of Mistry Shares
Dec. 9: NCLAT Didn’t Specify Why Tata Sons Must Be Wound Up, Harish Salve Tells Supreme Court
Dec. 10: Mistry Says He Wanted To Run Tata Sons As A Board-Managed Company
Dec. 10: Tata Rejects Mistrys’ Share-Swap Separation Offer as ‘Nonsense’
Dec. 14: Both Sides Spar On Board Independence
Dec. 15: Mistry Argues Against Tata Sons’ Conversion Into A Private Company
Dec. 16: Mistry Side Argues For Board Representation
Supreme Court Rules In Favour Of Tata Sons
Tata Sons Wins, Supreme Court Sets Aside NCLAT Order
Why Mistry’s Oppression Case Failed In The Supreme Court
Judgment Leaves Open Key Corporate Governance Points
No Doubts About The Direction I Chose, Says Cyrus Mistry On Battle With Tata
Ratan Tata Says Supreme Court Judgment In Tata-Mistry Case Validation Of Tata Sons’ Ethics
What Tata And Mistry’s Ex-Colleagues Make Of The Supreme Court Verdict