Tata Vs Mistry: 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.
“We must say our first impression isn’t very good,’’ said the Chief Justice, referring to the NCLAT judgement. Mistry’s side asked the court to pass a status quo order instead of temporarily setting aside the NCLAT judgment.
“The general view was that the NCLAT order was overreaching in many ways,” Rajat Sethi, partner at S&R Associates, told BloombergQuint. “So the Supreme Court has some reason to sort of want to look at everything afresh rather than letting any portion of the order operate in the meanwhile.”
Until the apex court pronounces its final verdict, Tata Sons has given an undertaking to not use Article 75 of its articles of association. This article permits the company at any time, by a special resolution of shareholders, to force a shareholder to sell his shares. The earlier deemed public company nature of Tata Sons prevented it from being used. But that bar was lifted when Tata Sons converted to a private company, soon after Mistry’s dismissal as executive chairman.
Watch | S&R Associates’ Rajat Sethi On The Supreme Court’s Order In Tata Vs Mistry Case
This adds another twist to a long-standing boardroom battle between Ratan Tata and Cyrus Mistry.
The bench, headed by Chief Justice of India SA Bobde, included Justice BR Gavai and Justice Surya Kant. Senior advocates Harish Salve, Mukul Rohatgi and Abhishek Manu Singhvi led the charge for the Tatas. Neeraj Kishan Kaul appeared by Cyrus Mistry while CA Sundaram appeared for Mistry’s firms.
The NCLAT, on Dec. 18, had reinstated Mistry to his original position as executive chairman of Tata Group, saying his removal was “illegal”.
The appeals filed in the Supreme Court include a petition by Tata Sons which challenged the appellate tribunal’s judgment in its entirety. Tata Sons said the NCLAT judgment had gone against the principles of company law and undermined the right of the board. The NCLAT had no jurisdiction to reinstate Mistry and this wasn’t even sought by him, it said in its petition. The removal was done only because there was “an untenable trust deficit” between Tata Trusts and Mistry, the petition said, adding that the judgment is untenable in law, and has undermined corporate democracy and rights of the board of directors.
Tata Teleservices Ltd., too, challenged Mistry’s reinstatement to its board. The company contended that the appellate tribunal passed the direction without giving them a chance to present their side and brought back Mistry even when he didn’t seek it at any forum. The Tata group company said in its petition that Mistry never availed the opportunity to present his side before he was removed from the company’s board.
Tycoon Ratan Tata, who filed a separate case against the NCLAT, questioned the comments made by the tribunal against him. The NCLAT had found Ratan Tata’s action against Mistry as evidence of mismanagement and oppression of minority shareholders.