SC stays NCLAT order reinstating Cyrus Mistry as Tata Chairperson
Weeks after the National Company Law Appellate Tribunal (NCLAT) reinstated Cyrus Mistry as the Executive Chairperson of Tata Group, the Supreme Court stayed the tribunal's order citing "basic errors" in it. The SC's order came days after Mistry said he is not interested in pursuing the chairpersonship but hopes to protect his rights as a minority shareholder. Here are more details.
A three-judge SC bench of Chief Justice of India SA Bobde and Justices BR Gavai and Surya Kant observed, "Our first impression is not good about the order of the tribunal. The tribunal granted the prayer which was not prayed." The bench noted that there was no petition for reinstatement of Mistry, however, the tribunal ordered his reinstatement anyway.
The SC bench also said, "We find there are lacunae in the judicial orders passed by the NCLAT." It noted that the NCLAT order, delivered on December 18, suffered from "basic errors and we have to hear the matter in detail." The court has now posted the matter after four weeks and issued notices to Cyrus Investment Pvt Ltd, Mistry and others.
Addressing Mistry, the bench said, "You have been out of the saddle quite a long time. Does this hurt you... How does it hurt you today?" Notably, on Sunday, Mistry had said in a statement, "Despite the NCLAT order in my favor, I will not be pursuing the executive chairmanship of Tata Sons or directorship of TCS, Tata Teleservices, Tata Industries."
Mistry added, "I will however vigorously pursue all options to protect our rights as minority shareholders including a seat on the board." Incidentally, the SC barred the Tatas from exercising power under Article 25 of the Company Law and push out shares of minority shareholders.
In its petition, Tata Sons Private Ltd had said, "The direction to restore Cyrus Mistry for his remaining term, without noticing that the term has come to an end is a recipe for disaster, for the reason that it will create unnecessary confusion." "A directorial complaint, at best, has been blown up into a case of oppression and mismanagement of Tata Sons," it added.
On December 18, the NCLAT ordered Mistry's reinstatement as Tata Group's Executive Chairperson. The tribunal held that the appointment of Mistry's successor, Natarajan Chandrasekaran, was "illegal" while also ordering a reversal of Tata Sons' "unlawful" move to turn from a public company to a private company. The tribunal, however, stayed Mistry's reinstatement for four weeks to allow Tata to challenge the ruling.
Mistry joined the board of Tata Sons in 2002 and in 2011, he was appointed the Deputy Chairperson. In 2012, he took over as Tata Sons' Chairperson after Ratan Tata. In October 2016, however, a reported spat between Mistry and Tata led to the former's ouster from the salt-to-software conglomerate. In December that year, Mistry resigned as director from all Tata Group companies.
After Ratan Tata was briefly appointed interim Chairman, Natarajan Chandrasekaran took charge in February 2017. Investment firms Cyrus Investments Pvt Ltd and Sterling Investments Corp—run by Mistry's family—then challenged Mistry's ouster in the National Company Law Tribunal (NCLT), alleging minority shareholders oppression, since Mistry's family holds 18.4% stake in Tata Group. After NCLT dismissed their plea in 2017, Mistry moved NCLAT, challenging NCLT's order.