This Article is From Jan 10, 2020

Setback For Cyrus Mistry As Top Court Puts On Hold NCLAT Order

The development comes a week after the Tatas approached the top court challenging the restoration of Cyrus Mistry as chairman of the group by NCLAT.

Setback For Cyrus Mistry As Top Court Puts On Hold NCLAT Order
The Supreme Court on Friday stayed the National Company Law Appellate Tribunal (NCLAT)'s order to reinstate Cyrus Mistry as chairman of Tata Sons. The development comes roughly a week after Tata Sons approached the Supreme Court challenging the restoration of Cyrus Mistry as the executive chairman of the group by the company law tribunal in December. Mr Mistry was sacked in 2016 from the top job at the helm of the holding company after he fell out with group patriarch Ratan Tata over corporate governance issues at Tata group companies. Since then, he has been embroiled in a legal battle claiming minority shareholder oppression and mismanagement.

  1. Chief Justice of India Sharad Arvind Bobde observed that the tribunal's decision to restore Cyrus Mistry as the chairman of Tata Sons may be an "adjudication error" which permeates the whole order.

  2. According to the tribunal's December 18 order, Mr Cyrus Mistry was restored at the helm of Tata Sons - one of the country's oldest and largest conglomerates - three years after his dramatic sacking at a board meeting. The NCLAT also ruled that the appointment of N Chandrasekaran as head of the holding company of $110-billion salt-to-software conglomerate was illegal.

  3. However, Mr Mistry said after the ruling that he would not seek to reclaim his board seats and position as executive chairman of Tata Sons.

  4. The Tata Sons board removed Mr Mistry as chairman and appointed Ratan Tata as interim chairman in October 2016. The change in the top management came about four years after he had taken over from Mr Tata.

  5. Tata Sons appealed against the NCLAT ruling in the Supreme Court this week. A handful of Tata group companies, including its crown jewel Tata Consultancy Services, have also appealed the decision.

  6. In December 2016, Mr Mistry resigned as director from all Tata Sons companies and moved the National Company Law Tribunal (NCLT) alleging oppression of minority shareholders and mismanagement. In January 2017, Tata Sons named N Chandrashekaran as chairman.

  7. In the next month, Mr Mistry was removed from the post of director on the Tata Sons board. Mr Chandrasekaran was the first non-Parsi to be appointed as chairman of Tata Sons.

  8. Mr Mistry currently serves as managing director of Shapoorji Pallonji & Company, which is part of the Shapoorji Pallonji group owned by his family. He joined the board of Tata Sons in 2006 and was appointed deputy chairman in November 2011.

  9. Tata Trusts, a group of public charities, owns a controlling 66 per cent stake in holding company Tata Sons, and is chaired by Ratan Tata.

  10. Mr Mistry's family owns a sizable minority stake in Tata Sons, the group's parent entity. Mr Mistry said his company, the diversified Shapoorji Pallonji group, would seek to appoint a member on the board of Tata Sons.