NCLAT reinstates Cyrus Mistry as Tata Sons executive chairman

National Company Law Appellate Tribunal rules decision to remove him from the top post as illegal.

Updated - November 28, 2021 12:21 pm IST

Published - December 18, 2019 03:34 pm IST - New Delhi

 Former Tata Sons Chairman Cyrus Mistry.

Former Tata Sons Chairman Cyrus Mistry.

Three years after Cyrus Pallonji Mistry was unceremoniously removed from the post of Executive Chairman of Tata Sons, the National Company Law Appellate Tribunal (NCLAT) on Wednesday ruled the decision “illegal”, paving the way for his reinstatement.

The replacement of the present ‘Executive Chairman’ and reinstatement of Mr. Mistry will however come into effect after four weeks during which Tata Sons has the option to challenge the tribunal’s verdict before the Supreme Court.

Additionally, the tribunal clarified that the Mr Mistry will be reinstated as Director of the ‘Tata Companies’ with immediate effect.

The tribunal also ordered Mr. Ratan N. Tata and the nominee of the ‘Tata Trusts’ to desist from taking any decision in advance which requires majority decision of the Board of Directors or in the Annual General Meeting.

It also declared as illegal the conversion of the ‘Tata Sons Limited’ from ‘Public Company’ to ‘Private Company’ by Registrar of Companies. The tribunal remarked the decision to convert the company private was ‘prejudicial’ and ‘oppressive’ to the minority shareholders including ‘Shapoorji Pallonji Group’.

Shapoorji Pallonji Group are in business with Tata Group i.e.— ‘Sir Dorabji Tata Trust’ and ‘Sir Ratan Tata Trust’ for more than four decades. Earlier Mr. Pallonji Shapoorji Mistry, father of Mr. Cyrus Pallonji Mistry, was appointed as the Executive Chairman of the Tata Sons.

For better protection of interest of all stakeholders, the tribunal said that in future at the time of appointment of the Executive Chairman, Independent Director and Directors, the ‘Tata Group’ which is the majority group should consult the minority group - ‘Shapoorji Pallonji Group’.

 

It also barred Tata Sons from invoking its power under Article 75, which empowers the ‘Tata Sons Limited’ at any time to transfer ‘ordinary shares’ of any of the shareholders without following the normal procedure of transfer, against Mr Mistry and other minority member.

Following the verdict, Mr Mistry in a statement said, “The outcome of the appeal is a vindication of my stand taken when the then board of Tata Sons, without warning or reason removed me, first as the executive chairman, and subsequently as a director of Tata Sons”.

The tribunal’s ruling came on a plea by Mr Mistry challenging his sudden removal from the post of ‘Executive Chairman’ pursuant to a decision of Board of Directors’ of the ‘Tata Sons Limited’.

Mr Mistry had contended that Tata Sons Chairman Emeritus Mr. Ratan N. Tata and Mr. N.A. Soonawala kept “interfering in the affairs of the company and demonstrating their insecurity about their legacy being undermined instead of looking to what is in the best interests of the company”.

“Over a period of time this turned to insisting that it is the will of the majority shareholder i.e. the ‘Tata Group’ that should prevail,” he had argued.

 

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