Chairman emeritus of Tata Sons Private Limited Ratan N. Tata moved the Supreme Court on Friday against the National Company Law Appellate Tribunal's (NCLAT) judgment restoring Cyrus Mistry as its chairman, saying the verdict has virtually pulled down the governance and corporate structure painstakingly built by the founders of the Indian multinational conglomerate.
Tata Sons has already moved the apex court against NCLAT decision of December 18.
Mr. Tata said the NCLAT judgment banked on specious arguments to find him “guilty” of acting in an “oppressive and prejudicial” manner against the interests of shareholders. Mr. Tata said he had spent more than half of his life in building the name of Tata Sons and other Tata operating companies to one of the top global companies.
He said the judgment claimed “over 550 emails” were exchanged between Mr. Mistry and him to demonstrate the scale of interference from the latter's side. Mr. Tata said there were “no such 550 mails in the first place”.
It was rather “remarkable and strange” that an exchange of ideas, views, etc, between him and Mr. Mistry could be treated as conclusive evidence of unsolicited interference, Mr. Tata said.
“What is even more remarkable is that the whole case of oppression and prejudice is based entirely on words and statements contained in correspondence without there being an iota of evidence to buttress any actual loss/injury being caused to Tata Sons as a result of Mr. Cyrus Mistry being forced to act on such interference/interdiction against his wishes,” Mr. Tata contended.
He said the NCLAT, through its contrived and self-serving reading of the correspondence, concluded that he was “determined” to remove Mr. Mistry. The tribunal accused him of engineering the coup to oust Mr. Mistry. The petition said the judgment, with no evidence to back it, castigated him and N.A. Soonwala (former trustee of Tata Trusts) and Mr. Nitin Nohria, a Trusts Nominated Director, for “unfair abuse of powers”.
In fact, the appeal said, the “various fronts where Mr. Cyrus Mistry’s leadership was lacking was his reluctance to timely and meaningfully disassociate himself from his family business after he became the Chairman of Tata Sons and address any conflict in this regard, which was a condition precedent to his appointment as Chairman of Tata Sons”.
Mr. Tata said Mr. Mistry's handling of the DoCoMo dispute was a “glaring example” of the lack of leadership skills. It was during Mr. Mistry's tenure that Tata Sons reneged on its word with DoCoMo. He showed “complete obstinacy” to comply with legal obligations even in the face of an adverse verdict by arbitration.
“This is not what the Tata Sons brand stands for. Quite to the contrary, honouring its commitments is one of Tata Sons’ highest virtues it takes great pride in. The spat with DoCoMo, which was widely covered by the press, brought ill-repute and reputational losses to Tata Sons,” the appeal said. It said Mr. Mistry failed to capitalise when business opportunities came up.
“Slowly and systematically, he had also concentrated power and authority in his own hands as Chairman in all major Tata Operating Companies,” the appeal alleged. It said the NCLAT verdict would lead to chaos in the functioning of Tata Sons, undermine shareholder sovereignty and lead to a breakdown of its governance structure.
Besides severely affecting the rights of the Tata Trusts, its nominated directors, Mr. Tata's rights as a shareholder and rewriting the articles of Tata Sons against its interests, the judgment undermined the rights of all other shareholders and virtually extinguishes the doctrine of shareholder sovereignty and corporate majority, it said.
The judgment had granted vast and unsought-for reliefs to the Shapoorji Pallonji (SP) Group (Mr. Mistry is a scion of the group), which were not even sought, that were not only contrary to company law and the Articles Of Association of Tata Sons but would paralyse the management and functioning of Tata Sons, the appeal said. The appeal said the SP Group was not in partnership with Tata Sons. The former was only a financial investor in Tata Sons. The NCLAT wrongly believed that Tata Sons was a “two-group” company.
Mr. Tata has been associated with the Tata Group for well over 55 years. He stepped down as the Chairman of Tata Sons after handing over the reins to Mr. Mistry in December 2012. Mr. Tata holds an aggregate of about 65.89% of the equity shareholding of Tata Sons.