NCLAT expunges 'disparaging' remarks against Cyrus Mistry in NCLT order; restores him as Tata Sons chairman

New Delhi: Ordering reinstatement of Cyrus Mistry as Chairman of Tata Sons, the NCLAT on Wednesday expunged ‘disparaging’ remarks made against him by the Mumbai bench of NCLT which had dismissed his plea challenging his removal as chief of the Tata group. A two-member bench of the National Company Law Appellate Tribunal headed by Chairperson S J Mukhopadhaya said that such observations against Mistry and other respondents were “undesirable and based on extraneously sourced material not on record”. “It casts impact on the reputation of the Appellants and Cyrus Pallonji Mistry which may affect them in pending proceedings, if any, and their business. These remarks are not only disparaging but also wholly unsubstantiated by any document on record,” the NCLAT said in its order. Citing 11 paras of disparaging remarks against Mistry in its 172-page long order, the NCLAT said, “Remarks made against the Appellants, Cyrus Pallonji Mistry and others stand expunged.” [caption id=“attachment_647244” align=“alignleft” width=“380”] File image of Cyrus Mistry. Reuters.[/caption] Cyrus Mistry, in his personal capacity, had filed petition before the NCLAT pointing out the observations by the National Company Law Tribunal (NCLT) Mumbai in its order dated 9 July, 2018. The NCLT had used words in remarks which includes “heart burn”, “settle their score”, “prejudicial to the interest of the company”, “sovereign authority”, “his way is highway” etc in its order. “At this stage, it is apt to notice some observations in the Judgment dated 9 July, 2018, passed by the Tribunal are inappropriate and avoidable,” said the NCLAT. The appellate tribunal further said that in its opening paragraphs of its judgement, NCLT was not required to highlight the products of Tata Sons nor was required to appreciate its activities before deciding the case on merit. “Sometimes, such observations or appreciation in favour of one or other party creates a wrong impression in the mind of the other party. The Tribunal is required to appreciate the merits and demerits of the case and should desist from highlighting the merits of a product or virtues of a party or appreciating any action taken by a party to a case,” it said. In Para 542 of its judgement dated 9 July, NCLT Mumbai had observed :“Cyrus created a situation that since he being the executive chairman, he is not accountable either to majority shareholders or to the trusts nominee director s…..” In Para 396, NCLT had said:“Is it that Mr Cyrus will remain whole and sole and call the shots in the company by virtue of he being appointed by the majority as Executive chairman.” “For Mr Cyrus started his journey as an Executive Chairman under the impression that he was given free hand or would be given free hand to run the affairs of the company, perhaps caused all these problems because he was obsessed with an idea that he alone would lead the company and others to remain assisting him in running the company. Perhaps since he saw Mr Tata working as Executive Chairman, he might gone into the mind that he would exercise the powers as Mr. Tata exercised forgetting the fact that Mr. Tata at that point of time had two hats,” NCLT had said in Para 564.