NCLAT restores Cyrus Mistry as executive chairman of Tata Group; holds appointment of N Chandrasekaran illegal
The National Company Law Appellate Tribunal (NCLAT) on Wednesday restored Cyrus Mistry as Executive Chairman of Tata Group and held the appointment of N Chandrasekaran as Executive Chairman illegal
The NCLAT pronounced its judgement over the petition moved by former Tata group Chairman Cyrus P Mistry and the two investment firms challenging his removal from the group
The Appellate Tribunal had reserved its order in July this year, after completing its marathon hearing over the issue
Earlier, the Mumbai bench of the National Company Law Tribunal (NCLT) had dismissed the petitions filed by the two investment firms Cyrus Investments Pvt Ltd and Sterling Investments Corp challenging Mistry' removal
In a big win for Cyrus P Mistry, the National Company Law Appellate Tribunal (NCLAT) on Wednesday ordered the restoration of Mistry back as the executive chairman of Tata Sons.
The Appellate Tribunal also held the appointment of present executive chairman, N Chandrasekaran illegal.
However, the tribunal said the restoration order will be operational only after four weeks, the time allowed to Tatas to file an appeal, PTI reported.
Setting aside a lower court order, the NCLAT also quashed the conversion of Tata Sons into a private company from a public firm.
— CNBC-TV18 (@CNBCTV18Live) December 18, 2019
The judgment was pronounced by a two-judge bench headed by Justice S J Mukhopadhyay over the petition moved by former Tata group Chairman Mistry and the two investment firms challenging his removal from the group.
Two major #NCLAT decisions on #TataSons :- 1) #CyrusMistry to be restored as Tata Group Executive Chairman, the restoration order will be operational after 4 weeks 2) The decision of the RoC to change from public to private has been set aside, RoC to correct & show as public co pic.twitter.com/tOw2GJN4XG — CNBC-TV18 (@CNBCTV18Live) December 18, 2019
The Appellate Tribunal had reserved its order in July this year, after completing its marathon hearing over the issue.
Mistry, a scion of wealthy Shapoorji Pallonji family, was in a coup removed as Chairman of Tata Sons in October 2016. He was the sixth chairman of Tata Sons and had taken over in 2012 after Ratan Tata. He was later also removed as director on board of Tata Sons.
However, Mistry and Tata family patriarch Ratan Tata had reportedly falling out over key investment decisions, including manufacturing of world's cheapest car Nano.
Mistry, whose family owns 18.4 percent stake in Tata Sons, challenged his removal in the National Company Law Tribunal (NCLT). The case of oppression and mismanagement against Tata Sons and 20 others, including Ratan Tata, filed by Mistry family entities - Cyrus Investments and Sterling Investments - were however in March 2017 dismissed by the NCLT ruling that they were not eligible to pursue the allegations.
Section 244 of the Companies Act, 2013 allows a shareholder of a company to bring an oppression and mismanagement case against the firm if it holds not less than one-tenth of the issued share capital.
On appeal, the Cyrus Mistry firms had secured a partial win at the NCLAT, which waived the 10 percent shareholding requirement but remitted the matter to the NCLT.
Earlier, the Mumbai bench of the National Company Law Tribunal (NCLT) had dismissed the petitions filed by the two investment firms Cyrus Investments Pvt Ltd and Sterling Investments Corp challenging Mistry' removal.
Later, Mistry had also personally approached the NCLAT over the NCLT order.
The Mistry camp had challenged the 9 July order of the Mumbai bench of the NCLT which dismissed the pleas against his removal as Tata Sons chairman, as also the allegations of rampant misconduct on part of Ratan Tata and the company's board.
A special bench of the tribunal had held that the board of directors at Tata Sons was “competent" to remove the executive chairperson of the company. The NCLT bench had also said that Mistry was ousted as chairman because the Tata Sons' Board and its majority shareholders had “lost confidence in him".
Two months after his removal, Mistry's family-run firms approached the NCLT as minority shareholders, against Tata Sons, Ratan Tata, and some other board members.
Mistry in his pleas primarily argued that his removal was not in accordance with the Companies Act and that there was rampant mismanagement of affairs across Tata Sons.
(With inputs from agencies)