Tata Group: Understanding Supreme Court ruling

Tata Group: Understanding Supreme Court ruling

The Supreme Court today ruled in favour of Tata Sons and Ratan Tata, by upholding the ouster of Cyrus Mistry as the Executive Chairman of the salt-to-software Tata Conglomerate. The apex court dismissed pleas filed by Cyrus Mistry and set aside the NCLAT (National Company Law Appellate Tribunal) order. The bench headed by Chief Justice of India S A Bobde, and comprising Justice A S Bopanna and Justice V Ramasubramanian had reserved the judgement earlier in December on various pleas by Tata Sons as well as Cyrus Mistry’s Cyrus Investments Pvt Ltd.
While allowing all the appeals by Tata Group, a three-judge bench has set aside the entire December 2019 order of the NCLAT that reinstated Mistry to his post. The three-judge SC bench also held that it would not go into the details of the compensation to be awarded or adjudicate on whether Tata Group could or could not use Article 75 of its Articles of Association. The court also held that there was no oppression of minority shareholders of the Tata Group or any mismanagement at Tata Sons.

The Apex Court, however, stopped short of adjudicating on the matter of separation between the two groups. The order leaves Tata Sons and Cyrus Mistry on their own to decide the issue of shares held by the Shapoorji Pallonji Group.
The judgement comes after a long legal battle between the two groups that began in 2017 after Cyrus Mistry was removed as the Executive Chairman of Tata Sons Ltd after a little over four years into his reign. Mistry had approached the Mumbai-bench of NCLT (National Company Law Tribunal) earlier in 2017 which ruled that his removal was legal. However, in 2019 the NCLAT (National Company Law Appellate Tribunal) overturned the NCLT order. It ruled that Cyrus Mistry be reinstated as the Executive Chairman of the $100-billion Tata conglomerate.
Both sides had approached the Supreme Court earlier last year.

Tata Sons have challenged the NCLAT ruling altogether, saying that the NCLAT has granted reliefs that were not asked for by the opposing party. Meanwhile, Cyrus Mistry’s Shapoorji Pallonji Group has sought representation on the Tata Sons board. Shapoorji Pallonji Group holds an 18.3% stake in Tata Sons through various subsidiaries.

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