On Wednesday 18th December, Cyrus Mistry, was restored as executive chairman of Tata Sons by a company law appeals court. The National Company Law Appellate Tribunal (NCLAT) ruled that appointment of N Chandrasekaran as head of the holding company of over $110 billion software conglomerate was illegal. It also noted that the group's chairman emeritus Ratan Tata's actions against Mistry were oppressive.
It, however, stayed the operation of the order with respect to reinstatement for four weeks to allow Tatas to appeal.
Setting aside a lower court order, the NCLAT also quashed the conversion of Tata Sons into a private company from a public firm. It also directed Tata Sons not to take any action against Mistry, whose family owns some 18 per cent interest in Tata Sons.
The remaining 81 per cent is held by Tata Trusts and Tata Group companies along with Tata family members.
Mistry had succeeded Ratan Tata as the Executive Chairman of Tata Sons, in December 2012, a post that also made him the head of all Tata group listed firms such as Tata Power and Tata Motors. In an overnight coup, he was removed as the Chairman of Tata Sons in October 2016.
He then challenged the removal before the Mumbai bench of National Company Law Tribunal but lost and then went in for appeal at the NCLAT.
Tatas had cited alleged failure of Mistry to "deliver on the promises that he had made at the time of his selection as the Chairman" and inability to lead the group in a cohesive manner and failure in providing proper guidance and support to the group as the reasons for his sacking.
Mistry had contended that he was removed because of his "efforts to remedy past acts of mismanagement", for resisting interference of Ratan Tata and for instituting a formal governance framework to regulate the role of the Tata Trusts.
Mistry has termed the NCLAT judgment as "victory for the principles of good governance and minority shareholder rights", Tata Sons said the NCLAT order appears to have gone beyond the specific reliefs sought by Mistry and it was not clear as to how the NCLAT order seeks to over-rule the decisions taken by shareholders of Tata Sons and listed Tata operating companies at validly constituted shareholder meetings.
"The proceedings of the sixth meeting of the Board of Directors of Tata Sons Ltd held on Monday, October 24 2016 so far as it relates to removal and other actions taken against Cyrus Pallonji Mistry is declared illegal and is set aside. In the result, Cyrus Pallonji Mistry is restored to his original position as Executive Chairman of Tata Sons Ltd and consequently as Director of the Tata companies for rest of the tenure," the NCLAT said in its order.
As a sequel thereto, the appointment of Chandrasekaran, who replaced Mistry, "is declared illegal," it said.
The NCLAT ordered 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".
