Ratan Tata vs Cyrus Mistry

The Supreme Court has given its verdict today on the case of Tata Sons Ltd, a Tata group company, and Cyrus Mistry of Shapoorji Pallonji (SP) Group. The court rejected the NCLAT’s decision, saying Mistry was legally correct to remove Tata Sons as chairman. The court also said that both Tata Sons and Shapoorji Pallonji (SP) Group should settle the issue of shares. The judgment was delivered by the bench composed of Chief Justice SA Bobde, Justice AS Bopanna, and Justice V Ramasubramaniam.

The court reserved the verdict in the matter on 17 December last year. Tata Sons challenged the order of the National Company Law Appellate Tribunal (NCLAT) dated 18 December 2019, in which NCLAT restored Cyrus Mistry as the chairman of Tata Sons Limited. NCLAT’s order was stayed by the Supreme Court on 10 January 2020.
Mistry was the youngest chairman of Tata Sons and his family owns an 18.4% stake in Tata Sons. He is also the second major shareholder in Tata Sons after Tata Trusts.

The NCLAT had said in its December 2019 judgment that it was illegal to remove Cyrus Mistry from the post of chairperson at the Tata Sons board meeting in 2016. It also directed that Ratan Tata should not take any decision in advance, requiring a majority decision in the Board of Directors of Tata Sons or a majority in the AGM.

Ratan Tata vs Cyrus Mistry

Cyrus Mistry took over as President of Tata Sons in December 2012 and was removed from the post on 24 October 2016 by a majority of the company’s Board of Directors. Subsequently, at a board meeting (EGM) convened on 6 February 2017, shareholders voted to remove Mistry from the board of Tata Sons. N Chandrasekaran then took over as executive chairman of Tata Sons.

Two Shapoorji Pallonji companies approached the National Company Law Tribunal (NCLT) alleging the removal of Mistry was unfair and allegation of mismanagement of minority shareholders over the case. Both these companies are shareholders in Tata Sons. However, in July 2018, the NCLT rejected the petition against which the Pallonji companies filed an appeal.

In the appeal, Shapoorji Pallonji companies said that the NCLAT failed to provide any significant relief to Mistry. Therefore Mistry’s companies should be entitled to representation in all the committees constituted by the Board of Directors of Tata Sons.

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