Tata Sons won a battle of “values and ethics” as the Supreme Court on Friday (March 26) backed the removal of Cyrus Mistry as the chairman of Tata Group in 2016.
Tata Group Chairman Emeritus Ratan Tata responded to the verdict on Twitter: “It is not an issue of winning or losing. After relentless attacks on my integrity and the ethical conduct of the group, the judgment upholding Tata Sons is a validation of the values and ethics that have always been the guiding principles of the group. It reinforces the fairness and justice displayed by our judiciary.”
The Supreme Court on Friday set aside the company law tribunal order of 2019 that had reinstated Cyrus Mistry as the chairman of the over $100 billion salt-to-software Tata Group. The court backed the removal of Cyrus Mistry.
The Mistry-Tata clash is one of the most high-profile and publicly fought corporate battles in the country.
A bench headed by Chief Justice SA Bobde said the decision to remove Cyrus Mistry was right. “All questions of law are in favour of Tata Group,” said the judges.
The National Company Law Appellate Tribunal (NCLAT) had on December 18, 2019, restored Mistry as the executive chairman of the conglomerate. That order, challenged by the Tatas, has been scrapped. The Supreme Court had on December 17 reserved the verdict.
A two-judge bench of the NCLAT had said Ratan Tata’s actions against Mistry were oppressive and the appointment of a new chairman was illegal. NCLAT had also quashed the conversion of Tata Sons into a private company from a public firm.
The Shapoorji Pallonji Group had told the apex court that the ouster of Cyrus Mistry as the chairman of Tata Sons in a board meeting in October 2016 was in violation of principles of corporate governance. Mistry in his pleas had also alleged rampant mismanagement of affairs across Tata Sons.
Tata Group had strongly opposed the allegations and said the board was well within its rights to remove Mistry.
The Mistry family was the single largest shareholder in Tata Sons, with an 18.4 per cent stake. Cyrus Mistry, who was the sixth chairman of Tata Sons, was removed from the position in October 2016. He had taken over as the chairman in 2012 after Ratan Tata announced his retirement.
Mistry, a scion of wealthy Shapoorji Pallonji family, and Ratan Tata reportedly sharply differed over key investment decisions, including manufacturing of world’s cheapest car Nano.
Responding to the Tatas’ petition challenging his reinstatement by the NCLAT last December, Mistry wanted Ratan Tata to reimburse all the expenses to Tata Sons since his departure in December 2012 in keeping with global standards.
The Supreme Court had directed both Tata Sons and Cyrus Mistry to take other legal recourse on the question of shares. This triggered another battle in which Shapoorji Pallonji Group sought to pledge its shareholding in Tata Sons to raise funds. The Tata Group objected to this and won a stay from the Supreme Court.
Mistry seeks representation in the company in proportion to the stake held by his family. The Supreme Court left the question of the valuation of Tata Sons’ shares open.