NCLAT restores Mistry as Tata Sons Chairman
19 Dec 2019 08:40:39
NEW DELHI :
Says, appointment of N Chandrasekaran illegal
The tribunal directs Ratan Tata to stay away from operations of the Tata board
Quashes order allowing conversion of ata Sons into a private company from a public firm
IN A big win for Cyrus Mistry, the National Company Law Appellate Tribunal (NCLAT) on Wednesday restored him as Executive Chairman of Tata Sons and ruled that appointment of N Chandrasekaran as the head of holding company of salt-to-software conglomerate was illegal. The NCLAT 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. 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. In his plea, Mistry had, among other allegations, said that there is external interference in the operations of Tata Sons and the interests of the minority shareholders were oppressed.
Thereby, in another major blow for Ratan Tata, the former Group Chairman, the tribunal directed him to stay away from the operations of the board. 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 per cent 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 per cent shareholding requirement but remitted the matter to the NCLT.
The bench further said that the NCLT Mumbai bench’s order dismissing Mistry’s charges against the group over his ouster was avoidable. In July last year, the NCLT rejected Mistry’s petition to reinstate him and found no merit in his allegations of operational mismanagement and oppression of minority shareholders. Tata Sons Chairman & directors to be appointed in consultation with Mistry Camp: NCLAT: FUTURE appointments of Chairman and other board members of Tata Sons must be done in consultation with the minority shareholder Shapoorji Pallonji Group, the NCLAT said on Wednesday while ordering reinstatement of ousted Chairman Cyrus P Mistry.