Supreme Court sets aside its own ruling on NCLAT order

Supreme Court sets aside its own ruling on NCLAT order

It had ruled in favor of Tata Sons in its dispute with the Shapoorji Pallonji Group

The Supreme Court has agreed to hear in the open court the review petition filed by Shapoorji Pallonji (SP) Group. The construction and real estate company had challenged the apex court's verdict in the dispute between Tata Sons Limited and Cyrus Mistry in which the court had ruled in favor of Tata Sons.

The order was passed by a three-judge bench of Chief Justice NV Ramana, Justice AS Bopanna and Justice V Ramasubramanian.

The order read, "The applications seeking exemption from filing the affidavits are allowed. The applications seeking an oral hearing of the review petitions are allowed."

In his dissenting opinion, Justice Ramasubramanian said, "I have carefully gone through the review petitions and do not find any valid ground to review the judgment. The grounds raised in the petitions do not fall within the parameters of a review. Hence, the applications seeking an oral hearing deserve to be dismissed."

The petitions will be heard in the open court on March 9.

In its earlier judgment, the Supreme Court had set aside the December 2019 order of the National Company Law Appellate Tribunal (NCLAT), which had reinstated Cyrus Mistry as the Chairperson of Tata Sons Limited.

The top court had answered all legal questions involved in the dispute in favor of Tata Sons bringing quietus to the half-decade old legal battle, which started in 2016 with the removal of Mistry as Tata Sons Chairman.

The bench of then Chief Justice SA Bobde, Justice AS Bopanna and Justice V Ramasubramanian had allowed the appeal filed by Tata Sons against the NCLAT judgment and dismissed the appeals filed by Mistry and SP Group.

Background

Mistry had taken over as the Chairman of Tata Sons, in December 2012. But the majority of the Board of Directors of the company removed him from the post in October 2016. Subsequently, at an Extraordinary General Meeting convened in February 2017, the shareholders voted for his removal. Thereafter, N Chandrasekaran took over as the Executive Chairman of Tata Sons.

Two Shapoorji Pallonji firms (shareholders in Tata Sons), moved the NCLT over Mistry's removal alleging 'oppression' of the minority shareholders and 'mismanagement.'

In July 2018, NCLT dismissed the petition against which an appeal was filed by the SP Group before the NCLAT. The NCLAT overturned the NCLT order prompting the current appeals before the Supreme Court.

Tata Sons had claimed in its petition that the NCLAT had granted relief that was not prayed for by restoring Mistry to his 'original position; as the Executive Chairman of Tata Sons and declaring the appointment of Chandrasekaran the incumbent Executive Chairman of Tata Sons as illegal.

The plea highlighted that Mistry's tenure as the Chairman and Director of Tata Sons expired in March 2017. A direction by NCLAT to allow him to continue as a functionary beyond the term would be contrary to the articles of association of the company and the established principles of the company laws.

In its cross-appeal, the SP Group contended that the NCLAT failed to give certain crucial relief to Mistry. It claimed that the firm was entitled to representation in all committees formed by the Board of Directors of Tata Sons. It also sought to strike down of placing the right of affirmative vote in the hands of the select directors of Tata Sons, which would enable them to override the view of the entire board.

In its 2019 judgment, the NCLAT had held that the proceedings of the Board meeting of Tata Sons held in October 2016 removing Mistry as the Chairperson was illegal.

It had also directed that Ratan Tata, the former Chairman of Tata Sons, should not take any decision in advance, which required a majority decision of the Board of Directors of the company or a majority in the Annual General Meeting.

Both Tata Sons and Mistry had challenged a 2019 order of the tribunal.