Its TATA bye-bye for Mistry
Its TATA bye-bye for Mistry
One of the most keenly watched corporate war in India had a fascinating end with the Supreme Court giving a green signal to Cyrus Mistry's sacking as Tata Sons chairman
Industrialist, philanthropist, visionary, nationalist - Ratan Tata wears many hats with equal ease. On Friday, another hat came his way that of a dogged fighter with the Supreme Court giving green signal to the 2016 decision of Tata Sons to fire it's then chairman Cyrus Mistry.
Mistry was largely a mystery when Ratan Tata started grooming him as his successor. Ratan Tata, when he took over as the Tata Sons chairman from one of the most famous Tatas, JRD Tata, had made and implemented a rule regarding the retirement of senior executives. He lived by that and took voluntary retirement in 2012 upon completing 75 years of age.
Ratan Tata was always unconventional and it was breaking a tradition when he nominated Cyrus Mistry, a scion of the Shapoorji Pallonji Group and a distant relative, as his successor. Mistry was the second non-Tata as chairman of the salt to software Tata Group in its 144 years old history after Nowroji Saklatwala, the third chairman of the group. Nowroji, however, had better credentials when he became chairman in 1932 as he was a nephew of the group found Jamshetji Tata compared to Mistry who is the brother in law of Ratan Tata's half brother Noel Tata.
All appeared going as planned by Ratan Tata initially until he got alerted. He realised this Mistry was not a mistri (mason) who would build the group. Mistry had started chipping away the old blocks as he began to sidelining the old guard and started appointing young CEOs in different Tata Group companies, much to the chagrin of mentor. The dispute started spiralling out in the public and soon daggers were drawn out with Ratan Tata baying for the head of his once protege and Mistry trying to hold the fort.
Four years after his ceremonious entry in the iconic Bombay House as Tata Sons chairman, Mistry faced an ignominious exist with the Tata Sons Board taking an unprecedented decision to sack its chairman as well as from its Board despite the Mistry family's 18.47 per cent shareholding in the company, making them the largest non-majority shareholder.
Not ready to take as fait accompli, Mistry decided to start a legal battle royale that dragged to three forums. Mistry moved to the National Company Law Tribunal (NCLT), accusing Tata Sons of oppression and mismanagement. NCLT gave him no succour, ruling in favour of Tata Sons, which had named Ratan Tata as its interim chairman in place of Mistry.
The disgraced sacked Tata Sons chairman appealed against the NCLT ruling with the National Company Law Appellate Tribunal (NCLAT), which ruled in his favour, ordering his reinstatement as Tata Sons chairman in December 2019. Tata Sons then knocked on the doors of the Supreme Court which stayed the NCLAT order in January 2020 before settling the issue in favour of Tata Sons.
A judge bench of the Apex Court on Friday (26 March 2021) allowed all petitions of the Tata Group and dismissed all petitions by Mistry's Shapoorji Pallonji Group. The bench was headed by Chief Justice SA Bobde. Justices AS Bopanna and V Ramasubramanian mere other members on the bench.
"The order of National Company Law Appellate Tribunal (NCLAT) dated December 18, 2019 is set aside," the bench said.
It was not that easy even for the Supreme Court to come to a conclusion. It ended up hearing both sides in December 2020, reserved the order and took almost three months to announce its verdict.
Interestingly, law of the land, despite being written in black and white, are all about interpretation. It became amply and vividly clear when the same set of laws were interpreted differently by three forums, NCLT and the Supreme Court ruling in favour of Tata Sons and the NCLAT ordering Mistry's reinstatement.
The Supreme Court had set before itself four key questions to decide upon:
⦁ Whether the NCLAT order, including reinstatement of Mistry on the Tata Sons and group company boards, is in consonance with provisions of Section 242?
⦁ Whether the characterisation by the tribunal of the affirmative voting rights as oppressive are justified?
⦁ Whether the tribunal could have granted a direction to Ratan Tata and the nominee directors virtually nullifying the effect of these articles?
⦁ Whether the reconversion of Tata Sons (from public to private company) acquired the necessary approvals?
"All the questions of law are liable to be answered in favour of the appellants Tata Group and the appeals filed by the Tata Group are liable to be allowed and SP Group is liable to be dismissed," the Apex Court ruled.
Although the details of the Supreme Court order are yet to be made available, it might not be the end of the high-profile tug of war as Mistry's team of lawyers might appeal for review of the order before a larger bench.
However, for the time being, Rata Tata has emerged victorious. "I appreciate and am grateful for the judgement passed by the honourable Supreme Court today. It is not an issue of winning or losing. After relentless attacks on my integrity and the ethical conduct of the group, the judgement upholding all the appeals of 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," Ratan Tata said on his official Twitter handle hours after the Apex Court ruled in his favour on Friday.