One of the country’s biggest corporate boardroom battles took another turn on Monday with the National Company Law Tribunal (NCLT) dismissing Cyrus Mistry’s petition against a Tata Sons decision to remove him as its Chairman.
But the two-year-old case may not be completely closed as the Mistry camp plans to move the appellate tribunal against the order of the NCLT’s Mumbai bench.
On Monday, in a courtroom bursting at the seams, the NCLT Bench of BSV Prakash Kumar and V Nallasenapathy dismissed Mistry’s plea accusing Tata Sons of oppressing minority shareholders and of mismanagement. The bench said there was “no merit” in the allegations. It also ruled that a company’s board was competent to dismiss its Chairman and that Mistry’s ouster was a result of Tata Sons’ loss of confidence in him.
The NCLT did not find any merit in the legacy issues that Mistry had raised, or in the charges against Tata Sons Chairman Emeritus Ratan Tata. It also did not find any merit in the allegations regarding C Sivasankaran, AirAsia and Tata Nano.
The order stated that it could not restrain Tata Sons from converting itself into a private company. It also dismissed all allegations against Tata Trusts, its trustees and Tata Sons.
Monday’s verdict, after a series of hearings at the Mumbai NCLT and NCLAT in Delhi, also held Mistry responsible for leaking information to the media.
Mistry, the sixth chairman of Tata Sons, from 2012-2016, was ousted following a boardroom coup on October 24, 2016 . A couple of months later, Mistry, through two firms run by his family — Cyrus Investments and Sterling Investments Corp — had moved the NCLT against Tata Sons and others. The Mistry family is the largest shareholder in Tata Sons, holding 18.4 per cent.
Fight to continue: Mistry
Following the NCLT ruling, Mistry’s lawyer Somasekhar Sundaresan said the “fight for good ethical corporate governance and ethical practices will continue”.
In a separate statement, Mistry’s office said: “The ruling of NCLT is disappointing, although not surprising. We will continue to strive for ... good governance and protection of interests of minority shareholders and all stakeholders in Tata Sons from the ... brute rule of the majority.”
“An appeal on merits will be pursued. Matters like Tata TeleServices, AirAsia, recovery of dues from Siva (Sivasankaran), non-closure of a loss-making Nano, a struggling resolution of Tata Steel Europe, all present serious issues...,” it added.
Tatas welcome order
Tata Sons welcomed the order stating that it vindicates the position of Tata Trusts and Tata Sons.
“The judgement has only re-affirmed and vindicated that Tata Sons and its operating companies have always acted in a fair manner and in the best interest of its stakeholders. The Tata Group has always been committed and will continue to be committed to transparency and good corporate governance of global standards,” said N Chandrasekaran, Chairman Tata Sons.
“Tata Sons hopes that a finality will be given to the judgement by all concerned in the larger interest of companies, the shareholders and the public,” Chandrasekaran added.