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Supreme Court sets aside NCLAT order on Cyrus Mistry as Tata's chairman

NEW DELHI: Rejecting the arguments that the ouster of Shapoorji Pallonji (SP) group’s scion Cyrus Mistry as the chairman by the Tata Sons Private Limited (TSPL) Board was 'oppressive,' the Supreme Court (SC) on Friday upheld the decision of the Tata Sons board in October 2016 to remove him from office and later from the company’s board.

A three-judge bench comprising of Chief Justice of India Sharad A Bobde, Justice A S Bopanna and Justice V Ramasubramanian pronounced the judgment in a 282-page judgment dismissed allegations by Mistry’s side of oppression of minority shareholders like SP group (SP group holds 18.37% shares) by the Tatas, who hold the majority stake. 

Ruling in favour of the multi-billion salt-to-software diversified conglomerate TSPL, the apex court set aside a National Company Law Appellate Tribunal (NCLAT) decision to reinstate minority shareholder Mistry, as its Executive Chairman.

The apex court dismissed the NCLAT’s observations that affairs inside TSPL were so 'prejudicial and oppressive' that the company deserved to be wound up.

The court held that while Mistry was initially only removed from the post of Executive Chairman of TSPL however his subsequent actions, like the leaking of supposedly 'confidential' mail to the media which created a sensation and passing on information to the Income Tax authorities claiming to be a law-abiding citizen, led to his removal as a director.

The court also trashed arguments of Mistry’s side that the 'oppressive' regime of Ratan Tata had led to bad business decisions for almost a decade.

Chief Justice Bobde noted, "It is interesting to note that at the time of his appointment in December 2012, what Mistry saw and acknowledged, was a ‘great learning experience he had under the direct guidance of Ratan Tata, but at the time of departure in October 2016, what he saw was only a conduct for over 10 years, that was oppressive and prejudicial to the interests of the company and of the minority."

On the question of valuation of shares of SP group, the court said that it depends on the value of the stakes of TSPL. The court left it to Tatas and SP group to reach a fair compensation on the latter’s shares either by taking the Article 75 route or by any other legal means.

Fifty-two years old, Mistry was handpicked to lead Tata Group after a global hunt and took over as the sixth chairman of the group in 2012, only the second (after Nowroji Saklatwala) to not bear the surname Tata after Ratan Tata retired on turning 75.

However, in October 2016, the TSPL board sacked Mistry as chairman as Ratan Tata emerged from retirement to wrest back control of the group that bears his family name, which was challenged by Mistry in NCLAT which had ordered to reinsate him, a judgement which was challenged by the Tata's in the SC. 

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