The Supreme Court has on Friday allowed Tata Sons’ appeal against the order of the National Company Law Tribunal, which had ordered to reinstate the ousted Chairman Cyrus Mistry.
The Bench of Chief Justice of India, SA Bobde and Justices AS Bopanna and V Ramasubramanian has 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. Further, the court dismissed the appeals filed by Mistry and Shapoorji Pallonji Group (SP Group).
The apex court held that the actions of the Tata Sons board against Mistry did not amount to the oppression of minority shareholders or mismanagement. The bench also said that it was open for Tatas and Mistry to work out their separation terms.
“We find all the questions of law are liable to be answered in favor of the appellants, Tata Group and the appeals file by the Tata Group are liable to be allowed and Shapoorji Pallonji group is liable to be dismissed,” the Court said.
The order of NCLAT dated 18 December 2019 is set aside, the Court added.
“Company petition no 82/2016 filed by two companies belonging to SP Group shall stand dismissed. Civil Appeal 1802 filed by Cyrus Investments Limited and Sterling Investment Corporation is dismissed. There will be no order as to costs,” the judgment said.
Further, on the plea by SP Group praying for alternate relief directing Tata Sons to cause the separation of ownership interest of SP Group in Tata Sons by extinguishing the shares held by SP Group in lieu of fair compensation, the Court said that it cannot rule on the same instead of asking parties to explore the legal options available to them.
“The valuation of shares of SP Group depends on the value of stake of Tata Sons in listed equities, unlisted equities, immovable assets, etc., and also perhaps the funds raised by SP Group on the security pledge of the shares.
Therefore, at this stage and in this court, we cannot adjudicate on fair compensation. We will leave it to the parties to take the article 75 route or any other legally available route in this regard,” read the judgment.
The NCLAT, in its December 2019 judgment, had held that the proceedings of the Board meeting of Tata Sons held on 24 October 2016, removing Cyrus Mistry as Chairperson was illegal. It had also directed that Ratan Tata should not take any decision in advance which requires majority decision of the Board of Directors of Tata Sons or a majority in the Annual General Meeting.
Mistry took over as Chairman of Tata Sons, in December 2012 and was removed from the post on 24 October 2016 by the majority of the board of directors of the company.