NCLAT restores Cyrus Mistry as Tata Sons head; holds N Chandrasekaran's appointment illegal

The NCLAT however stayed the operation of the order with respect to reinstatement for four weeks to allow the Tatas to appeal.

18th Dec 2019
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In a big win for Cyrus Mistry, the National Company Law Appellate Tribunal (NCLAT) on Wednesday restored him as executive chairman of Tata Sons and ruled that the appointment of N Chandrasekaran as the head of the holding company of the salt-to-software conglomerate was illegal.


The NCLAT however stayed the operation of the order with respect to reinstatement for four weeks to allow the Tatas to appeal.


Cyrus Mistry

Cyrus Mistry




Setting aside a lower court order, the NCLAT also quashed the conversion of Tata Sons into a private company from a public firm.


Mistry, a scion of the wealthy Shapoorji-Pallonji family, was removed as chairman of Tata Sons in a coup in October 2016. He was the sixth chairman of Tata Sons and had taken over in 2012 from Ratan Tata.


However, Mistry and Tata family patriarch Ratan Tata had reportedly fallen out over key investment decisions, including the manufacturing of the world's cheapest car, Nano. Mistry was later also removed as director of the Tata Sons board.


Mistry, whose family owns a 18.4 percent stake in Tata Sons, challenged his removal in the National Company Law Tribunal (NCLT). The case of oppression and mismanagement against Tata Sons and 20 others, including Ratan Tata, filed by Mistry family entities⁠—Cyrus Investments and Sterling Investments⁠—were in March 2017 dismissed by the NCLT, which ruled that they were not eligible to pursue the allegations.


Section 244 of the Companies Act, 2013, allows a shareholder of a company to bring an oppression and mismanagement case against the firm if it holds not less than one-tenth of the issued share capital.


On appeal, the Cyrus Mistry firms had secured a partial win at the NCLAT, which waived the 10 percent shareholding requirement but remitted the matter to the NCLT.


In July last year, the NCLT rejected Mistry's petition to reinstate him and found no merit in his allegations of operational mismanagement and oppression of minority shareholders.


Mistry had approached the appellate tribunal against the verdict of the Mumbai NCLT. The NCLAT had reserved its judgment after completion of arguments from both sides in July this year.


The judgment was pronounced by a two-judge bench headed by Justice S J Mukhopadhyay on Wednesday.


(Edited by Athirupa Geetha Manichandar)




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