Supreme Court: Cyrus Mistry’s Termination Was Legal, Can’t Become Chairman Now; Ratan Tata Reacts
Supreme Court in its judgement has set aside the order of the National Company Law Appellate Tribunal (NCLAT) restoring Cyrus Mistry as the executive chairperson of the conglomerate Tata Group. Thanking the Supreme Court for the same, Chairperson Emeritus of Tata Trusts Ratan Tata said that the judgement validated the values as well as ethics which have always been the guiding light for the Tata Group.
Not A Matter Of Winning Or Losing : Ratan Tata
Denying it is a matter of victory or defeat, he added that the judgement is a validation of the values and ethics that have always been the guiding principles of the group, especially after being attacked for integrity and ethical conduct. He said that this is a reflection of how fair and just the judicial system is and is grateful for the judgement passed by the honourable Supreme Court.
Setting aside the NCLAT order from December 18, 2019, the Supreme Court bench headed by Chief Justice of India SA Bobde which also comprised of justice AS Bopanna and justice V Ramasubramanian gave a judgement that 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 whereas those of the Shapoorji Pallonji Group are liable to be dismissed.
What Tata Group & SP Group Had To Say
Post the decision of Tata Group to remove Mistry as the chairperson, the group was alleged for violating the principles of corporate governance and pervasive violation of Articles of Association in the process. Calling the removal of Mistry as chairperson of the $100 billion Tata Sons in a board meeting held in October 2016 as a “blood sport” and “ambush”, the Shapoorji Pallonji (SP) Group approached the top court.
However, the allegations have been denied by the Tata Group which claims to have acted well within its right to remove Mistry as the chairperson and dismisses the contention of any wrongdoing from their part.
Mistry who succeeded Ratan Tata as chairperson of the Tata Sons in 2012, was ousted four years later.
The decision of Mistry’s ouster was defended by the group on the grounds of the fact that the group’s board lost confidence in him and his ability to lead the Tata Group in future. He also added that the removal of Mistry was “absolutely necessary” for the future success of the group. As a counter to his outster, Mistry claimed the removal to be a “illegal coup” which was aimed to cut short his “attempt to bring about reform” at the Tata Group.
The Mistry group owns 18.4% stake in the company whereas the Tata Trusts owns owns a 66% stake in Tata Sons.
Interestingly in what seems to be the biggest intraday gain in more than three weeks, after the ruling in favour of Tata group, shares of Tata Motors Ltd jumped as much as 5.6%. In addition to that the Tata Steel Ltd rallied 6.1%, Tata Consumer Products Ltd gained 2.7% and Tata Consultancy Services Ltd rose as much as 1.7%.