Mumbai: In one of the biggest corporate developments of 2019, the National Company Law Appellate Tribunal (NCL-AT) has restored Cyrus Mistry as executive chairman of the Tata Group and reinstated him as a director of Tata Sons and of three Tata Companies.
Shares of Tata Group companies fell after the judgment and several closed in the red.
Mr Mistry was removed as the chairman on October 24, 2016 after helming the Tata Group for over four years. He was appointed in 2012, after Ratan Tata retired. He was the sixth chairman and only the second, after Nowroji Saklatw-ala, to not bear the Tata surname. The NCLAT order will take effect after four weeks, the time window for the Tata Group to appeal the judgment.
Setting aside a lower court order, NCLAT also quashed the conversion of Tata Sons into a private company from a public firm and directed the Registrar of Companies to correct its record showing Tata Sons as a public company. NCLAT’s 172-page order also directed Ratan Tata and nominees of the Tata Trust to desist from any decision that requires a majority decision of the Board of Directors or in the Annual General Meeting.
The order held the appointment of N Chandrasekaran (former TCS CEO) as executive chairman of Tata Group in January 2017 as illegal.
Upholding the interest of minority shareholders and the manner in which Cyrus Mistry was removed, the NCLAT said: “Such power can be exercised only in exceptional circumstances and in the interest of the company. But before exercising such power, reasons should be recorded in writing and intimated to the concerned shareholders whose right will be affected.”
Senior advocate C.A. Sundaram, Cyrus Mistry’s counsel, said: “Cyrus Mistry’s insistence was on corporate governance, protection of minority shareholders’ interest. There has to be corporate governance of impeccable standard.”
Earlier on July 9, 2018, the NCLT had dismissed petitions by two investment firms. Later, Mr Mistry personally approached the NCLAT over the NCLT order....