NCLT verdict favours Tata Sons; Cyrus Mistry to appeal against order, terms ruling as 'disappointing'

As the National Company Law Tribunal (NCLT) today dismissed pleas of Cyrus Mistry challenging his removal as Tata Sons chairman, Mistry said he would appeal against the NCLT, Mumbai, order which he termed as "disappointing although not surprising". A statement from his office said, "We will continue to strive for ensuring good governance and protection of interests of minority shareholders and all stakeholders in Tata Sons from the wilful brute rule of the majority." 
 
In a ruling today, a special bench of the tribunal said it was not accepting Cyrus Mistry's contentions that his removal was due to the result of mismanagement by the board and oppression of minority shareholders of the group.
 
The statement from Mistry's office, however, said, "The ruling is in line with the earlier position expressed by the tribunal. An appeal on merits will be pursued." Further, it said the matters like TTSL, Air Asia, 'recovery of dues' from serial entrepreneur C Sivasankaran, non-closure of a loss-making Nano, a struggling resolution of Tata Steel Europe and all present serious issues will be pursued.
 
"Not only the facts that were under consideration but also subsequent facts and developments that continue to evidence oppression and mismanagement will be under scrutiny and will be pursued in full earnest," the statement added.
 
Under the Companies Act 2013, an order of NCLT can be challenged before the National Company Law Appellate Tribunal, said a PTI report. 
 
Cyrus Mistry was ousted as Tata Sons Chairman in October 2016. Two months later, he and his family-run investment firm, Cyrus Investments, approached the NCLT as minority shareholders against the corporate monolith and others, including Ratan Tata, alleging oppression and mismanagement.
 
Mistry had reportedly alleged that Tata Trust chairperson Ratan Tata and trustee N Soonawala interfered with the day-to-day operations of the group companies. He also alleged that they acted as shadow directors, and all of the above caused massive revenue loss for the group.
 
The Tata Group, however, had denied all charges stating that Mistry was removed because the Board had lost confidence in him. 
 
Welcoming the order, Tata Sons Chairman N Chandrasekaran expressed hope that "a finality will be given to the judgement of NCLT, by all concerned in the larger interest of companies, the shareholders and the public".
 
"The judgement has only re-affirmed and vindicated that Tata Sons and its operating companies have always acted in a fair manner and in the best interest of its stakeholders," the PTI report citing his statement said.
 
He reportedly said the Tata Group has always been committed and will continue to be committed to transparency and good corporate governance of global standards.
 
NCLT bench members B S V Prakash Kumar and V Nallasenapathy said that Mistry was ousted as chairman because the Tata Sons' Board and its majority shareholders had "lost confidence in him".
 
Reading out the judgement's operative part, the bench reportedly said, "he (Mistry) admittedly sent out crucial information related to the Tata firms to the Income Tax department, leaked information to the press, and after he came out in public against the company and its board members".
 
"The removal of Cyrus Mistry as executive chairperson was because the board lost confidence and not because they were contemplating that he would cause discomfort to Ratan Tata, Soonawala (N Soonawala, the group trustee), and other answering respondents...", it said, adding "The Board is competent to remove an executive chairman. Mr Mistry's removal from the position of director came because he admittedly sent out company information to the I-T (department), press, and came out in public against the board and the trust."
 
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Meanwhile, the Tata Group had argued that the law clearly allows removal of a chairperson and director and Mistry was removed by a majority of seven out of nine, as Mistry had not voted for his removal and another official had abstained.