New Delhi: In a huge victory for Tata Group, the Supreme Court on Friday accepted all contentions of the Tata conglomerate and set aside the order of the NCLAT, which restored Cyrus Mistry as the executive chairman of the Tata conglomerate.
A bench headed by Chief Justice S.A. Bobde said all questions of law are in favour of Tata Group and dismissed the appeals filed by Mistry. The top court upheld the Tata Sons decision to sack Cyrus Mistry on October 24, 2016.
Shapoorji Pallonji Group counsel had argued that Mistry was removed because he was going to place a draft governance structure at the Board meeting on October 24, 2016.
“We find 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 and Shapoorji Pallonji group is liable to be dismissed,” said the top court.
Value of SP Group shares depends on valuation by Tata Sons equities
The top court said the value of SP Group shares will depend on the valuation by Tata Sons equities and the court will not determine the fair value.
In December 2019, the NCLAT had ruled that the proceedings of the Board meeting of Tata Sons held on October 24, 2016 removing Cyrus Mistry as chairperson was illegal.
Chronology of events
Oct 24, 2016: Cyrus Mistry ousted as Tata Sons chairman, Ratan Tata named as an interim Chairman of the group.
Dec 20: Two Mistry family backed investment firms, Cyrus Investments Pvt Ltd and Sterling Investments Corporation Pvt Ltd, move NCLT Mumbai, alleging oppression of minority shareholders and mismanagement by Tata Sons. They also challenge Mistry’s removal.
Jan 12, 2017: Tata Sons names N Chandrashekaran as Chairman, the then TCS Chief Executive Officer and Managing Director.
Feb 6: Mistry removed as a director on the board of Tata Sons, holding company of Tata group firms.
Mar 6: NCLT Mumbai sets aside plea of the two investment firms of Mistry family over maintainability issue, citing they didn’t meet the criteria of 10 per cent ownership in a company for the filing of a case of alleged oppression of minority shareholders under the Companies Act.
The Mistry family owns 18.4 per cent stake in the closely-held Tata Sons but the holding is less than 3 per cent if preferential shares are excluded.
Apr 17: NCLT Mumbai also rejects plea by the two investment firms seeking waiver in the criteria of having at least 10 per cent ownership in a company for filing case of alleged oppression of minority shareholders.
Apr 27: Investment firms move NCLAT, challenging NCLT order which rejected their petitions over maintainability. They also challenged rejection of their waiver plea.
Sep 21: NCLAT allows pleas by the two investment firms seeking waiver in filing case of oppression and mismanagement against Tata Sons. It, however, dismissed Mistry’s other petition on maintainability saying the firms do not have more than 10 per cent in Tata Sons.
The appellate tribunal directs the Mumbai-bench of the NCLT to issue notice and proceed in the matter.
Oct 5: Two investment firms approach the principal bench of NCLT at Delhi, seeking transfer of the matter from Mumbai to Delhi citing likelihood of bias. The principal bench reserves order on the plea of the two investment firms.
Oct 6: Principal bench of NCLT dismisses the pleas and imposed a cost of Rs 10 lakh on the two investment firms, which was to be shared by both.
Jul 9, 2018: NCLT Mumbai dismisses pleas of Mistry challenging his removal as Tata Sons chairman as also the allegations of rampant misconduct on part of Ratan Tata and the company’s Board. NCLT said it found no merit in his allegations of mismanagement in Tata group firms.
Aug 3: Two investment firms approach NCLAT against the order of the NCLT dismissing his plea challenging his removal as chairman of the company.
Aug 29: NCLAT admits petition filed by Cyrus Mistry in his personal capacity and decided to hear along with the main petitions filed by the two investment firms.
May 23, 2019 : NCLAT reserves its order after completing the hearing in the matter.
Dec 18: NCLAT restores Mistry as executive chairman of Tata Sons, but suspended its implementation for four weeks in order to provide time for Tatas to appeal.
Jan 2, 2020: Tata Sons, challenges NCLAT decision of December 18, 2019 before Supreme Court.
Jan 10: Supreme Court stays NCLAT decision.
Sep 22: Supreme Court restrains Shapoorji Pallonji Group from pledging its share in Tata Sons.
Dec 8: Final hearing in the dispute commences.
Dec 17: SC reserves verdict in the dispute.
Mar 26, 2020: SC delivers its verdict, allows Tata Group’s appeals and sets aside NCLAT order restoring Mistry as executive chairman of the Group.
With inputs from agencies