Tata Sons moves SC against NCLAT order on Cyrus Mistry

Tata Sons Private Ltd on Thursday approached the Supreme Court, challenging the validity of the NCLAT order of December 18, restoring Cyrus Mistry as executive chairman of the company.

It contended the direction would set a dangerous legal precedent, as it “undermined corporate democracy and the rights of its board of directors”, besides being completely inconsistent with the annals of corporate law and reflecting non-appreciation of facts.

In a big relief to Mistry and Cyrus Investment Pvt Ltd, the NCLAT had restored him as the executive chairman of TSPL and ruled that the appointment of N Chandrasekaran as the head of the holding company of the over-USD-110 billion salt-to-software conglomerate was illegal.

Maintaining that it was “gravely aggrieved and prejudiced by the direction,” the petition filed by the company alleged that actions initiated by Mistry had caused a threat to the integrity of the board.

“The removal of Mistry as director of three Tata companies on October 24, 2016 was done and voted upon by the shareholders of the respective companies so the order by the NCLAT is plainly illegal,” the TSPL said, adding it was entirely wrong to have attributed motives or malafides on the trusts nominated directors.

The company, likely to be represented by senior advocate A M Singhvi, would seek an urgent hearing on reopening of the court on Monday.

In its petition, the company also said there is no logic and justification to declare the appointment of Ratan Tata as executive chairman of the appellant as illegal since he took over three years ago and was firmly in the saddle.

The appellate tribunal had held that the group's chairman emeritus Ratan Tata's actions against Mistry were oppressive and the appointment of a new chairman was illegal.

The TSPL pointed out Mistry's tenure had already expired on March 31, 2017, so there was no question of allowing him to complete his term as directed by the NCLAT.

“If a person is fit to hold the position of executive chairman is a matter to be decided by the collective commercial wisdom. The proposal for change of guard was initiated by the majority shareholders of the Tata Trusts, which was not on account of some ill-will or animosity against him but in a span of around four years, he had completely lost the trusts and confidence,” it said.

Defending replacement of Mistry as executive chairman and removal as director of Tata Industries, TTSL and TCS, the TSPL said the NCLAT judgement was replete with glaring errors.

The petitioner also contended that the NCLAT had erroneously declared the appellant to have not converted into a private company and on that basis wrongly declared the decision of the Registrar of Companies allowing the change of status as illegal.