Ratan Tata wins the fight against Cyrus Mistry in SC

  • The Supreme Court allowed all appeals by the Tata Group and upheld its decision to sack Cyrus Pallonji Mistry as the chairman and executive director of the group.
COURSE OF EVENTS
  • On October 24, 2016, Mistry was removed from his post of Chairman of Tata Sons by the board.
  • He was appointed to the top position in 2012.
  • Following his ouster, Mistry had moved the Mumbai bench of the National Company Law Tribunal (NCLT) challenging his removal.
  • He said that the majority shareholder of Tata Sons, the Tata Group was indulged in oppression of minority shareholders of the group. 
NCLT AND NCLAT 
  • In its 2017 judgment, the NCLT upheld Mistry’s removal from as Executive Chairman and Director.
  • It had observed that just because the board of Tata Sons had held a board meeting at short notice or included the item agenda (that removed Mistry from his post at the top) at the last minute, it could not be termed as a fraud.
  • In December 2019, the NCLAT had reinstated Cyrus Pallonji Mistry to the position of Executive Chairman of Tata Sons and Director of the Tata Group of companies for the remainder of his tenure. 
  • It had also termed Tata Group’s decision to convert from a public limited company to a private company was “prejudicial and oppressive to the minority members and depositors” and, therefore, illegal.
SC RULING 
  • A three-judge bench led by Chief Justice of India Justice S A Bobde set aside the entire December 2019 order of the National Company Law Appellate Tribunal (NCLAT) that reinstated Mistry to his post.
  • The three-judge SC bench also held that it would not go into the details of the compensation to be awarded or adjudicate on whether Tata Group could or could not use Article 75 of its Articles of Association.
  • The court also held that there was no oppression of minority shareholders of the Tata Group or any mismanagement at Tata Sons.
NCLT
  • The National Company Law Tribunal is a quasi-judicial body in India that adjudicates issues relating to Indian companies. 
  • The tribunal was constituted on 1 June 2016 by the government of India under the Companies Act 2013.
  • It is based on the recommendation of the V. Balakrishna Eradi committee on law relating to the insolvency and the winding up of companies.
  • The NCLT bench is chaired by a Judicial member who is supposed to be a retired or a serving High Court Judge and a Technical member who must be from the Indian Corporate Law Service, ICLS Cadre.
NCLAT
  • The National Company Law Appellate Tribunal (NCLAT) is a tribunal under Section 410 of the Companies Act, 2013. 
  • It is responsible for hearing appeals from the orders of National Company Law Tribunal(s) (NCLT).
  • The tribunal also hears appeals from orders issued by the Insolvency and Bankruptcy Board of India under Section 202 and Section 211 of IBC. 
  • It also hears appeals from any direction issued, decision made, or order passed by the Competition Commission of India (CCI).
  • The Tribunal is currently headed by Chairperson Justice Bansi Lal Bhat.

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