The Supreme Court on Friday ruled in favour of Tata Sons in its judgement on the cross appeals filed by Tata Sons Pvt Ltd and Cyrus Investments Pvt Ltd against the National Company Law Appellate Tribunal (NCLAT) order which had restored Cyrus Mistry as the executive chairman of the over $100 billion salt-to-software Tata conglomerate. Mistry had succeeded Ratan Tata as chairman of Tata Sons in 2012 but was ousted four years later.
"The order of NCLAT dated December 18, 2019 is set aside," the bench said while pronouncing the verdict and putting at rest the long-drawn legal battle of the salt-to-software Tata conglomerate. It said, "...all the questions of law are liable to be answered in favour of the appellants Tata Group, the appeals filed by the Tata Group are liable to be allowed and (the appeal by) the SP (Shapoorji Pallonji) Group is liable to be dismissed."
The bench, which dealt with the SP Group's contention regarding separation, said the valuation of the group's shares depends upon the value of the Tata Sons' stake in listed equities, immovable assets and others. "...at this stage and in this court, we cannot adjudicate on the fair compensation," it added.
"We will leave it to the parties to take the Article 75 route or any other legally available route in this regard," the bench said.
The SP Group had earlier valued its holding in the Tatas at Rs 1.75 lakh crore. However, during the hearing in the matter before the apex court, the Tatas had, on December 8 last year, said the valuation of the 18.37 per cent shares of the SP Group in Tata Sons Private Limited (TSPL) is between Rs 70,000 crore and Rs 80,000 crore.
In October 2016, Cyrus Mistry was ousted as the Chairman of the Tata Sons Limited during a Board meeting, which was challenged. In December 2019, the National Company Law Appellate Tribunal (NCLAT) judgement held that the proceedings which removed him as Chairperson was illegal, and ordered Cyrus Mistry‚Äôs reinstatement.
The apex court had on January 10 last year granted relief to Tata group by staying the National Company Law Appellate Tribunal (NCLAT) order of December 18, 2019 by which Mistry was restored as the executive chairman of the conglomerate.
The bench headed by Chief Justice SA Bobde and comprising Justices AS Bopanna and V Ramasubramanian reserved the verdict on December 17 last year. Shapoorji Pallonji (SP) Group had told the top court on December 17 that removal of Cyrus Mistry as the chairman of Tata Sons in a Board meeting held in October 2016 was akin to a blood sport and ambush and was in complete violation of principles of corporate governance and pervasive violation of Articles of Association in the process.
Tata Group, on other hand, had vehemently opposed the allegations and said there was no wrongdoing and the Board was well within its right to remove Mistry as the chairman. Senior advocate Harish Salve, representing Tata Sons, had submitted that Mistry walked away from the Board on October 24, 2016 and later wrote a nasty email. Senior advocate CA Sundaram, representing Cyrus Investments, rebutted it, saying that he was removed and had not walked away.
On the final hearing in the matter, Tatas had pointed out that Shapoorji Pallonji (SP) Group's case on quasi-partnership is a misrepresentation of facts and a fiction that they have peddled before the court. It told the top court that Tata Sons was not a 'two-group company' and there was no 'quasi-partnership' between it and Cyrus Investments Pvt Ltd.
The Mistry‚Äôs status is that of an investor and they have got huge returns, Tata Sons said. "They don't have any special rights under the company's articles," Salve had said.
Salve had also submitted that there should be a "selection committee" to "unselect" a person is "nonsensical". "A selection committee selects and recommends a candidate for the position of Chairman. However, the removal can only be done by the Board because only the Board is privy to the incumbent Chairman's work and can take a decision on removal," he argued.
The SP Group counsel argued that Mistry was removed because he was going to place a draft governance structure at the Board meeting on October 24, 2016.
In his reply to the Tatas' petition challenging his reinstatement by the NCLAT last December, Mistry had also demanded that group chairman emeritus Ratan Tata should reimburse all the expenses to Tata Sons since his departure in December 2012 in keeping with best global governance standards. In the cross appeal, Mistry also sought representation in the company in proportion to the 18.37% stake held by his family.
With inputs from PTI and IANS