‘Sets dangerous precedent’: Tata Sons petitions SC against order on Cyrus Mistry
Tata Sons Ltd moved the Supreme Court on Thursday against last month’s tribunal to reinstate Cyrus Mistry as executive chairman of the $100 billion-plus global conglomerate and restore him as director in the three group companies. In a strongly-worded appeal, the company argued the tribunal’s order was completely inconsistent with the annals of corporate law and set a dangerous legal precedent.
The Supreme Court is currently closed for winter break and will reopen on January 6. The court registry is, however, functional. The company had made it clear soon after the National Company Law Appellate Tribunal delivered its verdict last month that it would not let the verdict go unchallenged.
The comprehensive and sweeping ruling by the NCLAT’s two-member bench headed by chairperson Justice SJ Mukhopadhaya had also ruled that the Tata Sons’ transition from a public company to a private company was against Indian law.
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The bench ruled that Cyrus Mistry’s 2016 ouster was illegal and his successor N Chandrasekaran would have to return the business group’s leadership to him.
Cyrus Mistry, who had not asked for his reinstatement as executive chairman in his petition to the tribunal. had described the ruling as a victory for the principles of good governance and minority shareholder rights.
Tata Sons appeal in the Supreme Court underscored that the tribunal had gone beyond the specific reliefs sought by Mistry.
Tata Sons argued that as per the procedure applicable to corporate appointment and set out in the companies act, 2013, the NCLAT adopted an approach inconsistent with corporate democracy and the rights of shareholders and gave no reasons on why Mistry’s removal was illegal.
“It is nobody’s case that such removal violated any law or any contract. The Hon’ble NCLAT has imported principles from the realm of public law and eschewed relevant principles that apply to corporate democracy, which are based upon the right of the shareholder to cast a vote. No reasons were given by the Hon’ble NCLAT on how the process of replacement and removal was wrong and illegal”, the petition states.
News agency Press Trust of India said the firm had challenged the complete order of the tribunal judgement and sought a stay on it in the wake of Tata Consultancy board meeting scheduled to be held on January 9.
A lawyer who appeared for Tata Sons at the NCLAT hearing on Thursday confirmed that the petition challenging its order had been filed in the top court.
The tribunal bench was hearing a request by the Registrar of Companies to seek modifications in the order in Cyrus Mistry’s case. The bench asked the Ministry of Corporate Affairs to submit details of the definition of private and public companies under the rules of the Companies Act. The bench has also sought clarification on the paid up capital requirement for the same.