In tribunal’s order that reinstated Cyrus Mistry, Supreme Court spots a flaw

A bench led by Chief Justice of India SA Bobde stayed the National Company Law Appellate Tribunal, or NCLAT, had granted relief to Cyrus Mistry that he hadn’t even asked for.

The Supreme Court on Friday stayed the NCLAT order of 18 December that reinstated Cyrus Mistry as executive chairman of Tata Sons, the group that fired him in 2016 after he refused to resign.

Tata Group Deputy Chairman Cyrus Mistry attends the annual general meeting of Tata Steel Ltd., in Mumbai August 14, 2012.(File photo: Reuters)

A bench led by Chief Justice of India SA Bobde stayed the National Company Law Appellate Tribunal, or NCLAT, had granted relief to Cyrus Mistry that he hadn’t even asked for. “There is an adjudication error,” Justice Bobde said in his verbal observations as the bench issued notices to Cyrus Mistry.

The bench also asked Tata Sons not to invoke its powers under Article 75 of the company’s Articles of Association that would have enabled compulsory acquisition of shares of a member and can be used to force the exit of Cyrus Mistry family’s Shapoorji Pallonji group from Tata Sons.

Cyrus Mistry has already declared that he would not pursue chairmanship of the India’s biggest conglomerate or directorship at the group companies despite the tribunal order. Mistry, whose family owns about 18% of Tata Sons, however, has said that he will instead seek more rights for minority shareholders in the group.

In its decision, the NCLAT, a quasi-judicial body, had held that the Tata Sons board meeting that sacked Cyrus Mistry and the appointment of his successor N Chandrasekaran was illegal. The tribunal, which reinstated Cyrus Mistry for the “remainder of his term”, also ruled that Tata Sons continues to be a public company though the Registrar of Companies had approved a change in the company’s certification from public to private company.

The NCLAT ruling was challenged by Tata Sons that contended that the NCLAT direction to restore Cyrus Mistry for the remainder of his term which ended in 2017 was “a recipe for disaster’, creates unnecessary confusion and leads to more conflict.

Tata Sons had argued in its petition that the NCLAT granted reliefs which were not prayed for by restoring Cyrus Mistry to his “original position” as the Executive Chairman of Tata Sons. It insisted that the tribunal order was completely inconsistent with the annals of corporate law and sets a dangerous legal precedent.

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