The Mumbai Bench of the National Company Law Tribunal (NCLT) will deliver its judgement on an 18-month bitter legal battle between Tata Sons and its former chairman Cyrus Mistry Group on July 9. The verdict was scheduled for judgement today. The verdict is expected to pull the curtains down on the bitter feud between Tata Sons and the dismissed chairman Cyrus Mistry and set a landmark precedent for corporate feuds.
The allegations pointed out by Mistry includes mismanagement at Tata Sons, oppression of minority shareholders, corporate governance breakdown, excessive interference by Tata Trusts. Mistry claims that his removal from the group was illegal and there has been an abuse of Articles of Association and violation of insider trading norms. Tata Sons, however, rejected Mistry’s claims and blamed his misconception and silence when endured the stated problems during his tenure as a chairman.
Further, Mistry alleged Ratan Tata’s involvement in influencing the decision of the board of members of Tata Sons. Ratan Tata was accused of aviation misadventure, Nano project, and flawed global acquisition strategy. In rebuttal to the allegations, Ratan Tata said that an invitation to be chairman emeritus was extended to him by Mistry who actively sought guidance from Tata. Regarding the foreign acquisitions and Tata Sons’ investment, Ratan Tata claimed that decisions in the aviation sector were unanimously taken by the Tata Steel Board. On November 2016, Ratan Tata said, “This difficult decision (to remove Mistry) was made after careful and thoughtful deliberation, is one of the board (of Tata Sons) believes was absolutely necessary for the future success of the Tata Group.”
The hearing on the Tata Sons-Cyrus Mistry case lasted from October 2017 to February 2018.
Cyrus Mistry was first removed from the Chairman post in Tata Sons on October 24, 2016. Subsequently, on November 9, Tata Sons sacks Mistry as Chairman of TCS. On November 15, Tata Global Beverages removes Mistry as Chairman and on November 25, Tata Steel sacks him as Chairman.
On December 20, 2016, after resigning from the boards of six listed Tata firms, Mistry filed a legal suit in the NCLT against the Tata Sons.
Mistry wanted NCLT to replace the Tata Sons board with new independent directors, including an administrator or a retired SC judge. He did not want the trustees to interfere in the affairs of the Tata group companies. Mistry requested NCLT to restrain the interim chairman from attending the board meetings of the company. To deal with the transactions of AirAsia, Mistry requested the NCLT to appoint an independent auditor. Further, Mistry was seeking to restrain Tata Sons from entering new business contracts without the tribunal’s permission.
The legal feud between Mistry and Ratan Tata has been replete with defamation suits, affidavits, emails and letters, unprecedented in the 150-year-old history of Tata Group as well as corporate India.