End To India Inc's Nastiest Long-Drawn Boardroom War: SC favours Tata Group

New Delhi: In a major victory for the Tata Group, the Supreme Court on Friday set aside a National Company Law Appellate Tribunal (NCLAT) order restoring Cyrus Mistry as the executive chairman of Tata Sons Private Ltd (TSPL).

A Bench of Chief Justice SA Bobde, justices AS Bopanna and V Ramasubramanian said "it's allowing the appeals filed by the Tata Group. The order of NCLAT dated December 18, 2019, is set aside," 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 can't 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, 2020, 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.

The SP Group had told the top court that Mistry's removal as the chairman of TSPL at a board meeting held in October 2016 was akin to a 'blood sport' and 'ambush,' in complete violation of the principles of corporate governance and in pervasive violation of the Articles of Association in the process.

The Tata Group had vehemently opposed the allegations and denied any wrongdoing, saying the board was well within its right to remove Mistry as the chairman. The top court had, on September 22 last year, restrained the SP Group and Mistry as also his investment firm from pledging or transferring their shares in TSPL.

The SP Group, which owns 18.37 per cent shares in TSPL, had said the latter moved the top court to block its plan to pledge shares for raising funds and that reeked of vindictiveness and oppression of minority shareholder rights.

The apex court had, on January 10, 2020, granted relief to the Tata Group by staying the NCLAT order, by which Mistry was restored as the executive chairman of the conglomerate. Mistry had succeeded Ratan Tata as the chairman of TSPL in 2012, but was ousted four years later.

TSPL had earlier told the top court that it was not a 'two-group company' and there was no 'quasi-partnership' between it and Cyrus Investments Private Limited. In his reply to the Tatas' petition challenging his reinstatement by the NCLAT order, Mistry had also demanded that group chairman emeritus Ratan Tata should reimburse all the expenses to TSPL since his departure in December 2012, in keeping with the best global governance standards.

Mistry is seeking representation in the company in proportion to the 18.37-per cent stake held by his family, according to the cross-appeal. TSPL, formerly known as Tata Sons Limited, had sought setting aside of the NCLAT order in toto, alleging that it was "completely inconsistent with the annals of corporate law" and reflected "non-appreciation of facts", which was "untenable in law".

The NCLAT had held that the group's chairman emeritus Ratan Tata's actions against Mistry were oppressive and the appointment of a new chairman was illegal. It, however, had stayed the operation of its order with respect to Mistry's reinstatement for four weeks to allow TSPL to file an appeal in the top court.

"In other words, far from putting an end to the alleged acts complained of, the judgment (of the NCLAT) has sown the seeds for a never-ending discord and conflict between shareholders of the appellant (TSPL), creating a recipe for an unmitigated disaster," the Tata Group had said.