Supreme Court Allows Tata Sons Appeal Against NCLAT Order To Reinstate Cyrus Mistry As Chairman

In a big win for Tata Sons Ltd, the Supreme Court on Friday allowed its appeal against the order of the National Company Law Tribunal, which had ordered to reinstate the ousted Chairman Cyrus Mistry.The Court allowed the appeal of Tata Sons, answering all questions of law framed in the case in its favour, and set aside the NCLAT order. The appeals filed by Shapoorji Pallonji group and Cyrus Mistry were dismissed.The Top Court held that the actions of Tata Sons board against Mistry did not amount to oppression of minority shareholders or mismanagement. The bench also said that it was open for Tatas and Mistry to work out their separation terms. The reasoning of the bench will be know when the full copy of the judgment is released.A 3- judge bench comprising of Chief Justice of India SA Bobde, Justice AS Bopanna and Justice V Ramasubramanian pronounced the judgment. It was on December 17 last year that the bench reserved judgment in the case after hearing a battery of Senior Advocates including Harish Salve, Shyam Divan, CA Sundaram, Dr AM Singhvi, Janak Dwarakadas, Mohan Parasaran etc.The NCLAT, in its order passed on December 18, 2019, had quashed the decision taken by the Board of Tata Sons in October 2016 to remove Mistry as the Chairman and had directed to restore Mistry.The present legal battle has its genesis in the company petitions filed by Shapoorji Pallonji Group under Sections 241 and 242 of the Companies Act 2013 alleging oppression and mismanagement in Tata Sons. These petitions were filed in the wake of Mistry's removal. The NCLT Mumbai bench dismissed the petitions, against which appeals were filed in NCLAT. On December 18, 2019, The National Company Law Appellate Tribunal restored Cyrus Mistry as the Executive Chairman of Tata Group. Allowing Mistry's appeal, the Appellate Tribunal had set aside the judgment of Mumbai bench of National Company Law Tribunal (NCLT) that had upheld the appointment of N Chandrasekharan as Chairman in his place. The said NCLAT order was stayed by the Apex Court in January 2020 whereas the judgment was reserved on 17th December 2020. Tatas v Cyrus Mistry : 15 Grounds Of Challenge Against NCLAT OrderQuestions of Law FramedThe Supreme Court framed the following questions of law :(i)Whether the formation of opinion by the Appellate Tribunal that the company's affairs have been or are being conducted in a manner prejudicial and oppressive to some members and that the facts otherwise justify the winding up of the company on just and equitable ground,is in tune with the well settled principles and parameters,especially in the light of the fact that the findings of NCLT on facts were not individually and specifically overturned by the Appellate Tribunal ?(ii)Whether the reliefs granted and the directions issued by the Appellate Tribunal, including the reinstatement of CPM into the Board of Tata Sons and other Tata companies, are in consonance with the pleadings made, the reliefs sought and the powers available under Subsection (2) of Section 242(Companies Act 2013) ?(iii)Whether the Appellate Tribunal could have, in law,muted the power of the Company under Article 75 of the Articles of Association, to demand any member to transfer his ordinary shares, by simply injuncting the company from exercising such a right without setting aside the Article ? iv)Whether the characterisation by the Tribunal, of the affirmative voting rights available under Article 121 to the Directors nominated by the Trusts in terms of Article104B, as oppressive and prejudicial, is justified especially after the challenge to these Articles have been given up expressly and whether the Tribunal could have granted a direction to RNT and the Nominee Directors virtually nullifying the effect of these Articles ?(v)whether the reconversion of Tata Sons from a public company into a private company, required the necessary approval under section 14 of the Companies Act, 2013 or at least an action under section 43A(4) of the Companies Act,1956 during the period from 2000 (when Act 53 of 2000came into force) to 2013 (when the 2013 Act was enacted)as held by NCLAT?All questions of law were answered in favour of the Tata Group.Stand of Tata Sons Calling the NCLAT direction to reinstate Cyrus Mistry as Chairman to undermine the principles of corporate democracy, it was the case of Tata Sons group that NCLAT lacked jurisdiction for such restoration especially when such a relief was not sought. According to Tata Sons, NCLAT lacked jurisdiction to declare it as a "Public Company" when it is a "Private Company" under sec. 2(68) of the Companies Act 2013.During the course of hearing in the matter, it was submitted by Harish Salve that "It has always been a private company. The curious thing which has happened in the ...

Supreme Court Allows Tata Sons Appeal Against NCLAT Order To Reinstate Cyrus Mistry As Chairman

LIVELAW NEWS NETWORK

Tags