NCLAT holds N Chandrasekaran’s appointment as Tata Sons Chairman illegal and restores Cyrus Mistry as chairman of Tata Group.
In a big blow to the Tata Sons Ltd, the National Company Law Appellate Tribunal (NCLAT) on Wednesday, 18th Dec 2019, held that appointment of N Chandrasekaran as Executive Chairman of Tata Sons as illegal. It also restored Cyrus Mistry as the Chairman. The court also said Tata Sons’ move to turn private from a public company was unlawful and ordered a reversal.
“The restoration order will take effect after four weeks and Tata has the option to challenge the ruling in the Supreme Court.”
Cyrus Mistry was appointed as Tata Sons Executive Chairman in November 2011, replacing Ratan Tata who slipped into the role of Chairman Emeritus, a role he continues to be in. Mistry was removed by the board from the role in October 2016 and subsequently ejected from all Tata companies after successive company boards withdrew their faith in him. Current Tata Sons Executive Chairman N. Chandrasekaran took over the reins in February 2017.
Mistry, whose family owns an 18.4 percent stake in Tata Sons, challenged his removal in the National Company Law Tribunal (NCLT). The case of oppression and mismanagement against Tata Sons and 20 others, including Ratan Tata, filed by Mistry family entities.
Commenting on the judgment, Cyrus Mistry said, “Today’s judgment isn’t a personal victory for me, but is a victory for the principles of good governance & minority shareholder rights. The outcome of the appeal is a vindication of my stand.”
Tata Sons questioned NCLAT’s order and said it would take appropriate legal recourse. “The NCLAT order appears to even go beyond the specific reliefs sought by the Appellant [Cyrus Mistry]. Tata Sons strongly believes in the strength of its case and will take appropriate legal recourse,” the company said in a statement.
