Mistry’s plea against removal as Tata Sons’ chief dismissed

Mumbai, July 9 

The National Company Law Tribunal (NCLT) on Monday dismissed pleas of Cyrus Mistry challenging his removal as Tata Sons’ chairman as also the allegations of rampant misconduct on part of Ratan Tata and the company's Board.

A special Bench of the tribunal held that the Board of Directors at Tata Sons was "competent" to remove the chairperson of the company.

NCLT Bench members BSV Prakash Kumar and V Nallasenapathy said Mistry was ousted as chairman because the Tata Sons' Board and its majority shareholders had "lost confidence in him".

Reading out the judgment's operative part, the Bench said "he (Mistry) admittedly sent out crucial information related to the Tata firms to the Income Tax Department, leaked information to the press, and came out in public against the company and its Board members".

It further said: "The removal of Cyrus Mistry as executive chairperson was because the Board lost confidence and not because they were contemplating that he would cause discomfort to Ratan Tata, Soonawala (N Soonawala, the group trustee), and other answering respondents...

"The Board is competent to remove an executive chairman. Mr Mistry's removal from the position of director came because he admittedly sent out company information to the I-T (department), press, and came out in public against the Board and the Trust." The Tata Group had argued that the law clearly allows removal of a chairperson and director and Mistry was removed by a majority of seven out of nine, as Mistry had not voted for his removal and another official had abstained. The Bench in its order on Monday agreed with arguments of the Tata Group.

"We have found no merit in the argument that Ratan Tata, Soonawala interfered, or that their conduct caused prejudice to the company's interest. In view of all of the above, we hold that Mr Mistry's removal doesn't call for action under 241 of the (Companies) Act," it said.

According to Section 241 of the Companies Act, any member of a company can make an application to the NCLT for seeking in case the company's affairs are being conducted in a manner prejudicial to public interest, or in a manner oppressive to any member of such company.

The tribunal rejected Mistry's allegations against Tata Sons Board and Ratan Tata of mismanagement of affairs and oppression of minority shareholders. — PTI

Mistry admittedly sent out crucial information related to the Tata firms to the Income Tax Department, leaked information to the press, and came out in public against the company and its Board members. The removal of Cyrus Mistry as executive chairperson was because the Board lost confidence in him and not because they were contemplating that he would cause discomfort to Ratan Tata, Soonawala (N Soonawala, the group trustee), and other respondents — NCLT judgment

"The judgment is a reinforcement of the principles and forthrightness that prevails in our judicial system, which should make all of us proud of our country and its democracy"  — Ratan Tata, Chairman emeritus, TATA group

"It has re-affirmed that Tata Sons and its firms have always acted in a fair manner and in the best interest of its stakeholders" — N Chandrasekaran, TATA Sons chairman