Mistry prevails

Over three years after Cyrus Pallonji Mistry was dislodged in a boardroom coup, the National Company Law Appellate Tribunal (NCLAT) has reinstated him as the executive chairman of Tata Sons. The order is an embarrassment for the Tatas, one of India’s most respected behemoths, even as they have the option of filing an appeal in the Supreme Court. Mistry, scion of the affluent Shapoorji Pallonji family, had been removed under controversial circumstances, something that was not expected of a $110-billion conglomerate famed for its fairness and transparency. The Tatas had cited Mistry’s alleged failure to lead from the front and ‘deliver on the promises he had made at the time of his selection as the chairman’ for his ouster. Mistry, however, had claimed that he was removed as he tried to ‘remedy past acts of mismanagement’ and resisted the ‘interference’ of the group’s chairman emeritus, Ratan Tata.

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The tribunal’s decision is vindication of the rights of minority shareholders, who are usually not in a position to call the shots. The Mistry family is now at liberty to sell or retain its nearly 18 per cent shareholding in Tata Sons. Making it clear that an autocratic approach won’t be tolerated, the NCLAT has ordered Ratan Tata not to take in advance any decision which requires the concurrence of the majority of the Board of Directors.

The next round of the high-stakes Tata-Mistry battle is likely to be fought in the Supreme Court. Last month, the SC had reversed the appellate tribunal’s order, thereby paving the way for Essar Steel’s takeover by global steel giant ArcelorMittal. No matter who emerges as the winner eventually, the bottom line is that a legendary group can afford to do way with a democratic setup only at its own peril, especially when its financial condition is worse than it was in 1990-91. Reluctance to do introspection and course correction can prove disastrous in the dog-eat-dog corporate world. It makes good business sense to protect the interests of all stakeholders, big or small.