In a big relief for Tata Sons, the Supreme Court has stayed the order of the National Company Law Appellate Tribunal reinstating Cyrus Mistry as the chairman of the Tata Group.
It also sent a notice to Cyrus Mistry and is likely to take up the case again after four weeks. Cyrus Mistry had filed caveats in the case.
On its part, Tata Sons assured the court that it will not invoke provisions relating to the compulsory purchase of the 18% shares of the Shapoorji Pallonji Group, to which Cyrus Mistry belongs.
“There is a complete stay on the NCLAT order. Therefore the status quo ante, the status as remained before the NCLAT order, will remain,” said Mohan Parasaran, one of the lawyers representing the Tata Group.
It is likely therefore that N Chandrasekaran will assume his office as the Tata Group chairman.
Cyrus Mistry was appointed the chairman of Tata Sons — the holding company of the 150-year-old Tata Group — in 2012, when Ratan Tata retired. He is one of the sons of Pallonji Mistry, chairman of construction oriented Shapoorji Pallonji Group, which holds around 18.4% of Tata Sons.
Cyrus Mistry was removed from his positions in 2016. Tata Sons later argued before the NCLAT that he was removed for poor performance, claiming that group companies were making losses and the business situation had not improved significantly in his tenure as the chairman.
The NCLAT rejected the argument, pointing out that the nominations and remunerations committee of Tata Sons had praised Mistry’s performance weeks before he was removed.
It also pointed out that many of the reasons given for the removal had not been discussed in board meeting, and ordered his reinstatement two weeks ago.
Mistry’s removal from Tata Sons board was followed by similar exercises at Tata Group’s firms such as TCS, Tata Motors and so on.
The NCLAT had, while restoring Mistry as the chairman of Tata Sons, also directed his reinstatement on the boards of companies such as TCS, which is now being challenged by the IT company.
Based on legal opinion, said TCS, it, has “on January 3, 2020 filed an appeal in the Hon’ ble Supreme Court of India (i) to set aside the said judgement qua the Company and (ii) in the interim stay on operation of the said judgement to the extent it relates to the company.”
Cyrus Mistry is one of the only three people to be chairman of Tata Sons without a Tata surname.
He was followed soon after by N Chandrasekaran, the former chairman of TCS, who was promoted to Tata Sons chairman.