Big win for Tata Sons as SC upholds removal of Cyrus Mistry; dismisses SP groups' appeal

In a huge victory for Tata Sons, the Supreme Court on Friday dismissed the appeals by Cyrus Mistry and upheld his removal as the Chairman of the $100 billion salt-to-software conglomerates in 2016. 

The court pronounced its judgment on the cross-appeals filed by Tata Sons and Cyrus Investments against the 2019 order by the National Law Tribunal to reinstate Mistry as the executive chairman of the company. The Supreme Court had then reserved the verdict.

During the Friday hearing, a bench headed by Chief Justice SA Bobde said the company had the right to to remove Cyrus Mistry as Chairman while answering all other legal questions in favour of Tata Sons.

"We find all the questions of law are liable to be answered in favour of the appellants, Tata Group and the appeals file by the Tata Group are liable to be allowed and Shapoorji Pallonji group is liable to be dismissed," said the judges.

The court also dismissed the Shapoorji Pallonji (SP) group’s plea for fair compensation of their equity shares in Tata Sons. It said that value of the shares will depend on the valuation of Tata Sons’ equities and the apex court would not get into determining a fair value. The bench added that both parties were at liberty to raise the issue at the appropriate forum.

Raian Karanjiwala, Managing Partner for Karanjiwala & Co, who appeared for Tata Sons in the Apex Court told Republic TV, "This is a complete victory for Tata."

The Tata-Mistry case 

Shapoorji Pallonji (SP) Group had told the SC on December 17 that removal of Cyrus Mistry as the chairman of Tata Sons in a board meeting held in October 2016 was akin to a “blood sport” and “ambush." Senior Advocate Shyam Divan, appearing for Mistry, said that his removal was in complete violation of principles of corporate governance. Tata Group, on other hand, had vehemently opposed the allegations and said the board was well within its right to remove Mistry as the chairman. 

Mistry had succeeded Ratan Tata as chairman of Tata Sons in 2012 but was ousted four years later. Tata Sons had earlier told the top court that it was not a 'two-group company' and there was no 'quasi-partnership' between it and Cyrus Investments Pvt Ltd.

In his reply to the Tatas' petition challenging his reinstatement by the NCLAT last December, Mistry had also demanded that group chairman emeritus Ratan Tata should reimburse all the expenses to Tata Sons since his departure in December 2012 in keeping with best global governance standards.