Supreme Court Allows Cyrus Mistry’s Appeal Against NCLAT’s Decision, Tags Ratan Tata’s Appeal

The Apex Court allowed Cyrus Mistry’s cross-action appeal against NCLAT’s decision on May 29, 2020. Explicitly, the judgement had reinstated Mistry to his post of Executive Chairman of Tata Group. Via this appeal, Mistry sought expansive relief against the judgement. Correspondingly, a bench of Justices AS Bopanna & Hrishikesh Roy tagged Ratan Tata and Tata Group’s appeal since both were against the same judgement.

A Historical Take on the Judgment

The appeal against NCLAT’s decision can be traced back to the 2019 judgement of the Appellate Tribunal. NCLAT, in December 2019, had restored Cyrus Mistry as the Executive Chairman of Tata Group. This was in response to an appeal by Mistry against the decision of the NCLT. The Appellate Tribunal had reversed the decision of the Tribunal which had upheld the appointment of N. Chandrasekharan as the Chairman in his stead.

The Tata Group, in retaliation, went onto to seek a stay against the Appellate’s judgement. Supreme Court granted the said relief on January 10, 2020. Furthermore, the Tata Group filed a plea in the Tribunal seeking modification of this judgement; which stood rejected on January 24, 2020. The Apex Court responded by issuing a notice against the Appellate Tribunal’s actions.

NCLAT’s Response

NCLAT justified that Mistry’s dismissal had not been a result of his poor performance, for the Directors on the Nomination and Remuneration Committee appreciated his work. Mistry had occupied a chair on that Committee while being a part of the Tata Group. Furthermore, referring to Article 121 of Articles of Association, the tribunal held that losses incurred by the Tata Group could not be made accountable against Mistry’s management. Moreover, the tribunal also sought a response from the Tata conglomerate regarding the recent change adopted by the company. According to sources, Tata Sons Ltd. went from a Public Company to Private Company without following the due process.