NCLAT restores Cyrus Mistry as executive chairman of Tata Group1 min read . Updated: 18 Dec 2019, 04:38 PM IST
- Cyrus Mistry, who was the sixth chairman of Tata Sons, was ousted from the position in October 2016
- Mistry, in his pleas, had argued that his removal was not in accordance with the Companies Act
NEW DELHI : The National Company Law Appellate Tribunal (NCLAT) today restored former Tata group Chairman Cyrus Mistry as executive chairman of Tata Group. The tribunal has also held the appointment of Natarajan Chandrasekaran as executive chairman illegal.
A two-judge bench of the NCLAT said Ratan Tata's actions against Mistry were oppressive and the appointment of a new chairman was illegal, Bloomberg reported. NCLAT has also quashed the conversion of Tata Sons into a private company from a public firm.
The Tatas have the time file an appeal against the order in four weeks as the tribunal said the restoration order will be operational only after four weeks. The Tatas also have the option of challenging the order in the Supreme Court.
As the news came before the closing bell, shares of Tata Motors fell 5.25% to ₹ ₹174.95 on the BSE, Tata Global Beverages tanked 4.14%, Tata Coffee plunged 3.88%, Indian Hotels Company dipped 2.48%, Tata Chemicals fell 1.65%, Tata Investment Corporation 1.22% and Tata Power Company 0.98%.
The Mistry family is the single largest shareholder in Tata Sons, with an 18.4 per cent stake.
Cyrus Mistry, who was the sixth chairman of Tata Sons, was ousted from the position in October 2016. He had taken over as the chairman in 2012 after Ratan Tata announced his retirement. Mistry, a scion of wealthy Shapoorji Pallonji family, and Ratan Tata reportedly had a fallout over key investment decisions, including manufacturing of world's cheapest car Nano.
Mistry in his pleas primarily argued that his removal was not in accordance with the Companies Act and that there was rampant mismanagement of affairs across Tata Sons.
The National Company Law Tribunal (NCLT) had earlier dismissed petitions filed by two investment firms Cyrus Investments Pvt Ltd and Sterling Investments Corp challenging Mistry' removal. There were also allegations of rampant misconduct on part of Ratan Tata and the company’s board.
A special bench of the tribunal had held that the board of directors at Tata Sons was “competent" to remove the executive chairperson of the company. The NCLT bench had also said that Mistry was ousted as chairman because the Tata Sons’ Board and its majority shareholders had “lost confidence in him".
Later, Mistry had approached the NCLAT against the NCLT order.