NEW DELHI :
New Delhi: Tata Sons Ltd’s chairman emeritus Ratan N. Tata on Friday approached the Supreme Court to challenge an appeals court ruling that censured him for having taken oppressive and prejudicial steps against the interest of the company’s shareholders.
The 18 December National Company Law Appellate Tribunal (NCLAT) judgement held that the decision to remove Cyrus Mistry as Tata Sons chairman was illegal, and he should be reinstated as the chairman of the company and as director of three other group firms. The NCLAT also held that the appointment of a new chairman in his place was illegal.
Ratan Tata, who controls the Tata Trusts, which own two-thirds of Tata Sons, the group’s holding company, claimed in his plea that the NCLAT had held him guilty “without explaining what the factual or legal foundation of the oppressive and prejudicial grounds were".
In his petition, Tata submitted that Mistry was removed since “he had failed to timely capitalize on business opportunities when they presented themselves and Tata Sons’ financial performance, under his tenure, was also deeply unsatisfactory".
Ratan Tata also claimed that Mistry “brought disrepute to the Tata group" by the way he handled the Docomo litigation, a reference to the dispute that broke out after Docomo’s decision to sell its stake in joint venture Tata Teleservices Ltd in 2014. Docomo had initiated arbitration proceedings against Tata Sons, claiming the latter had failed to fulfil its obligation to find a buyer for the company’s stake in Tata Teleservices.
“It was during Mr. Mistry’s tenure that Tata Sons reneged on its word with Docomo under the agreement citing purely legal and technical arguments. Even after an adverse verdict was delivered in the arbitration, Mr. Cyrus Mistry showed complete obstinacy and attempted to resist complying with the legal obligations further. This is not what the Tata Sons brand stands for," Tata’s petition said.
He went on to add that the NCLAT judgement will create a wrong legal precedent, which maybe be misused against several firms, including state-run companies.
The petitioner argued that the findings of the appellate tribunal were “wrong, erroneous, contrary to the record of the case" and, hence, the apex court’s intervention was necessary.
Tata urged the court to set aside the judgement, else it “would cause chaos in the functioning of Tata Sons, undermine shareholder sovereignty and lead to a break-down of its governance structure".
Meanwhile, the NCLAT on Friday reserved its order on a plea filed by the Registrar of Companies seeking modifications to its judgement. The tribunal may pass an order on Monday.
On Thursday, Tata Sons Ltd had separately moved the apex court against the re-instatement of Mistry as chairman and his immediate re-instatement as director of Tata Sons and the three group companies.