Tata likely to move apex court in first week of Jan
Appeal will also seek stay on other directions laid down in ruling
MUMBAI: The Tata group is likely to approach the Supreme Court in the first week of January to obtain a stay against the immediate reinstatement of Cyrus Mistry as the director of three Tata group companies from which he was ousted, two people with direct knowledge of the matter said.
The three group companies are Tata Consultancy Services Ltd (TCS), Tata Industries Ltd and Tata Teleservices (Maharashtra) Ltd.
The appeal will also seek a stay on the other directions laid down in the NCLAT order.
The National Company Law Appellate Tribunal (NCLAT) order of Wednesday mandates restoring Mistry as a director immediately in these three companies. So, while Mistry technically becomes a director of these companies from the moment of the NCLAT order, in reality he will have to wait till the boards of these companies meet during the third or fourth week of January to consider the December quarter earnings.
The Tata group hopes to obtain a stay from the Supreme Court on the NCLAT order before the board meetings.
In the meantime, the Tata group is also seeking legal clarity on whether the NCLAT order can supersede shareholder rights and processes, the two people said, requesting anonymity.
Legal opinion is divided on this. While some experts say that shareholder rights rule supreme, others say that the NCLAT order has only gone into the merits and legality of Mistry’s removal as a director.
The NCLAT has ruled that Mistry’s removal from Tata Sons on October 24, 2016 was illegal and that he should be restored as executive chairman of Tata Sons. The court also held the appointment of N Chandrasekaran as the new chairman of Tata Sons as illegal. The implementation of this order has been suspended for four weeks to allow Tata group to appeal.
The second part of the judgement directed that Mistry’s directorship in the three Tata group companies should be restored with immediate effect. The order applies to only three companies as Mistry’s directorship was revoked following an extraordinary general meeting and a shareholder ballot. In the rest of the group companies— Tata Motors Ltd, Tata Chemicals Ltd, Tata Steel Ltd and Indian Hotels Ltd—he had stepped down.
According to Sebi norms, any change in the board of a publicly traded firm can be effected only after stock exchanges are informed about it. So far, no Tata Group company has told stock exchanges about Mistry’s reinstatement as a director.
A spokesperson for Tata Sons said the company is “evaluating and will take appropriate legal recourse”. An email sent to the spokesperson for TCS, the most valuable company in the Tata group, was not answered immediately.