Tatas may move SC against judgement

MUMBAI/NEWDELHI: Tata Sons will likely be able to challenge the National Company Law Appellate Tribunal’s (NCLAT) order reinstating Cyrus Mistry as executive chairman of Tata Sons on several grounds, several lawyers said.

The Tata group is expected to take all legal recourses, including moving the Supreme Court.

Legal recourses, including interim relief before the Supreme Court, are likely to be fully activated before January 18, according to lawyers—the outside limit of the four-week deadline given by the tribunal to appeal against the order.

Lawyers said the group may appeal before the Supreme Court at the earliest to secure an injunction against the NCLAT order from taking effect, and to ensure an early hearing.

In October 2016, Mistry was suddenly removed as Tata Sons’ executive chairman.

A senior lawyer, who spoke on the condition of anonymity, said that Tata Sons will have the option to argue against the NCLAT’S judgment that says Tata Sons’ decisions were “prejudicial” and “oppressive”, and that the company misused its powers against Mistry under the company’s Articles of Association.

While the appellate tribunal’s order said that such powers can be exercised “only in exceptional circumstances and only in the interest of the company”, the verdict affects the reputation of the Tata group, which it could possibly challenge, the lawyer added.

Since the Shapoorji Pallonji Group itself has been a shareholder in Tata Sons for several decades, and has been a witness to the drafting of the Articles of Association, it may be hard to argue against the provisions, especially as they have chosen to remain in the company despite being aware of the contents, another lawyer said, also requesting anonymity.

At present Shapoorji Pallonji holds an 18% stake in Tata Sons and Cyrus Investments holds over 10% in the company.

Tata Trust is a core investment company and over 90% of its income comes from dividends from its investments in the various group companies that it controls.

Tata Sons may challenge remarks on “mismanagement”, given that it controls a large number of group companies. Even if the court gets into a long-drawn litigation process, it could possibly result in the appellate tribunal’s order not taking effect.