Cyrus Mistry’s sack is upheld

In a significant ruling, the National Company Law Tribunal on Monday upheld the October 24, 2016, decision of the Tata Sons Board dismissing its then Chairman Cyrus Mistry, which Mistry's office termed as "disappointing" hinting that they would approach the higher tribunal.

The NCLT ruled that the Tata Sons board was competent to remove the executive Chairman and that Mistry was ejected as the board members had lost confidence in him.

Rejecting Mistry's plea to reinstate him on the Board of Tata Sons, the NCLT pointed out that he (Mistry) had openly gone against the Board, and hence against the company.

The much-awaited verdict came on a petition filed by Mistry after he was abruptly ousted as the Tata Sons Chairman, creating an upheaval in the Indian corporate world.

Mistry later quit from the board of six other Tata Group companies but challenged the Group and his successor, the

former Interim Chairman Ratan Tata's decisions, before the NCLT.

The petitioners alleged, among other things, abuse of articles of association by outsiders, breakdown of governance and loss of ethical values. Official sources indicated that Mistry is likely to challenge the NCLT verdict before the Appellate Tribunal. They further contended that Mistry was sacked as Chairman and later as Tata Sons director as a result of "oppression by promoters who are in turn owned by Tata Trusts.

The petition also listed how the Articles of Association "were violated and misused to give powers to the majority shareholders to subvert the interests of the minority shareholders and interests of the company." Alleging "massive revenue losses" for the group owing to the alleged mismanagement by Tata Sons board and Ratan Tata, the petition sought to point out Ratan Tata's relationship with C. Sivasankaran and his companies, which resulted in providing them with ex gratia favours' without any 'quid pro quo' for the Tata shareholders or their group companies. It had also sought a forensic audit into such dealings. However, the NCLT dismissed all the allegations and rejected Mistry's plea to reinstate him on the Tata Sons Board. "The judgement has only re-affirmed and vindicated that Tata Sons and its operating companies have always acted in a fair manner and in the best interest of its stakeholders,’’ said Tata Sons Chairman N. Chandrasekaran in a statement.