3 years 2 months has been the duration of the battle and the final leg of the showdown at the Hon’ble Supreme Court still remains.
It has been a thriller sequence of a legal battle that saw the 172 page judgment by National Company Law Appellate Tribunal (attached for your kind reference)
Justice Sudhansu Jyoti Mukhopadhyaya has been known for his news hitting judgements. He was the one who recently has given unsecured operational creditors the same rights to recovery as secured financial lenders under the Insolvency and Bankruptcy Code, something which later was struck down by the Supreme Court.
He was first non-Tata scion to be CEO and also the first to be fired.
The headlines in a renowned newspaper were “Mistry Back. So is Mystery’. Their earlier headline in 2016 was ‘Mistry Ends: Mystery Begins’
Amongst others, the judgement says:
a) The removal of Mr. Mistry has been termed illegal and his position as Executive Chairman of Tata Sons has been restored with 4 weeks of suspension for this decision to be effective. The window of 4 weeks will also serve for Tata Group taking legal remedy.
b) Since the current chairman appointment has become illegal, Mr Ratan Tata takes over as Interim Chairman.
c) Mr Mistry will become Director in Tata Sons and other 3 Tata companies forthwith.
d) The conversion of Tata Sons into private company has also been decided as illegal.
If we read the judgement – Company Appeal (AT) No. 254 of 2018, we found how the relationship between ‘SP Group’ and ‘Tata Family’ evolved over the last 50 years and the role of Article 75. The core dispute is whether the holding company is a quasi-partnership between the Tata Group and the 154-year-old Shapoorji Pallonji, or SP, Group, which is now run by Shapoor Mistry, the elder brother of Cyrus. Was it a partnership, where Mr. Mistry’s rights as a minority shareholder were suppressed. Or was he just a professional CEO, then the board was perhaps within its rights to fire him for non-performance.
Purely from an academic perspective, without commenting on the righteous of the same or taking sides, I would entreat you to read the judgement about the sore points: Article 121 in Articles of Association of Tata Sons, so called “legacy hotspots” – Nano project, Indian Hotels, TTSL, Tata Steel Europe, role of Mr N.A. Soonawala and Mr. Nitin Nohria- Dean of Harvard Business School, appraisal report of ‘Nomination and Remuneration Committee’ etc. The Tata Group’s argument on falling dividends, the lacklustre performance of the Tata Group sans TCS, the INR 9,000 crores worth acquisition in Tata Power of the Welspun renewables acquisition.
The sequence of events covers almost every point one can teach in B-schools today, from corporate governance to conflict management and succession planning. However, undoubtedly it will do down the annals of history as one of the darkest chapters.
What are your observations?
Thanks & Regards!!