After more than three years of forced exit from the post of the Chairman of Tata Sons, Cyrus Mistry’s dignity has been restored by the appeals court. The National Company Law Appellate Tribunal (NCLAT) – India’s quasi-judicial body dealing with corporate law cases-has ruled that the appointment of N Chandrasekaran’s is illegal.
Cyrus Mistry was sacked from the position of the chairman of Tata Group in October 2016, almost four years after he was appointed in 2012, due to ‘non-performance’. The court has ruled Mistry’s removal as illegal and directed to the group to restore Mistry and group chairman in next four weeks.
Cyrus Mistry who fought for ethical corporate governance at the group, said that this is not a personal victory. “Today’s judgment is not a personal victory for me, but is a victory for the principles of good governance and minority shareholder rights,” said Mistry in a press statement.
Abhishek Singhvi, who appeared for Tata Sons, said that the group will seek legal remedy, including the option of taking the matter to Supreme Court. “Though (the order is) disappointing, we will certainly take the next legal recourse, including the option of moving the Supreme Court, well before the onemonth time given,” said Singhvi.
Tata Group is among most recognizable names of industry, and the Tata vs Mistry was one of the most publicized corporate legal battles in the country.
Tata Group, founded in 1868, is among the most familiar industrial houses of the country. It carries a legacy of more than one and a half century, and known to be ‘human face of industry’.
Tata Group, owned by Tata Trusts, has 29 publicly listed Tata enterprises with a combined market capitalization of about $151.62 billion as of March 1, 2018. It includes Tata Steel, Tata Motors, Jaguar Land Rover with its marques Jaguar and Land Rover, Tata Consultancy Services, Tata Power, Tata Chemicals, Tata Global Beverages, Tata Coffee, Tata Teleservices, Titan, Tata Communications, and The Indian Hotels Company Limited (Taj Hotels). The combined revenue of the group is above 100 billion dollars, as of March 2019.
Since Ratan Tata took over the group in early 1990s, the group has also been involved in many corruption controversies like 2G scam, Air Asia scam, the Vistara partnership and the Jaguar deal. A few weeks ago, the Income Tax Department has delivered a 12,000 crore rupees blow to Tata Trusts, as the government authority has cancelled the registration of six Tata Trusts.
As per the website of the group, 66 percent of Tata Sons is owned by trusts which ‘promote education, health, culture, and livelihood initiatives in India’. But, the Comptroller and Auditor General of India found that the company had invested 3,139 crore rupees in ‘prohibited modes of investment’, and this resulted in loss of 1,066 crore rupees to exchequer. Investment with the aim to make profit is prohibited in for trusts and societies, but, the Tata Trusts did the same.
According to some reports, Cyrus Mistry, whose family holds 18 percent share in Tata Sons (second largest after Tata Trusts- 66 percent), was instrumental in getting the Tata’s caught red handed. He provided the I-T department plethora of documents to prove that Tatas are saving tax through illegal means.
Tata is among the most trusted institutions in the country. The group often brands itself as ‘human face of industry’, the corruption and tax evasion will definitely erode the public trust enjoyed by Tatas. The latest blow to Tata from the NCLAT will prove a big blow to the group, as well as the public standing of Ratan Tata.