The Tata-Mistry feud that hogged the limelight in the past two years is all set to intensify with Cyrus Mistry deciding to challenge the NCLT verdict that went against him today.
The much-awaited NCLT ruling, which came in as resounding victory for the Tatas, was hailed by many including the group patriarch Ratan Tata.
Earlier in the day, the Mumbai bench of the National Company Law Tribunal (NCLT) dismissed the petitions filed by the Mistry family alleging oppression of minority shareholders and corporate governance issues at the biggest corporate entity in the country.
The NCLT said it is not accepting Mistry's contentions that his removal was due to the result of mismanagement by the board and oppression of minority shareholders of the group.
The Mistry family owns a tad over 18.3 per cent in Tata Sons, the holding company of the Tata Group, which in turn is 66.8 per cent owned by over a dozen Tata Trusts, the largest public charity in the country.
Welcoming the NCLT verdict, Ratan Naval Tata, the chairman of the Tata Trusts, said "The judgement is a vindication of the actions that Tata Sons felt obliged to take in October 2016."
It can be noted that Tata, the chairman emeritus of the salt-to-software group, was personally accused of wrongdoings by Mistry after his October 24, 2016 dismissal.
"It is a reinforcement of the principles and forthrightness that prevails in our judicial system, which should make all of us proud of our country and its democracy," Tata said in a statement.
On the other hand, a statement from Mistry's office described the ruling as "disappointing although not surprising".
"The ruling is in line with the earlier position expressed by the tribunal. An appeal on merits will be pursued," it said.
"We will continue to strive for ensuring good governance and protection of interests of minority shareholders and all stakeholders in Tata Sons from the wilful brute rule of the majority," the statement from Mistrys office added.
An NCLT order can be challenged before the National Company Law Appellate Tribunal (NCLAT), and an NCLAT's decision can be challenged in the Supreme Court.
In a rare interaction with the media after his dismissal, Mistry had in early 2017 said that he "is young and that he has a long time to seek justice".
Welcoming the order, Tata Sons chairman N Chandrasekaran hoped "a finality will be given to the judgement of the NCLT, by all concerned in the larger interest of companies, the shareholders and the public."
"The judgement has only reaffirmed and vindicated that Tata Sons and its operating companies have always acted in a fair manner and in the best interest of its stakeholders," Chandrasekaran said.
The Tata Group has always been committed and will continue to be committed to transparency and good corporate governance of global standards, the chairman added.
Two months after Mistry was ousted as Tata Sons chairman in October 2016, he and his family-run investment firm, Cyrus Investments, moved the NCLT, which had initially dismissed his petitions, saying his under 10 per cent ownership did not make him a minority shareholder.
Mistry challenged the verdict at the NCLAT, which not only asked the Mumbai bench to hear the plea afresh and also waived the minimum ownership norms.
Meanwhile, corporate advisory firm Ican Advisors' founder Anil Singhvi said the NCLT ruling is a "big disappointment for minority shareholders rights".
"I hope Mistry goes to the Supreme Court and settle the matter once and for all," Singhvi told PTI.
Similarly, Shailesh Haribhakti, a noted corporate governance expert and chairman of leading auditing form Desai Haribhakti, said though the order is a resounding victory for the Tata group, "I am of the view that Mistry should take appropriate legal advice to move forward to the Supreme Court or accept the decision as final."
Singhvi said two things are involved in this verdict: One is that minority shareholders should have a say in the affairs of a company in which they are capital investors.
"Just because the promoters have brute majority does not mean that the capital of the minority shareholders have no value and thus no say," he pointed out.
The second issue is of fairness. "Dismissal of a chairman is not any other agenda that the majority in the board can just shrug it aside," he said.
Singhvi hoped that the Supreme Court considers this as the rarest of rare case in corporate governance and rule accordingly.
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