Cyrus Mistry was removed as chairman because Tata Sons Board and its members lost confidence in him, ruled the National Company Law Tribunal (NCLT).
The National Company Law Tribunal (NCLT) on Monday dismissed Cyrus Mistry’s plea for his illegal removal as Tata Sons’ chairman. The Mumbai Bench of the NCLT ruled in favour of Tata Sons saying the board of directors are competent to remove executive directors. The tribunal did not find any merit in legacy issues raised by Mr Mistry against Tata Sons. NCLT ruled that Mr Mistry was removed because Tata Sons Board and its members lost confidence in him.
Mr Mistry was removed because the board and majority of its members lost confidence in him after he sent out certain crucial information about the company to the I-T department, leaked details to the media and came out openly in public against the company’s shareholders and its board, the bench said.
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In his plea, Mr Mistry had said that his removal as Tata Sons’ chairman was illegal. He had also alleged mismanagement at Tata Sons, oppression of minority shareholders, a breakdown of corporate governance and excessive interference by Tata Trusts.
The Tata Group had responded by saying that Mr Mistry’s removal was not illegal and that he was familiar with the affairs of Tata Sons.
Mr Mistry had taken over as the chairman of the salt-to-software group in 2012 after Ratan Tata announced his retirement. Mr Mistry – the sixth chairman of Tata Sons – was removed from his position in October 2016. He was later removed as director on the board of the holding company on February 6, 2017.
Mr Mistry and his family-run investment firm, Cyrus Investments, approached the NCLT, as minority shareholders, against the corporate monolith and others including Mr Tata alleging oppression and mismanagement. The Companies Act mandates that a petitioner should hold at least one-tenth of the issued share capital of a company or represent 10 per cent of the total number of members to file cases alleging mismanagement and oppression of minority shareholders.
After Mr Mistry’s ouster, N Chandrasekaran, who earlier headed Tata Consultancy Services, then took charge as chairman of Tata Sons in February 2017.