Ratan Tata Files Separate Appeal Against NCLAT Order Favouring Cyrus Mistry

Ratan Tata, the Chairman Emeritus (former Executive Chairman), of Tata Sons Pvt Ltd has moved the Supreme Court under Section 423 of the Companies Act, 2013 challenging the National Company Law Appellate Tribunal's (NCLAT) order which found him guilty of taking "oppressive and prejudicial steps against the interest of the shareholders of the Tata Sons", particularly Cyrus Mistry.

NCLAT's December 18 order, which had overturned the National Company Law Tribunal's, Mumbai Bench, (NCLT) order, is alleged to have been devoid of any explanation regarding "what the factual or legal foundation of the oppressive and prejudicial grounds is".

Calling the order "prejudicial to the interests of Tata Sons and all its stakeholders", Tata has urged the top court to set aside the NCLAT order. In the absence of such a relief, it is submitted, there would be chaos in the functioning of the company, undermining of shareholder sovereignty, eventually leading to a breakdown in the company's structure of governance.

The findings of NCLAT, including those against Tata having orchestrated the ousting of Mistry from his chair, have been called "wrong, erroneous, (and) contrary to the record of the case" and the judgment has been referred to as "specious not in the least because it reaches the aforesaid conclusion on nothing but a contrived and self-serving reading of certain correspondence". Strongly criticizing the judgment for not appreciating facts and submissions, the appellant has alleged that the tribunal has propagated a selective narrative by glossing over the record.

"The Impugned Judgment is also infirm because it blatantly indulges in propagating a selective narrative where relevant facts and record have been glossed over, submissions made by the Appellant and other Respondents have been ignored and if noticed then are not been dealt with in the Impugned Judgment. The pretense of reasoning and judicial approach is betrayed by omission to consider the record itself."

It has also been clarified that the starting premise of the judgment, that Tata Sons is a "two group company" (Tata Group and Shapoorji Pallonji Group), is also wrong as there has never been a partnership between the Groups. Cyrus Mistry was not made the Executive Chairman of Tata Sons as a representative of the Shapoorji Pallonji Group, but "in a purely professional capacity by a Selection Committee". Tata, who was heading that committee, then goes on to justify the ousting of Mistry.

"Months preceding his eventual replacement, the relationship between Mr. Cyrus Mistry and the Tata Trusts had become discordant and it was strongly felt by the Tata Trusts that he could not provide robust leadership to Tata Sons in future." His leadership was in doubt as he was unable to "disassociate himself from his family business after he became the Chairman of Tata Sons and address any conflict in this regard, which was a condition precedent to his appointment as Chairman of Tata Sons", claims Tata.

He also, allegedly, concentrated power and authority in his own hands and alienated Board members from matters relating to Tata Operating Companies eventually leading to massive financial losses. In addition, submitted Tata, Mistry's reluctance to comply with arbitration orders against Tata, during the spat with Docomo, "brought ill-repute and reputational losses" to the company, which prides itself on honouring its commitments, and became a cause of concern towards its leadership.

Tata Sons has also filed an appeal against the NCLAT order.