INTRODUCTION
Tata Consultancy Services (TCS) is a Tata Sons division that was established on April 1,1968. It is a global Indian information technology (IT) services and consulting firm located in Mumbai, Maharashtra, India. Cyrus Mistry is an Indian businessman. He was the Chairman of the massive Tata Group business from 2012 until 2016. He also serves as a director of Cyrus Investments Private Limited.
TIMELINE OF DISPUTES
When Ratan Tata stepped down as Chairman of Tata Sons Limited in December 2012, Cyrus Mistry was appointed by a Tata Group selection panel. Cyrus Mistry was removed as chairman of Tata Sons Limited by a majority of the Board of Directors in October 2016 for lack of confidence. On January 12, 2017, Tata Sons appoints N Chandrashekaran, the then-TCS Chief Executive Officer and Managing Director, as Chairman of Tata Sons Limited. Cyrus Mistry was dismissed from Tata Sons’ board of directors by a shareholder vote at a general meeting in February 2017. Following that, Cyrus Mistry filed a complaint with the National Company Law Tribunal (NCLT), Mumbai, alleging oppression of minority shareholder rights and operational mismanagement by Tata Sons.
CHARGES THAT CYRUS MISTRY’S MADE ON TATA SONS
• Tata Sons abused their powers under few articles and Tata Trust
exercised control over the Tata Sons board.
• Tata Groups’ transactions with Siva and Sterling Group of Companies.
• Tata Trusts engaged in a fraudulent transaction involving Rs. 22 crore
in Air Asia.
• The losses sustained in the Nano automobile project clearly
demonstrate the Tata Group’s persecution of minority shareholder
rights and mismanagement.
• Tata Trusts overpaid for the acquisition of Corus.
NATIONAL COMPANY LAW TRIBUNAL (NCLT) VERDICT
The NCLT Mumbai Bench dismissed all accusations brought against Tata Sons in July 2018. The bench further determines that Tata Sons’ Board of Directors is competent to remove Cyrus Mistry from his position as Chairman of Tata Sons Limited. The bench ruled that Cyrus Mistry made the allegation about Air Asia with impunity, disregarding all legal considerations. Concerning the Nano project claims, the NCLT ruled that they were made without Tata Motors being a party to the litigation. The NCLT also dismissed accusations regarding Tata Group’s acquisition of Corus and transactions with Shiva and Sterling Group.
NATIONAL COMPANY LAW APPELLATE TRIBUNAL (NCLAT) VERDICT
The National Company Law Appellate Tribunal (NCLAT) overturned the NCLT, Mumbai Bench decision in December 2019 and ruled in favour of Cyrus Mistry. According to the NCLAT, Mistry’s removal as Chairman of Tata Sons was illegal. The NCLAT further directed that Cyrus Mistry be reinstated as chairman of Tata Sons and that N Chandrasekaran’s appointment to the chairmanship of the over USD 100 billion salt-to-software conglomerate be deemed ‘illegal.’
TATA’S CONTENTIONS
Tata Sons and Ratan Tata filed a petition with the Supreme Court in January 2020, challenging the NCLAT verdict. In their appeal, Tata Group maintained that there was no wrongdoing on the side of Tata Group in the removal of Cyrus Mistry as chairman of Tata Sons Limited in October 2016, and that the board was “well within its rights to do so.”
SUPREME COURT VERDICT
On March 26, 2021, the Supreme Court issued its long-awaited decision in the Tata-Cyrus Mistry case. The decision was made in favour of the Tata Group. The bench dismissed all claims of oppression and mismanagement made against Tata Sons Limited by businesses controlled by Cyrus Mistry.
Cyrus Mistry filed review petition challenging Supreme Courts Order, was accepted by Supreme Court on 15 February 2022. This review petition was dismissed plea seeking review of 2021 verdict upholding removal of Cyrus Mistry as head of Tata Sons on 19 May 2022.