SC stays NCLAT order reinstating Cyrus Mistry as chairman of Tata Sons
Supreme Court has stayed the NCLAT’s order reinstating Cyrus Mistry and chairman of Tata Sons and issued a notice to Mistry. The top court said the NCLAT is seemed to have committed a basic error in adjudicating as there was no prayer for reinstatement.
The NCLAT had in Dec 2019 restored Mistry as executive chairman of Tata Sons and ruled that appointment of N Chandrasekaran as the head of the holding company of salt-to-software conglomerate was illegal.
Tata Sons, the holding company of the salt-to-software conglomerate, moved the top court, challenging the reinstatement.
“Our first impression of the NCLAT judgment is not very good. This tribunal has granted prayer which has not even been prayer,” observed the court, adding that it appears the NCLAT lacks powers to pass the Directions that it has.
Mistry ruled out his return as the chairman of Tata Sons. He told the court that he does not want reinstatement but asked for a seat on the board. He also requested the court not to put a stay on the NCLAT judgement and that Tata Sons should not invoke powers under Article 75 to compel Pallonji Group to sell its stake.
Mohan Parasaran, former solicitor general and lawyer for Tata Sons, said the court, prima facie, was of the view that the judgement was totally erroneous and therefore it was inclined to grant an interim stay.
“We gave an assurance to the court that we will not invoke the power of compulsory purchase under Article 75 of the constitution with regards to the shares owned by the Shapoorji Pallonji group, which is duly recorded by the court,” he said.
The court has adjourned the matter for filing a reply by the parties and will take up the matter for due consideration in about four weeks or so, he added.
Article 75 empowers Tata Sons to purchase the shares of any shareholder at a price to be valued which will be the fair market price.
“If we express that power then the entire appeal become infructuous. Therefore, considering all aspects until the very validity of that power is also a challenge. We thought it will be prudent to give them the undertaking pending the appeal,” said Parasaran.Supreme Court has stayed the NCLAT’s order reinstating Cyrus Mistry and chairman of Tata Sons and issued a notice to Mistry. The top court said the NCLAT is seemed to have committed a basic error in adjudicating as there was no prayer for restored Mistry as executive chairman of Tata Sons and ruled that appointment of N Chandrasekaran as the head of the holding company of salt-to-software conglomerate was illegal.
Tata Sons, the holding company of the salt-to-software conglomerate, moved the top court, challenging the reinstatement.
“Our first impression of the NCLAT judgment is not very good. This tribunal has granted prayer which has not even been prayer,” observed the court, adding that it appears the NCLAT lacks powers to pass the Directions that it has.
Mistry ruled out his return as the chairman of Tata Sons. He told the court that he does not want reinstatement but asked for a seat on the board. He also requested the court not to put a stay on the NCLAT judgement and that Tata Sons should not invoke powers under Article 75 to compel Pallonji Group to sell its stake.
Mohan Parasaran, former solicitor general and lawyer for Tata Sons, said the court, prima facie, was of the view that the judgement was totally erroneous and therefore it was inclined to grant an interim stay.
“We gave an assurance to the court that we will not invoke the power of compulsory purchase under Article 75 of the constitution with regards to the shares owned by the Shapoorji Pallonji group, which is duly recorded by the court,” he said.
The court has adjourned the matter for filing a reply by the parties and will take up the matter for due consideration in about four weeks or so, he added.
Article 75 empowers Tata Sons to purchase the shares of any shareholder at a price to be valued which will be the fair market price.
“If we express that power then the entire appeal become infructuous. Therefore, considering all aspects until the very validity of that power is also a challenge. We thought it will be prudent to give them the undertaking pending the appeal,” said Parasaran.