The Supreme Court on March 26 ruled in favour of Tata Sons, allowing the conglomerate's appeals against the National Company Law Appellate Tribunal (NCLAT) order reinstating Cyrus Mistry as Chairman.
The apex court set aside the December 17, 2019 NCLAT order which allowed reinstatement of Mistry as Chairman of Tata Sons and as a director on the board.
The SC also dismissed appeals filed by Mistry-family controlled Shapoorji Pallonji Group, which owns an 18.37 percent stake in the salt-to-steel conglomerate.
"All the questions of law are liable to be favoured for Tata group. The appeals are allowed by Tata group," Chief Justice of India (CJI) SA Bobde said, as quoted by legal news website Bar & Bench.
A bench comprising of Chief Justice Bobde and including Justices AS Bopanna and V Ramasubramanian pronounced the judgment. The SC bench had reserved the judgment in the case on December 17, 2020.
Also read: Cyrus Mistry vs Tata Sons: A timeline of events that led to the split
The SC said it cannot adjudicate on fair compensation for Shapoorji Pallonji Group for their holding in Tata Group companies.
"We cannot adjudicate on the question of compensation and they can take route under Article 75. Order of NCLAT is set aside. Appeal by Tata group is upheld. Appeal by SP group is dismissed. Appeal by Cyrus Investments is dismissed," Chief Justice Bobde said.
"We leave it to Tata Sons, Mistry to take legal route to resolve issue of shares. Value of Tata Sons shares depends on equity," he said.
Share prices of Tata group companies rose as much as 6 percent intraday after the SC's ruling.
Also read: Tata group stocks rise up to 6% after Supreme Court rules in favour of Tatas against Mistry
Ratan Tata, Chairman Emeritus of Tata Sons, said he is grateful for the judgment.
"It is not an issue of winning or losing. After relentless attacks on my integrity and the ethical conduct of the group, judgement upholding all the appeals of Tata Sons is a validation of values and ethics that have always been the guiding principles of the group," he said in a tweet.
VR Mehta, Tata Trust told CNBC-TV18 that the "Supreme Court's order is a great relief; The legal battle leaves a lot of scars. Cyrus Mistry's Group wanted to show as if Tata Sons was a partnership firm. The SP Group was only a shareholder in Tata Sons. The issue of valuation can ultimately be resolved."
The feud between the two parties began in 2016 after Mistry was ousted as Chairman of the conglomerate. N Chandrasekaran was subsequently appointed as Executive Chairman of Tata Sons.
Further, in a statement following the verdict, Tata Sons said, "The judgement of the Hon'ble Supreme Court vindicates the position of Tata Sons and upholds the governance standards adopted by the Tata Group over the years. Tata Sons is grateful to the Hon'ble Supreme Court. "
"Tata Group remains deeply committed to continue its efforts towards development of the nation and building the business, keeping the long-term interest of shareholders and the community at large," it added.
Also read: In Article 75, has Supreme Court handed the advantage to Tata Sons Vs Cyrus Mistry?
Here's what happened previously:
> In February 2017, Mistry had filed a suit alleging oppression and mismanagement at the company. In July that year, the National Company Law Tribunal (NCLT) dismissed his petition, and said Tata Sons can’t be prevented from becoming a private company. Mistry then appealed the decision in the NCLAT, which ruled in his favour.
> Tata Sons in January 2020 challenged the NCLAT decision before the Supreme Court, and the top court stayed the tribunal's judgment. The NCLAT had ruled that Mistry's dismissal as Chairman of Tata Sons was illegal.
> In September 2020, Shapoorji Pallonji said it would separate from Tata Sons. The Mistry family had offered a share swap agreement, which was rejected by the conglomerate.
> In a reply to the petition in December 2020, Mistry had said Ratan Tata should reimburse all the expenses to the group since his departure in December 2012. Mistry had succeeded Ratan Tata as Chairman of the group in 2012.