The apex court observed that the tribunal seems to have committed errors in adjudicating and ‘seems to lack powers to pass the directions that it has’.
The Supreme Court has stayed the National Company Law Appellate Tribunal (NCLAT) order reinstating Cyrus Mistry as Tata Sons executive chairman, observing that there were 'lacunae' in the orders passed by the tribunal.
The apex court observed that the tribunal 'seems to have committed errors in adjudicating and seems to lack powers to pass the directions that it has' and that it will 'have to hear the matter in detail'.
A three-judge bench comprising Chief Justice SA Bobde and Justices BR Gavai and Surya Kant said there was no prayer in the petition for reinstatement of Mistry but the tribunal went ahead with it and ordered his reinstatement. "We find there are lacunae in the judicial orders passed by the NCLAT," the bench said issuing notices to Mistry and others.
The court was hearing a petition filed by Tata Sons (TSPL) challenging the tribunal’s decision restoring Mistry as executive chairman of the Tata Group.
TSPL has challenged NCLAT’s December 18 decision that gave a big relief to Cyrus Investments and Mistry, restoring him as the executive chairman of TSPL, and ruling that the appointment of N Chandrasekaran as the head of the holding company of the $110-billion salt-to-software conglomerate was illegal.
The bench posted the matter after four weeks.
But in a relief to Mistry, the top court ordered the Tatas to not exercise power under Article 25 of the Company Law for pushing out shares of minority holders in the company. The bench said no effort has been made to make the Pallonji Group dilute their shareholding.
Senior advocate C A Sundaram, appearing for the company Cyrus Investment Pvt, submitted that instead of staying the NCLAT order, notice should be issued and two weeks be given for filing the reply.
However, the bench said, "Our first impression is not good about the order of the tribunal. The tribunal granted the prayer, which was not prayed."
The Mistry's side wanted to place a note about interim arrangement which was not accepted by the bench. Senior advocate NK Kaul appeared for Mistry while senior advocate Shyam Divan was appearing for the shareholders which were on Mistry's side.
During the hearing, Sundaram said he was not pressing for the consequential relief of reinstatement of Mistry but was against the wrongful removal of Mistry from Tata. He said Mistry wants his nominee to be placed on the Tata Sons board.
Senior advocates AM Singhvi, Harish Salve, Mukul Rohatgi and Mohan Parasaran represented the Tatas.(With PTI inputs)Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.