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Tata Sons vs Cyrus Mistry: A timeline of the corporate battle as it unravels in courts

Tata Sons vs Cyrus Mistry: Here's a look at all the events that led to one of the most bitter legal battles ever witnessed in the realm of India's corporate world.

March 26, 2021 / 09:25 AM IST
Tata Group | Representational picture

Tata Group | Representational picture

 
 
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The Tata versus Mistry legal spectacle that is unfolding before the Supreme Court is probably one of the most closely-watched corporate battles in the history of India's business world.

The Supreme Court is scheduled to pronounce on March 26 its judgement on the cross appeals filed by Tata Sons and Cyrus Investments against the NCLAT order which had restored Cyrus Mistry as the executive chairman of the over $100 billion salt-to-software Tata conglomerate.

 

Let's take a look at all the events that led up to one of the most bitter legal battles ever witnessed in the realm of India's corporate world.

October 2016: Cyrus Mistry, then the chairman of Tata Sons, was sacked from his post, a move that took most people by surprise. Ratan Tata was subsequently named interim chairman. Mistry then wrote to Tata Sons' board, accusing the trustees of 'shadow control'. He also denied allegations that the board was not consulted regarding the purchase of Welspun Power.

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December 2016: Cyrus Mistry resigned from all Tata Group firms. Two of the Mistry family-backed investment firms-- Cyrus Investments and Sterling Power-- moved the National Company Law Tribunal (NCLT). They challenged Mistry's ouster from the position, while also alleging oppression of Tata Sons' minority shareholders. However, Mistry was then served a legal notice by Tata Sons for an alleged breach of confidentiality.

January 2017: A contempt plea was filed by the Mistry family in the NCLT where they alleged that Cyrus Mistry's removal from the board of Tata Sons was in violation of the court's December 2016 order whereby none of the involved parties in the dispute was to initiate any action against the other while the matter was under consideration and pending disposal of the company's plea. Meanwhile, former Tata Consultancy Services (TCS) chairman N Chandrasekaran was appointed chairman of Tata Sons.

Februrary 2017: Cyrus Mistry was also removes from the post of director of Tata Sons.

March 2017: Mistry's plea alleging minority shareholders' oppression was deemed 'not maintainable' by the NCLT under provisions of the Companies Act which require at least a 10 percent ownership in such a case. While the Mistry family did own an 18.4 percent stake in Tata Sons, their holding was under 3 percent excluding preferential shares.

April 2017: The waiver of the 10 percent criteria, sought by the two Mistry family-backed firms, was rejected by the NCLT's Mumbai bench. This rejection was then challenged by the firms in the NCLAT, along with the NCLT's dismissal of their petiton alleging minority shareholder oppression.

August 2017: A proposal to turn Tata Sons into a private company was passed by its shareholders.

July 2018: The pleas challenging Mistry's removal from the post of Tata Sons' chairman was rejected by NCLT on the grounds that the ouster followed the company's board having lost confidence in him.

August 2018: Cyrsu Mistry approached the NCLAT in his personal capacity against NCLT order that upheld his removal.

December 2019: Cyrus Mistry was restored as executive chairman of Tata Sons and also said that the manner in which the company's shareholders had given a go-ahead to a proposal to turn it into a private company was illegal.

However, the NCLAT did add a four-month suspension of the implementation of its order in order to allow Tata Sons time to file an appeal. The Tatas then approached the SC where they appealed against the NCLAT order reinstating Mistry as Tata Sons' executive chairman as well as restoring his directorships in the holding company and three group companies. The apex court stayed the order.

January 2020: Cyrus Mistry said he did not seek to return to the position of Tata Sons' chairman. He did, however, mention in a statement that he will be pursuing all options to protect his family's rights as a minority shareholder of the Tata group's holding company, which includes getting back a seat on the board of Tata Sons. His statement came ahead of the SC's hearing on Tatas' plea challenging the December 2019 NCLAT order reinstating Mistry as chairman.

July 2020: Tata Sons reportedly said in court filings that the company's brand value eroded under Mistry's chairmanship, while also adding that the financial performance of group companies declined while he was at the helm. Meanwhile, the Mistry firms said in their affidavit to the SC that Tata Sons had withheld key facts pertaining to the company's operation as a public company. According to the Mistry firms' claims, Tata Sons had always been a public limited company. However, it added that the word 'private' was added into the Tata Sons' name by the Registrar of Companies (RoC) on August 8, 2018, right before the NCLAT hearing on the appeal against NCLT Mumbai's order in the matter.

September 2020:  The SP Group stated before the Supreme Court that a separation from the Tata Group is necessary due to the potential impact this continuing litigation could have on livelihoods and the economy. They stated that it was crucial that an early resolution is reached to arrive at a fair and equitable solution reflecting the value of the underlying tangible and intangible assets.

Additionally, it was reported that the Tata Group indicated to SC that it was open to buy out the stake held by the Mistry family.

Mistry's side also said maybe it was time for his family to separate from the Tata Group. "The current situation has forced the Mistry family to sit back and reflect on the past, present and possible future for all stakeholders. The past oppressive actions, and the latest vindictive move by Tata Sons that impact the livelihoods of the wider SP Group community leads to the inexplicable conclusion that the mutual co-existence of both groups at Tata Sons would be infeasible. The SP-Tata relationship spanning over 70 years, was forged on mutual trust, good faith, and friendship. Today, it is with a heavy heart that the Mistry family believes that a separation of interests would best serve all stakeholder groups,” the Mistry family-controlled SP Group said in a statement.

October 2020: Mistry family proposed share swap. SP Group sought pro-rata shares in Tata group's listed companies in lieu of its 18.37 stake in Tata Sons, the holding company of group firms. Tata Sons subsequently rejected the proposal.

December 2020: SP Group told the top court that Mistry's removal as the chairman of Tata Sons in October 2016 was akin to a blood sport and ambush and was in complete violation of principles of corporate governance and pervasive violation of Articles of Association in the process. Tata Group, on other hand, vehemently opposed the allegations and said there was no wrong doing and the board was well within its right to remove Mistry as the chairman.

During the court hearings, Mistry's representative seeking representation in the company in proportion to the 18.37 percent stake held by his family.
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