NCLAT orders reinstatement of Cyrus Mistry as Chairman of Tata Sons
New Delhi, Dec 18: In a big win for Cyrus Mistry, a company law appeals court on Wednesday restored him as executive chairman of Tata Sons and ruled that appointment of N Chandrasekaran as head of the holding company of over USD 110 billion salt-to-software conglomerate was illegal.
The National Company Law Appellate Tribunal (NCLAT) held that the group's chairman emeritus Ratan Tata's actions against Mistry were oppressive and the appoint of the new chairman illegal. It, however, stayed the operation of the order with respect to reinstatement for four weeks to allow Tatas to appeal.
Setting aside a lower court order, the NCLAT also quashed the conversion of Tata Sons into a private company from a public firm. It also directed Tata Sons not to take any action against Mistry, whose family owns some 18 per cent interest in Tata Sons.
The remaining 81 per cent is held by Tata Trusts and Tata Group companies along with Tata family members.
Mistry, scion of the wealthy Shapoorji Pallonji family, had in December 2012 succeeded Ratan Tata as the Executive Chairman of Tata Sons, a post that also made him the head of all Tata group listed firms such as Tata Power and Tata Motors. In an overnight coup, he was removed as the Chairman of Tata Sons in October 2016. Along with him, the entire senior management too was purged and Ratan Tata was back at the helms of affairs four years after he took retirement.
Mistry challenged the removal before the Mumbai bench of National Company Law Tribunal but lost and then went in for appeal at the NCLAT.
Tatas had cited alleged failure of Mistry to "deliver on the promises that he had made at the time of his selection as the Chairman" and inability to lead the group in a cohesive manner and failure in providing proper guidance and support to the group as the reasons for his sacking.
Mistry had contended that he was removed because of his "efforts to remedy past acts of mismanagement", for resisting interference of Ratan Tata and for instituting a formal governance framework to regulate the role of the Tata Trusts. The "legacy hotspots" included shutting down the small car Nano project; cutting losses with expensive decisions in firms such as Indian Hotels Company Ltd (IHCL) and Tata Teleservices Ltd; and Air Asia fraud.
While Mistry termed the NCLAT judgment as "victory for the principles of good governance and minority shareholder rights", Tata Sons said the NCLAT order appears to have gone beyond the specific reliefs sought by Mistry and it was not clear as to how the NCLAT order seeks to over-rule the decisions taken by shareholders of Tata Sons and listed Tata operating companies at validly constituted shareholder meetings.
"The proceedings of the sixth meeting of the Board of Directors of Tata Sons Ltd held on Monday, October 24 2016 so far as it relates to removal and other actions taken against Cyrus Pallonji Mistry is declared illegal and is set aside. In the result, Cyrus Pallonji Mistry is restored to his original position as Executive Chairman of Tata Sons Ltd and consequently as Director of the Tata companies for rest of the tenure," the NCLAT said in its order.
As a sequel thereto, the appointment of Chandrasekaran, who replaced Mistry, "is declared illegal," it said.
The NCLAT ordered Ratan N Tata and the nominee of the Tata Trusts to "desist from taking any decision in advance which requires majority decision of the Board of Directors or in the Annual General Meeting".
Also, the company, its Board of Directors and shareholders were ordered not to exercise power under Article 75 against Mistry.
Powers under Article 75 had not been exercised since inception and "can be exercised only in exceptional circumstances and in the interest of the company, but before exercising such power, reasons should be recorded in writing and intimated to the concerned shareholders whose right will be affected, it said.
Mistry was the sixth chairman of Tata Sons and had a tenure up to March 2017. The NCLAT order gives him five more months at the helm of Tata Sons if the said order is not stayed or overturned by the Supreme Court.
Declaring the decision of the Registrar of Companies to change character of Tata Sons from public company to private one as "illegal", NCLAT asked the RoC to correct records to show the company as public company.
The court also stated that some observations in the July 9, 2018 judgment passed by the NCLT were "inappropriate and avoidable".
These included appreciating activities of Tata Sons and highlighting its products, which had no bearing on merits of the case, it said, adding certain observations against Mistry were "undesirable and based on extraneously sourced material not on record".
Stating that such observations cast "impact on the reputation" of Mistry, the NCLAT expunged those remarks while setting aside the July 9, 2018 Judgment of NCLT, Mumbai.
After the judgment was pronounced, Tata Sons counsel prayed for suspension of part of the judgment reinstating Mistry.
"With a view to ensure smooth functioning of the company, while we are not inclined to suspend the Judgment pronounced today in its totality, but suspend the part of the Judgment so far as it relates to replacement of the present Executive Chairman and reinstatement of Mistry for a period of four weeks," the NCLAT said. "Rest of the Judgment and Directions including the direction to reinstate Cyrus Pallonji Mistry as Director of the company and directors of three Tata companies shall be complied forthwith."
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Campaigning for second phase of 14 LS seats ends in Karnataka
Bengaluru, May 5: The campaigning for the second phase of polling in 14 Lok Sabha segments in Congress-ruled Karnataka ended on Sunday, with the "Hassan sex scandal" wading into the narrative in no small measure.
Tuesday's elections (May 7) matter the most for the BJP as it had bagged all those 14 seats in the 2019 polls.
Karnataka has a total of 28 Lok Sabha constituencies. The first phase of elections for 14 segments was held on April 26.
Congress leaders including Rahul Gandhi and Priyanka Gandhi Vadra have targeted the BJP over the alleged sex scandal involving Hassan JD(S) MP, Prajwal Revanna, in campaign rallies.
Rahul Gandhi alleged that Prajwal Revanna had raped 400 women, and lashed out at Prime Minister Narendra Modi for seeking votes for a "mass rapist" and sought his apology.
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Prajwal, grandson of former prime minister and JD(S) patriarch H D Deve Gowda, is facing allegations of sexually abusing women. The state government has set up a Special Investigation Team (SIT) to probe the charges.
Prajwal Revanna was the JD(S)-BJP alliance candidate from Hassan seat which went to polls on April 26.
The JD(S) joined the BJP-led NDA in September last year.
The BJP, on the other hand, has attacked the government for alleged failure to "contain anti-national activities", and incidents of 'Love Jihad' and 'appeasement politics'.
The party leaders repeatedly referred to the bomb blast at a cafe here on March 1, the murder of 23-year-old Neha Hiremath on a college campus in Hubballi by Fayaz Khondunaik on April 18 and the raising of pro-Pakistan slogans in the corridors of Vidhana Soudha on February 27.
Speaking to reporters in the district headquarters town of Belagavi, Chief Minister Siddaramaiah today said, "In the first phase, we will win about eight to nine seats. In the second phase, we will win in 10 constituencies."
The Congress is also banking heavily on the state government's guarantee schemes and remains optimistic that they will pay the party electoral dividends.
Among the candidates in the fray for the May 7 polls is Union Minister Pralhad Joshi, who is seeking a fifth straight term from Dharwad.
There will be a by-poll to the Shorapur assembly constituency in Yadgir district on May 7 following the death of Congress MLA Raja Venkatappa Naik in February this year.
The 14 segments going to polls on Tuesday are: Belgaum (Belagavi), Uttara Kannada, Chikkodi, Bagalkot (Bagalkote), Bidar, Haveri, Dharwad, Koppal, Bellari (Ballari), Raichur, Bijapur (Vijayapura), Davangere and Shimoga (Shivamogga) and Gulbarga (Kalaburagi).
According to the Election Commission, 227 candidates are in the fray. The BJP and the Congress have fielded 14 candidates each while the Bahujan Samaj Party is trying its luck in nine seats. There are 117 independents. Also, 73 people are fighting the election from registered unrecognised parties.
The 14 constituencies have 2.59 crore voters, the EC said, adding, there are a total of 28,257 main polling stations.
Among the BJP contestants are: former Chief Ministers Basavaraj Bommai (Haveri) and Jagadish Shettar (Belgaum), former Assembly Speaker Vishweshwar Hegde Kageri (Uttara Kannada) and former Chief Minister B S Yediyurappa's son B Y Raghavendra (Shimoga).
Congress President M Mallikarjun Kharge's son-in-law Radhakrishna Doddamani is contesting from Gulbarga.
The Congress has fielded Minister Eshwar Khandre's son Sagar Khandre (Bidar), Minister Laxmi Hebbalkar's son Mrinal Hebbalkar (Belgaum), Minister Satish Jarkiholi's daughter Priyanka Jarkiholi (Chikkodi), Minister Shivanand Patil's daughter Samyukta Patil (Bagalkot) and Geetha Shivarajkumar, who is wife of Kannada film actor Shivarajkumar and daughter of former Chief Minister late S Bangarappa (Shimoga).
As Congress has fielded Karnataka Minister for Mines and Geology S S Mallikarjun's wife Prabha Mallikarjun from Davangere, the BJP gave ticket to Gayathri Siddeshwara, who is wife of MP G M Siddeshwara.
The Election Commission has made elaborate arrangements to increase voter turnout amid the soaring temperatures in the 14 constituencies.
From arranging shamianas and tents, additional fans and drinking water facilities, to keeping ambulances on standby and using adjacent rooms of the polling booth as waiting areas, the Election Commission is making efforts to ensure that the polling percentage is not affected due to the "harsh summer".
In this first phase, Karnataka recorded 69.56 per cent voter turnout.
Speaking to PTI, Karnataka Chief Electoral Officer Manoj Kumar Meena said the constituencies where polling will take place on May 7 are in North Karnataka region and the temperature is slightly high there, "so we have made all necessary arrangements to ensure that people aren't deterred from coming out of their homes to vote."
