In a major win for Cyrus Mistry in his legal battle against the Tatas, the company law appellate tribunal has restored him as the executive chairman of the Tata Group. The tribunal has also held the appointment of N Chandrasekaran as executive chairman as illegal. However, the tribunal has allowed the Tata Group four weeks to challenge the reinstatement order in the Supreme Court.

Cyrus Mistry was removed as the Tata Sons chairman in October 2016. Cyrus Mistry had then moved the NCLT, which was the start of a protracted legal battle.

Tata Sons has responded to the order saying, "It is 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 NCLAT order appears to even go beyond the specific reliefs sought by the appellant." The group added that it will take appropriate legal recourse.

On the other hand, Cyrus Mistry has welcomed the order. "Victory for the principles of good governance & minority shareholder rights," he said. He added that it is now time for all stakeholders to work together for sustainable growth and development of the Tata Group."

CNBC-TV18 spoke to Prabal Basu Roy Management Advisor and Former Corporate Director, Suhas Tuljapurkar Managing Partner at Legasis and Mohit Saraf of Luthra & Luthra to decode the judgement.

Roy said, "This judgement has essentially gone to the root of how boards are being effectively run by a set of very distinguished but compliant board members. I think that is what is being said and they have proven through mails and various other actions that board members who were on the board were taking directions from a super director so to speak. I think that is the very substantive point which will have to be determined because this will impact corporate boards across the country."

Tuljapurkar said, "I don't think life will change drastically from an investor's perspective as well. If the logic with which this judgement has come out is to say that removal of Cyrus Mistry actually led to uncertainty and therefore it was not in the interest of Tata Sons, of the operating companies as also public at large, the uncertainty that this judgement has created is probably larger in its scope and magnitude than actual removal of Cyrus Mistry."

Saraf said, "I am actually aghast because the order is not based on law. It is based on how much investment you have made, your relationship between the families, how nothing was put in the contract, nothing was put in the articles, but it is still binding on people because I think the judge has taken much higher moral ground which is outside, in my understanding of common law if it is not reflected in the article, if it is not reflected in the companies act how can that govern the relationship between the partner, I am aghast."

First Published:Dec 18, 2019 9:47 PM IST