Ratan Tata and Cyrus Mistry
Ratan Tata and Cyrus Mistry
Litigation News

Breaking: Supreme Court stays NCLAT order reinstating Cyrus Mistry as the Chairman of Tata sons

Bar & Bench

The Supreme Court has today stayed the National Company Law Appellate Tribunal (NCLAT) judgment which had paved the way for reinstating Cyrus Mistry as Executive Chairman of the company.

A Bench of Chief Justice SA Bobde, Justices Surya Kant and BR Gavai also issued notice in the petitions filed by Tata Sons, Ratan Tata and Tata Trustees challenging the December 18 NCLAT judgment.

The Court also stayed the operation of the NCLAT order despite vehement submissions made by Senior Counsel Aryama Sundaram representing the Respondent in favour of status quo to be maintained.

The Court observed that the order of the appellate tribunal was sorely lacking and agreed to hear the appeals on the case.

Sundaram pressed for status quo to be maintained on the grounds that in addition to direction for the reinstatement of Mistry as the Executive Director, the NCLAT order also dealt with five other aspects. A stay on the order would lead to a stay on all thsoe aspects as well.

Sundaram apprised the Court of Mistry's press statement announcing that he would not take up the position of Executive Director and the same should suffice for a stay not to be granted. Sundaram also submitted that moulding of relief by the NCLAT cannot be grounds to say that the entire order is bad.

The Court however, opined that the NCLAT order needed to be stayed and proceeded to issue notice on the same. The Respondents in the matter are directed to file their reply within four weeks.

Senior Advocates Abhishek M Singhvi, Harish Salve, Mukul Rohatgi and S N Mookherjee, briefed by Karanjawala & Co and Shardul Amarchand Mangaldas, appeared for Tata Group and assured the Court that no steps will be taken with regard to invoking powers under Article 75 of AoA.

Tata Sons had approached the Apex Court assailing the NCLAT order on the grounds that the same sets a “dangerous legal precedent” and will be adverse to the interests of the company and its members.

It is alleged by the company that the NCLAT has set aside the order of the NCLT’s Mumbai Bench without discussing the findings and reasonings of the same. It is averred that the reliefs granted by the appellate tribunal raise serious questions of law.

Further, it is claimed that the NCLAT had granted reliefs that were not prayed for. The relief of restoring Cyrus Mistry as Executive Chairman for the “rest of the tenure” is untenable given the fact that his tenure extinguished in March 2017 itself. Declaring the appointment of the incumbent Executive Chairman as “illegal” is not a relief that was prayed for, the petition states. On the reinstatement of Mistry, the petition states,

“The consequence of the direction is to put back Mr. Cyrus Mistry as a Director of a slew of Companies and not merely Tata Sons. Any extension of the tenure available at the time of initial appointment would be ultra vires the jurisdiction of the Hon’ble NCLAT and would have to be set aside for that reason without more.”

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