NCLAT order has gone beyond the relief sought by Cyrus Mistry, says special advisor to Tata Trust

The National Company Law Appellate Tribunal (NCLAT) declared Cyrus Mistry's removal as chairman of Tata Sons illegal, but Mistry won't return to Bombay House anytime soon as portions of the order have been stayed and a Supreme Court battle is in the offing.

Discussing the above developments in detail VR Mehta, special advisor to Tata Trust  said the NCLAT order in the Tata versus Mistry case is shocking and disappointing. “The shocking part is that the order has gone beyond the relief sought by Mr. Mistry. He never sought his reinstatement at the NCLAT. In fact, he has given in writing about dropping this particular aspect,” he added.

“There are other aspects also where it’s a complete reversal of the position taken by the National Company Law Tribunal (NCLT). Here we have a situation where a group of people in the NCLAT have taken one decision and on the same facts, the NCLAT has come to a different decision. Of course NCLAT is the appellate authority so their decision prevails as of now,” added Mehta.

The next inevitable step is going to the Supreme Court and that is surely happening now, said Mehta. "We will definitely take up all these issues. The position of Tatas is very clear. It has already been stated in both fora and this will be taken forward. Of course taking into account the observations made by the honourable NCLAT.”

Meanwhile, Amit Tandon, MD, Institutional Investor Advisory Services India Limited ( IiAS ) said, we do not expect disruption in operations of Tata Group companies. “We need to remember that they are professionally run companies. So at one level you would not expect to see significant disturbance or disruption in their operations but having said so, it is always important to remember the way the Tata Group is structured; there is a strong interplay which happens between the board and the senior management or rather the chairman of Tata Sons and those of the operating companies,” added Tandon.

“You need to remember that the chairman of Tata Sons is the chairman of some of the large operating companies. The other way is that he provides leadership and guidance. So, if today the group is focused on deleveraging – that’s a call which has been taken at the Tata Sons board level,” stated Tandon.

Speaking further about the operations, Tandon said, “It’s incorrect to say there is not going to be any disruption but at the end of the day the backstop is provided by the board and it is provided by the management. Therefore, the day-to-day operations will continue with very little disturbance or distraction at this stage.”

According to Tandon, the overhang of prolonged litigation will weigh on Tata Group's operations.

With regards to the issue of Cyrus Mistry’s tenure, Mehta specified, “At the time of his removal from Tata Sons’ board in October 2016, he had only about 6 months left of his tenure of 5 years. So it is surprising again that he has been given a term of 3 years now by the NCLAT, which was neither the prayer nor the factual position at the time of his removal. So this is another issue where we will be contesting and taking up at the Supreme Court in our appeal.”