NEW DELHI: On 24 October 2016, Tata Sons issued a crisp 100-word statement announcing the removal of Cyrus Mistry from the post of chairman.
“Tata Sons today announced that its Board has replaced Mr. Cyrus P. Mistry as Chairman of Tata Sons. The Board has named Mr Ratan N. Tata as Interim Chairman of Tata Sons,” read the first half of the statement.
This short statement by the country’s most respected industrial house sent the corporate world into a tizzy. What ensued was an ugly public spat between the Tata Group and Cyrus Mistry, who also happened to be the scion of the Shapoorji Pallonji Group (SP Group), which held 18 per cent stake in Tata Sons.
Mistry moved the National Company Law Tribunal (NCLT) against his removal. In his submission to NCLT, Mistry attributed his unceremonious removal from Tata Sons to his efforts to remedy past acts of mismanagement inherited from the past management, resist the interference from Ratan Tata and institute a formal governance framework to regulate the role of Tata Trusts.
Of course, Tata Sons refuted all the claims made by Mistry.
On the allegations of interference by Ratan Tata, Tata Sons informed the NCLT that the company board gives its “chairman complete autonomy to manage opportunities and challenges”.
It even claimed that the tenure of the former chairman was marked by repeated departures from the culture and ethos of the group.
On the allegations of past acts of mismanagement, Tata Sons argued that “Mr Mistry has been a director of Tata Sons since 2006 and as such was fully involved in all the key decisions that the Tata Group had taken over the years.”
Tata Sons further said that it was unfortunate that only on his removal as chairman that he began making allegations and misrepresentations about business decisions he was party to for over a decade.
In July 2018, the NCLT dismissed Mistry’s petition against his removal and also the allegations levelled against Tata Sons by Mistry.
Mistry later moved to NCLAT, which gave its decision in favour of Mistry and directed Tata Sons to reinstate him as the Chairman.
Against the NCLAT order, Tatas moved the Supreme Court, which in March 2021 ruled in favour of Tata Sons approving its decision to remove Cyrus Pallonji Mistry as the executive chairman and director of the group and overturned the NCLAT order reinstating him.