By Business India Editorial

Ratan Tata must be a relieved man. One major question mark on his otherwise unblemished career was the question of the removal of the chairman, Cyrus Mistry, from Tata Sons. The very person he and his board had appointed. More than the ignominy of the ouster was the way in which Mistry was removed. What still remains a mystery is why Tata did it knowing fully well that his actions could severely damage his reputation and legacy.

While the mystery still remains unsolved, the three judge Supreme Court judgement delivered in the Tatas vs Mistry case has finally laid to rest Tata Sons’ exercise of power and not only set aside the order of the NCLAT, which had sought the reinstatement of Mistry as the chairman of Tata Sons, but also passed severe comments on Mistry. From the very beginning Business India had said that Mistry had no case, based on the fundamental provisions of company law.

“It is not about winning or losing. It is a validation of the value and ethics that have always been the guiding principles of the group,” tweeted chairman emeritus Ratan Tata soon after the judgement was made public. The judgement, will bring an end to the most high-profile corporate battle. 

Overturning all the orders passed by NCLAT and also the additional claims made by Mistry, the bench came down heavily on NCLAT. At one point it went on to remark that quasi-judicial tribunals were created with a view to avoid delays in the dispensation of justice, but instead of eliminating delay, it had eliminated discipline in the various pleadings and procedures involved. 

The battle surfaced after the board of Tata Sons ousted Mistry, in 2016. And, as expected, Mistry sought legal redress by knocking at the doors of various courts and quasi-judicial bodies before all the appeals and orders passed by NCLAT were disposed of by the highest court. Various points of law were examined in great detail and are likely to serve as a benchmark in all future cases in the coming years. These included some fundamental questions as to what constitutes minority oppression, the principle of what is just and equitable, corporate governance and the rights governing private and public companies.

The bench observed that Mistry’s appointment was based on his merits and not because he was the representative of Shapoorji Pallonji’s 18.5 per cent stake in the company. There are several precedents to the effect that an illegal dismissal does not make the dismissal a nullity. Another point related to the articles of association regarding which the bench observed that the Shapoorji Mistry group had invested in Tata Sons many years after it was incorporated and had then accepted the articles of association. No objections were raised at the time.