Shri Jamsetji Tata founded Tata Group, a global enterprise in 1868. The mission of the enterprise is to improve the quality of life of the communities and serve globally, through long-term stakeholder value creation based on leadership with trust. The Tata Group includes companies as Tata Consultancy Services, Tata Motors, Tata Steel, Tata Chemicals, Tata Global Beverages, Titan, Tata Capital, Tata Power, Tata Advanced Systems, Indian Hotels and Tata Communications.
Tata Sons is the principal investment holding company and the promoter of Tata companies. Tata Sons was established as a trading unit engaged primarily in the lucrative opium and tea trade with Mongolia and China. About sixty-six percent of the equity share capital of Tata Sons is held by philanthropic trusts, which support education, health, livelihood generation, and art and culture. The biggest two of these trusts are the Sir Dorabji Tata Trust and Sir Ratan Tata Trust.
Mr. Cyrus Pallonji Mistry had joined the board of Tata Sons on 1st September 2006. He had served as a Director of Tata Elxsi Limited, from 24th September 1990 to 26th October 2009 and was a Director of Tata Power Co. Ltd. until 18th September 2006. In 2013, he was appointed as the Chairman of Tata Sons, he was also the chairman of all major Tata companies including Tata Industries, Tata Steel, Tata Motors, Tata Consultancy Services, Tata Power, Tata Teleservices, Indian Hotels, Tata Global Beverages and Tata Chemicals.
On 24th October 2016, the Board of Tata Sons voted in favor to remove Cyrus Mistry from the chairmanship of Tata Sons. Inter alia, the former Chairman of the Tata Group, Mr. Ratan Tata was restored as an interim chairman of Tata Sons. Tata Sons had abruptly removed Cyrus Mistry as its Chairman. As retaliation, Cyrus Mistry had dragged Tata Sons and his interim successor Ratan Tata to the National Company Law Tribunal (NCLT). Cyrus Mistry had challenged his removal and alleged misconduct on the part of the company’s board with the quasi-judicial body NCLT, Mumbai.
In the meanwhile, Natarajan Chandrasekaran took over as the new chairman of Tata Sons. Subsequently that year, Tata Sons was converted from a public limited company to a private limited company, pursuant to the Companies Act, 2013.
NCLT Mumbai had dismissed the plea of Mistry challenging his removal as Tata Sons Chairman, as it found no merit in his allegations of mismanagement in Tata group Cyrus Mistry further appealed the NCLT Mumbai order with the appellate authority - National Company Law Appellate Tribunal (NCLAT).
On 18th December 2019, NCLAT in its order held the appointment of N.Chandrasekaran as illegal and restored Cyrus Mistry as Executive Chairman of Tata Group. NCLAT also pointed out that the action taken by the Registrar of Companies to allow the Tata Sons to become a private company was against the provisions of the Companies Act, 2013. NCLAT clearly stated in its order that the conversion was 'prejudicial' and oppressive to the minority members and depositors'.
Tata Sons, in order to protect his legacy linked to the transformation of the Tata group, appealed the NCLAT order with the Supreme Court of India. Tata Sons urged the Supreme Court to set aside the NCLAT order reinstating Cyrus Mistry, as Executive Chairman of Tata Group.
On 10th January 2020, Supreme Court in its verdicts tayed the NCLAT order reinstating Cyrus Mistry as the Executive Chairman of Tata Sons observing that there were "lacunae" in the orders passed by the Tribunal. Supreme Court also ordered that Tata Sons should not exercise power for pushing out shares of minority shareholders in the company.
On 24th January 2020, Supreme Court has issued notice to Cyrus Mistry and the Centre on Tata Sons's plea against the NCLAT' order, stating that the ROC’s decision regarding conversion of Tata Sons as a "private company" was illegal.
Allegations and counter-allegations have been flowing back and forth, showing no sign of an end to this battle. The power tussle also showcases that corporate governance and board leadership has been hogged continuously. Boards of Directors are the principal agents to deliver good corporate governance. Bad things happen in an organization when corporate governance is ignored. Independent Directors forming the voice of the minority shareholders are suggested to play a pivotal role on the Board in such cases.
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