InvestorQ : What were the highlights of the Supreme Court decision in the Tata versus Mistry case that has been going on for the last five years?
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What were the highlights of the Supreme Court decision in the Tata versus Mistry case that has been going on for the last five years?

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Sam Eswaran answered.
4 weeks ago
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Here are some of the key highlights of the Supreme Court judgment on the long pending Tata versus Mistry case, which was delivered on Friday 26 March 2021.

· Supreme Court upheld the decision of the Tata Sons board in October 2016 to remove Cyrus Mistry from the post of chairman and also from the board. The judgment noted that it was within the purview of the board’s decision making powers.

· This virtually sets aside the NCLAT order of December 2019, ordering the reinstatement of Mistry to the Tata Sons board and deeming the appointment of N Chandrasekaran to the position as illegal.

· The Supreme Court bench headed by Justice Bobde, who is retiring shortly, rejected the Mistry Group’s plea against conversion of Tata Sons into a private limited company. The judge observed that it was no case of minority shareholder bullying.

· The judgment was silent on the valuation of the 18.4% stake of the Mistry group in Tata Sons and its valuations. However, the judge noted that both parties could commence talks on planned exit of the Mistry group from Tata Sons; as was the intent.

· The judge noted that it was outside the purview of the current bench to fix any valuation for the stake of Mistry family in Tata Sons. Cyrus Mistry had asked the court to intervene on valuation of stake under Article 75 of the Article of Association of Tata Sons.

· However, the judgment comes on a subject which is not the issue any longer. For example, Cyrus Mistry has only asked for board representation for their 18% stake and have not expressed intent to be reinstated as chairman of Tata Sons.

· The bigger battle could now begin on the valuation issue, because the gap in perception is huge. While the Mistry family values its stake in Tata Sons at Rs.176,000 core, the Tatas have pegged it much lower at around Rs.80,000 crore.

· It may be recollected that last year when the Mistry group had tried to pledge their stake in Tata Sons with a global investment group to raise funds, Tata Sons had objected to it as being against the terms of the Articles of Association.

· Currently, the Tata Trusts owns 66% in Tata Sons and the Tata Trusts are controlled by Ratan Tata. Mistry had taken over as Chairman of Tata Sons in 2012 after Ratan Tata had turned 75 years old. However, that dalliance ended in 2016 in an acrimonious manner.

· Recently, Mistry family had agreed to an exit from Tata Sons, although valuations remained a worry. Mistry family had agreed to sell their stake in Tata Sons in lieu for stake in Tata group companies but Tatas had rejected that bid.

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