Tata Group legal advisers baffled by order: 'NCLAT granted relief which was never sought'

The order has displaced Chandrasekaran, who had been selected following procedure provided under AOA.

Tata Group legal advisers baffled by order: 'NCLAT granted relief which was never sought'
MUMBAI: Legal advisers affiliated to Bombay House say they are baffled by the NCLAT order and believe the relief granted by the tribunal has gone “far beyond” what was sought by the plaintiffs, Cyrus Investments.

By ordering that Mistry be reinstated as executive chairman of Tata Sons, the NCLAT has granted relief which had never been sought at any stage, either before National Company Law Tribunal (NCLT) or the NCLAT, the legal sources said. Further, the order of the tribunal has displaced the current executive chairman, N Chandrasekaran, who had been selected following the procedure provided under the Articles of Association of Tata Sons, they said.

“The petition filed in NCLT specifically states that the petitioners are not seeking the relief of reinstating Cyrus Mistry (Respondent No 11) as chairman,” said the advisers cited earlier. “The order was beyond the relief sought by the aforesaid parties. While some prayers had never been sought from the inception, others were given up in writing during the course of arguments.”


The legal sources said that by ordering reinstatement of Mistry as a director of Tata Sons, the NCLAT has granted relief which had been specifically dropped in writing by the petitioners during the course of arguments before the NCLT.

Chandra’s Roles
“Therefore, Tata Sons shall take all legal recourse available to it to challenge the order,” a person close to the matter said.

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One legal aspect they believe is significant is that Mistry’s tenure would have anyway ended six months after the board meeting of October 2016 in which he was dismissed (i.e, March 2017) but the tribunal in its wisdom has reinstated him after three years.

Another issue that has now come to the fore is whether Chandrasekaran can take executive decisions after the judgment. The confusion on the chairman’s role will have major repercussions on the conglomerate.

Chandrasekaran has been putting the Tata House in order, and the NCLAT verdict has unsettled and disturbed the whole organisation once again, said a top official close to the development. In Bombay House itself, employees were seen discussing the fallout of the verdict.

Shuva Mandal, group general counsel, said: “Tata Sons strongly believes in the strength of its case and will take appropriate legal recourse. Tata Sons assures its various stakeholders that it not only has always operated in a fair and equitable manner but also acted in accordance with the law and will continue to do so.”
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Interestingly, the Tata Group appears to have been blindsided by the NCLAT order. Former Tata Sons director Ishaat Hussain was chairing an expert committee of Sebi on the social stock exchange, which was also attended by members including Chandrasekaran, when the news of the NCLAT order came.

The mood at Bombay House is grim and the top guns at Tata Sons appear to be concerned, said people close to the matter. It is, as a top Tata Sons official put it, an absolutely surprising development.
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