Minority shareholder Shapoorji Pallonji Group on Wednesday told the Supreme Court that the removal of Cyrus Mistry as executive chairman of Tata Sons was oppressive and illegal.
It said the ouster was against the good faith and trust Shapoorji Pallonji had enjoyed with the Tata group for decades.
Appearing before a Bench led by CJI Sharad A. Bobde, senior advocate for SP Group Shyam Divan said the amended Companies Act ushered in a richer corporate governance model quite different from the ‘Raja-Praja’ model of the past.
Mr. Divan said the management of the company lay with the board of directors, as per the Articles of Association and the law. The ouster of Mr. Mistry was ex-facie in breach of the Articles of Association of Tata Sons.
He said the Articles of Association provided for a selection committee to be constituted to recommend the appointment of a person as the chairman of the board. The board may appoint the person so recommended as chairman, subject to Article 121, which required the affirmative vote of all directors.
The termination of the chairman had to go through the same process as done for appointments. In fact, Mr. Mistry was praised for his work only a few months prior to his removal, Mr. Divan said.
The apex court was hearing the cross appeals filed by Tata Sons and Cyrus Investments against the appellate tribunal NCLAT’s order which had restored Cyrus Mistry as the executive chairman of the more than $100-billion salt-to-software Tata conglomerate.
Mr. Divan explained how the selection of the chairperson for Tata Sons was so crucial as it affected many companies and stakeholders across the countries and continents.
