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Tata vs. Mistry – Case Analysis

March 18, 2020


The Tata-Mistry clash has been one of the most high-profile and publicly fought corporate battles in India. On December 18, 2019 the NCLAT (National Company Law Appellate Tribunal) jolted the corporate world with its judgment on the Cyrus Investments Pvt. Ltd. & Anr. VS Tata Sons Ltd. & Ors. The two-judge Bench headed by Justice S J Mukhopadhyaya had pronounced glary judgement stating

  • the resolution passed by the Tata Sons board to remove Mr. Cyrus Pallonji Mistry (Cyrus Mistry) a scion of Shapoorji Pallonji family, from his post and all consequential actions taken by Tata Group companies to remove him as director declared “illegal’’,
  • and held the appointment of N Chandrasekaran, the current chairman of Tata Sons, as executive chairman as “illegal”. Who was appointed chairman of Tata Sons in February 2017.
  • also termed the conversion of Tata Sons Limited from being a public company to private as illegal and oppressive to the minority members and depositors. It asked the registrar of companies to make the required correction
  • given four weeks for restoring Mistry to the post of Tata Sons’ executive chairman.

Several Tata companies and top executives including chairman emeritus Ratan Tata challenged against the order of NCLAT in Supreme Court. The court stayed the NCLAT order with an observation that the case would be listed for hearing after all sides had formally placed their submissions before it.


Tata Sons Limited’ is a group company comprising of ‘Tata Trusts’, ‘Tata Family’ and Tata Group Companies, having 51 shareholders.

Among the 51 shareholders, Mr. Cyrus Mistry holds 18.4% stake in the company

The ‘Shapoorji Pallonji Group’ (“SP Group” for short) was involved in jointly conducting the affairs of the Tata Sons Limited’ for over five decades in an environment of mutual trust and confidence and there is no formal agreement/consent about the same.

Shareholding Pattern of Tata Sons Ltd.

 Name of the Shareholder No of Shares %
Shapoorji Pallonji Group 108 0.026723
Sterling Investment Corp

Shapoorji Pallonji Group

37120 9.18489
Cyrus Investments

(Shapoorji Pallonji Group)

37120 9.18489
Ratan Tata 3368 0.83337
Sir Dorabji Tata Trust 113067 27.97705
Sir Ratan Tata Trust 95211 23.5588


What Actually Happened...?

Mr. Cyrus Pallonji Mistry (Known as Cyrus Mistry) was appointed Tata Sons’ Ltd (Company) Executive Chairman from December 2012 to March 2017. Who was appointed as Director of the company in the year 2006.

Ratan Tata who is the former chairman and shareholder of the company was hostile and dismayed towards the decisions of Mr. Cyrus Mistry as an Executive Chairman and his aids in some of the vital areas and transactions such as,

  • suggestions on piloting the bid for a prestigious defence contract.
  • On the Tata-Docomo dispute, Ratan Tata felt the group’s credibility was at stake. He was keen to honour the deal with Docomo and got Mistry to deposit Rs 8,000 crore with the Delhi High Court.
  • shutting down the Nano project and cutting losses with expensive decisions in other Tata Group Companies and
  • proposal by an advisor of Cyrus Mistry of Rs 10 crore for funding Odisha assembly elections which was not in line with the regular practice of the company in relation to Electoral funding.
  • Tata group made two bids for a prestigious army contract earlier in 2016 for Rs 60,000 crore contract of 2,600 Future Infantry Combat Vehicles.
  • The disputes over the Tata-Welspun deal which was not presented before the board of the Tata Sons Ltd, serious lapse of governance of Mr. Cyrus Mistry was witnessed in the context of the acquisition of ‘Welspun Renewables Energy Limited’ by ‘Tata Power Renewable Energy Limited’, a subsidiary of the ‘Tata Power Company Limited’
  • Tata Sons board was presented with a proposal of a tie-up with US pizza chain Little Caesars which was not supported by Mistry aids.
  • Mistry’s approach to widely different subjects, managing Tata factory workers and managing relations with Japan Inc.

These became contentious. Mistry’s aides, however, believe that such suggestions and involvement amounted to “interference”. All this, plus Tata’s concern about Mistry’s emphasis on real estate deals, an area the Tata group had no expertise in, and a sense that Team Mistry “simply wanted Ratan Tata to fade away” finally tilted the scales for the decision to oust Mistry from his post.

Tata vs Mistry Event Flow Chart

Tata vs Mistry-Event Flow Chart

Appellants (Cyrus Investments Pvt. Ltd) Challenge before NCLAT and their stand

 Oppression of Articles

 Article 75 and 121 in the Articles of Association of the company (safeguard the interest of the Company) are prejudicial and oppressive interference against the corporate governance. In other words, there is no scope for an independent decision.

  • Article 121A specifies a list of matters which are to be brought before the Board.
  • Articles oppression by Tata trust as requiring prior consent and affirmation not only before the board of the Tata sons but also before the Group companies by Mistry which was never followed earlier.
  • When this was not done there were repeated threats of the breach of Articles as prior consent was not obtained.
  • Highlighted the instances of interference by Mr. Ratan N. Tata and Mr. N.A. Soonawala where it was not intended.
  • Articles of the company would be wholly oppressive to the interests of the minority and would, therefore, need to be deleted.

Conversion of Public Limited Company to Private Limited Company

  • a sudden attempt has been made to convert the company from public limited to private limited.
  • same would be subject to approval by the Tribunal, after hearing all stakeholders where the same has not been taken


  • various instances of mismanagement and decisions
  • due to the use of the majority shareholding group of their strength, including the misuse of the Articles
  • by virtue of Article 121-A, controls the management and policy decisions of such company. This results in Undermining Governance.

Stand of Contesting Respondents (Ratana Tata, Other Directors & Tata Group)

 With respect to Articles 

  • Articles of Association are the Regulations of the Company binding on the company and its shareholders
  • They stated that all actions have been taken as per the provisions of the ‘Articles of Association’, ‘Companies Act, 2013’ and the ‘Secretarial Standard on Meetings.
  • Article 121 if read with Article 104A of the Articles of Association, it cannot be held to be arbitrary
  • No legitimate expectations for the appellants either under section 241 or any other Indian Law
  • replacement/ removal of Mr. Cyrus Mistry are in the nature of directorial complaints which cannot be raised in a petition
  • Removal as Director is cannot be canvassed as a case of oppression or prejudice to the proprietary rights of minority group.
  • Stated as there is no provision in the Articles or any shareholders’ agreement to participate in the management or nominate any directors by minority group
  • Removal was not contrary to and a blatant breach of Article 118 as no selection committee had been constituted for such removal

 Loss of Confidence on Mistry

  • It was the view of Tata Trusts that Mr. Cyrus Mistry had failed to deliver on the promises that he had made at the time of his selection as the Chairman
  • He was unable to lead the Tata Group cohesively and failed in providing proper guidance and support to the Group
  • In the present case, not only was there a historical lack of performance but there was a complete loss of confidence regarding Mr. Cyrus Mistry’s ability to lead the company in future.

Conversion from Public to Private

  • Conversion has been made by the Registrar of Companies in view of the definition of ‘Private Company’, as defined under Section 2(68) of the Companies Act, 2013 and for such changing, no application is required to be filed under Section 14 of the Companies Act, 2013.

View of Courts on Facts and Evidences

  • Companies Act, 2013 provisions of section 241-242 make it clear that if any member of a company complains that the affairs of the company have been or are being conducted in a manner ‘prejudicial to public interest’ or in a manner ‘prejudicial’ or ‘oppressive’ to him or any other member or members or ‘prejudicial to the interests of the company’ may file application under Section 241(1)of the Companies Act, 2013.
  • Questions that arise for consideration are:
    • Whether the company’s affairs have been or are being conducted in a manner ‘prejudicial’ or oppressive to any member or members
    • If that be so, whether to wind up the company would unfairly prejudice such member or members
  • After looking at documentary evidences it can be understood that Cyrus Mistry was unaware and not in a position to understand as to how decisions are taken by the ‘Tata Trusts’ before the decision of the Board of Directors of Company.
  • Communications between the Respondents from 2013 to 2016 show that there was complete confusion in the Board about the governance framework of the Company (‘Tata Sons Ltd.’) as before deciding any matter or for taking any resolution by the Board decision used to be taken by Mr. Ratan N. Tata for ‘Tata Trusts’, in which other shareholders were taking active part.
  • The proceedings of the meeting dated 24th October 2016 and the facts
    • Ratan Tata was determined to remove Mr. Cyrus Mistry before the meeting of the Board.
    • The majority shareholders of ‘Tata Trusts’ represented by Mr. Ratan Tata were knowing that advance notice was required for his removal, therefore, opinion had been obtained from eminent lawyers and the Hon’ble ex- Supreme Court Judge, as apparent from the proceedings of the meeting.
    • The Board decided to move ahead with the press announcement as the action have a global effect.
  • There is nothing on the record to suggest that the Board of Directors or any of the trusts, at any time expressed displeasure about the performance of Mr. Cyrus Mistry.
  • The proceedings of the Board of Director’s dated 24th October 2016 also show that ‘Tata Trusts’ asked its nominee Directors to bring a motion to request Mr. Cyrus Mistry to step down from the post of the Executive Chairman on the ground that ‘Tata Trusts’ had lost confidence.
  • Reasons have not been discussed or recorded in the proceeding of the meeting
  • On the stand taken by the Contesting Respondents that the removal of Mr. Cyrus Mistry is directorial in nature, in the interest of Company, in such case, there was no occasion to issue a ‘Press Statement’
  • The records suggest that the removal of Mr. Cyrus Mistry had nothing to do with any lack of performance. On the other hand, the material on record shows that the Company under the leadership of Mr. Cyrus Mistry performed well which was appraised by the ‘Nomination and Remuneration Committee’ a Statutory Committee under Section 178, just a few months before he was removed.
  • annual performance review of the ‘Nomination and Remuneration Committee’ was unanimously approved by the Board and the performance of Mr. Cyrus Mistry has been endorsed and praised by nearly 50 Independent Directors of Group Companies.

Upon Conversion 

  • the procedure followed by company is against the law and unsustainable.
  • As per sub-section (4) of Section 43A of Companies Act 1956, a ‘private company’ which became a ‘public company’ by virtue of the provisions of section 43A, is to continue to be a public company until it has, with the approval of the Central Government and in accordance with the provisions of the Act, again becomes a ‘private company’.
  • As per Section 14 of the Companies Act, 2013 to take effect of conversion it required to
  • alter its Articles,
  • pass a special resolution,
  • take approval by the Tribunal.

Writers Ink...

Tata Group has the legacy of being a known as one of the most responsible and ethical organisations in the corporate world with excellent work culture and professional management. Tata’s rise over the years was mainly due to its commitment towards various stake holders and its strong management focussed on the vested interest of the TATA Group but the result of the sudden removal of Mistry and the happenings thereafter have raised concerns on the internal management of the group.

The entire case shows up the serious trust deficit between Mistry, the board and the Tata Trusts, the majority shareholders, which own two-thirds of the holding company. The Relationship between the two have broken down complexly. The Group has been frequently cited for its falling financial performance and a complete breakdown of values. The case highlights the importance of ensuring proper and adequate corporate governance and transparency in management

As the NCLAT decision has been challenged before the Supreme Court. We have to wait and watch the take of SUPREME COURT on this…..


NCLT and NCLAT orders

NCLT - CP NO. 82/241,242,244/NCLT/MB/MAH/2016 -

NCLT, Mumbai Bench Judgement dated 17042017

NCLAT - Company Appeal (AT) No. 254 of 2018

NCLAT Judgement dated 18122019.pdf


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