How did it happen?
Let’s read about The Mystery of TATA Mistry. This is turning out to be the beginning of the end of a 70-years old relation.
It’s 24th October 2016. Morning time.
Cyrus Mistry, the chairman and scion of the Tata Sons in his office is preparing for the board meeting. Ratan Tata and Nitin Nohria get into Mistry’s office and tell him to resign right away before the meeting.
The room was in pin drop silence. Cyrus Mistry was stunned. He denied that he won’t resign and would handle the board meeting.
Ratan Tata and Nitin Nohria went away to the board room. A few minutes later, Mistry entered the boardroom. After a while, he was officially ousted as the chairman of Tata Sons through the formal procedure of the meeting.
The meeting lasted 60 minutes long. The agendas that Mistry wanted to discuss were shelved.
And there began the battle for India’s greatest business empire.
That very moment, the Bombay House became a battleground for the ownership of the salt to software conglomerate.
Let’s understand the chronology of the event
Cyrus Mistry resigned from all the Tata group firms and through his two family owned firms move NCLT to challenge his ouster as illegal. They also alleged the oppression of minority shareholders in Tata Sons. Mistry was also served a legal notice by Tata Sons for breach of Confidentiality.
Natarajan Chandrasekaran, the CEO and MD of TCS is appointed as the chairman of the Tata Sons.
Mistry was removed from the Board of Directors of Tata Sons.
Infograhic: The Mystery of TATA-Mistry
NCLT sets aside the plea of minority shareholders citing 10 percent ownership criteria. Mistry family owns 18.4 percent of the Tata Sons and excluding the preferential shares, only 3 percent is left.
NCLT rejects the plea by Mistry family firms of waiver of the 10 percent criteria. This was then challenged at the NCLAT.
Tata Sons pass the resolution to turn the company into Private from a Public company.
NCLT allows pleas by two investment firms seeking waiver in filing case of oppression and mismanagement against Tats Sons. Though it dismissed the other petition of maintainability saying the firms did not have more than 10 percent stake.
5th: The two firms approach the Delhi bench of NCLT saying bias on the part of the Mumbai bench. They wanted to transfer the case to the Delhi bench.
6th: The principal bench rejected the plea and imposed a fine of 10 lakhs on the firms and it was shared by both.
NCLT Mumbai rejects the pleas by Mistry on his removing of the chairman as illegal and also found no misconduct on the part of Ratan Tata and found the allegations to be baseless. There was no mismanagement in Tata Sons.
Cyrus Mistry in his personal capacity approaches NCLAT against his removal of chairman from the company.
The NCLAT admits the petition filed by Mistry in his personal capacity and also hears on the main petition filed by the two group firms.
The NCLAT restores Cyrus Mistry as the chairman of the Tata Sons with immediate effect and also that the manner in which the company turned private from a public company was also illegal. The Bench also gave 4 weeks’ time to Tata Sons to move to Supreme Court for appeal.
Cyrus Mistry says he doesn’t wish to be the chairman of the company anymore but will do best to exercise his right as the minority shareholder of the conglomerate and also get a board seat at Tata Sons. This came as Tatas moved SC against the December 2019 NCLAT order.
In a court filing Tatas said that under the leadership of Mistry, the brand value of the name eroded and also the performance of group companies declined. While the Mistrys Tata Sons had withheld key facts pertaining to the company’s operations as public company. They also added that the word private was added right before the NCLAT order.
As the SP Group wanted to pledge the shares of Tata Sons to get a loan for their struggling group, Tatas had moved to the Supreme Court to block this deal as it would end up an unknown party having a control of the group which would be difficult.
Tatas sought to buy the entire stake of the Mistry Family.
This would mark the beginning of the end of a long business relationship between the two big Parsi families that dates back to the 40s and 50s.
But this end might not be the way both the companies want. As the calculation of valuation of the conglomerate and the calculation of valuation of the SP Group would be another tricky aspect which would only delay the end of this relationship.
Thanks for reading!
Also Watch: The Legal and Financial Aspects of Tata-Mistry Fight
Cover Image: BT TV Youtube Channel
This article has been written by Priyansh Chachani for FinMedium.
Chronology of events in Tata-Mistry fight before NCLT, NCLAT – Mistry back as Tata Sons chief. (n.d.). Retrieved September 23, 2020, from https://economictimes.indiatimes.com/news/company/corporate-trends/chronology-of-events-in-tata-mistry-fight-before-nclt-nclat/may-23-2019/slideshow/72870607.cms
Cyrus Mistry vs Tata Sons: A timeline of events that led to the split. (n.d.). Retrieved September 23, 2020, from https://www.moneycontrol.com/news/business/cyrus-mistry-vs-tata-sons-a-timeline-of-events-that-led-to-the-split-5872701.html
Gupta, D. (2019, June 17). Revealed: What happened at the board meeting where Cyrus Mistry had to quit as Tata Sons chairman. Retrieved September 23, 2020, from https://scroll.in/article/927204/revealed-what-happened-at-the-board-meeting-where-cyrus-mistry-had-to-quit-as-tata-sons-chairman
Kumar, P. (2017, October 20). How Cyrus Mistry was Fired as Tata Chairman. Retrieved September 23, 2020, from https://nirmalyakumar.com/2017/10/21/how-cyrus-mistry-was-fired-as-tata-chairman/