Singhvi also said that Mistry insisted that he would not quit from the top post even as the Board, asked him to resign, peeved with his below-par performance. Mistry took over at the helm of Tata Sons in 2012.
As many as seven of the nine members of Tata Sons’ Board approved then chairman Cyrus Mistry’s removal. They lost confidence in him as Mistry failed to deliver as per the promises, Ratan Tata counsel Abhishek Manu Singhvi informed the National Company Law Appellate Tribunal (NCLAT) on Monday. The eighth member of the Board was Mistry himself, while the ninth member abstained from voting.
Singhvi also said that Mistry insisted that he would not quit from the top post even as the Board, asked him to resign, peeved with his below-par performance. Mistry took over at the helm of Tata Sons in 2012. He was removed from the chairman’s post in October 2016. Tata’s counsel said Mistry used to make tall claims like taking the company among the top 25 of the world without giving any details, but during his over four years’ tenure, most of the Tata Group firms were incurring losses, resulting in a decline in the profitability of the group. Debts were also on the rise. Only TCS and Jaguar were earning profits.
Hearing Mistry’s plea against his ouster from the top post, the two-member NCLAT bench, headed by chairperson Justice SJ Mukhopadhyay, said: “We need to know as to why the Board lost confidence in him?”.
Mistry had on August 3, 2018 approached the appellate tribunal challenging the July 9, 2018 order of the Mumbai bench of the National Company Law Tribunal (NCLT) that dismissed his plea challenging his removal as the chairman of the company. Cyrus Investments, the investment firm of Shapoorji Pallonji (SP) Group, earlier contended in the NCLAT that, going against Tata Sons’ own Article of Association (AoA), Mistry was removed as its chairman by the Board in its October 24, 2016 meeting even as the matter did not form a part of the agenda.
The SP Group had also said that Article 118 of the AoA stipulates that a selection committee should be formed for appointing or dismissing a chairman, which was not followed when Mistry was removed. His removal amounts to an act of oppression to the minority. “The Board removed him just like that. The Board did not have anything in relation to the removal of the chairman in its agenda on that say. He can’t be removed as he displeases the majority shareholders,” the Group had argued.