Corporate India would be keen to read the Supreme Court judgement today and absorb the flavour and thinking of the court for future matters.
Cyrus Mistry and Ratan Tata. (File photo: PTI)
This is a verdict that gives finality to what has been a long drawn, high profile corporate battle that India has seen in recent years – the Tata-Mistry case. Corporate India would be keen to read the Supreme Court judgement today and absorb the flavour and thinking of the court for future matters. While we do not, as yet, have the copy of the Tata-Mistry case judgement in hand, those who have looked at the case closely and followed the developments and the issues raised by both the camps, tell us what to look for in the ruling not just for what it has to say about the arguments of the two sides but also for the implications the judgement will have for others in corporate India and in cases, not necessarily identical, but where there is a rift between the progenitor and the new leadership after the management control has been transferred. Here is what to look for:
1. What has been the argument to reject or completely overturn the NCLAT (the National Company Law Appellate Tribunal) judgement which was in favour of the Mistry camp? This is important because the NCLAT had come down quite heavily on the NCLT (National Company Law Tribunal) judgement earlier and what the Supreme Court bench has to say on the NCLT judgement, which in some sense was the start of the battle between the Tata and the Mistry camps would be crucial.
2. What does the Supreme Court have to say on the merits of the issues raised by the Mistry camp and the whole argument of a large minority shareholder and its rights? What does the court have to say on majority shareholder rights and how to ensure they retain a certain level of control and do not feel they can ride roughshod over the views of the minority shareholders. So, what the court has opined on the Mistry camp’s contention will need to be looked at closely and this would be essential not just to understand the judgement better but also from the point of implications of this for the minority shareholders as a whole. In other words, what is the test the court thinks essential to ensure the minority shareholder’s rights are not abused and that they got a fair hearing and their concerns addressed?
3. The other element that needs to be studied closely is if a minority shareholder seeks a way out then and wants to exit then why has the court chosen to stay silent on the methodology for exit and left it to the two parties to resolve it among themselves? How is that to be resolved if the court is not offering a forward path to this inescapable relationship as shareholders that the two sides are into? Or if there are any clues hidden in the judgement on the forward path for the two sides. Clarity on these will be material to get a better sense of how the concerns were addressed and what the court feels about the minority oppression argument and how to deal with it in a judicious manner.
4. How the individual allegations raised during the long trials of the case were addressed – be these around adherence to the Sebi rules or those involving issues that fall under the ambit of other regulators like the RBI or the Enforcement Directors. What does the court have to say on these and the path forward?
5. A reading of the different aspects looked at in the judgement to get a flavour and thinking of the court on future matters and the likely implication for other companies that may face a rift when a progenitor hands over control and new leadership takes charge or has a lattice of business where there are both trusts and brands involved and different shareholder groups.