Ratan Tata says Mistry damaged the group’s reputation

Escalating what was so far a corporate battle, Ratan Tata, the patriarch of the Tata group, has now filed a petition in the Supreme Court against the National Company Law Appellate Tribunal (NCLAT) ruling issued a fortnight ago favouring the return of ousted chairman Cyrus Mistry. Tata Sons on Thursday had filed a similar petition seeking a stay on the NCLAT order.

The NCLAT ruling in December that wanted the Tata group to restore Mistry as chairman, and had made wide-ranging comments on the functioning of the group; it had also termed the appointment of the current chairman, N. Chandrasekaran, as illegal. It had restrained the group from taking any major business decisions and had highlighted that Mistry had been wronged in his dismissal. Mistry was ousted as chairman in a coup-like operation at a Tata Sons board meeting presided over by Ratan Tata in October 2016.

Subsequent to the ouster of Mistry, Tata stayed away from commenting on the issues concerning the Tata group, having brought in insider Chandrasekaran to helm Tata Sons. Prior to being elevated, Chandrasekaran had successfully led the group’s crown jewel, Tata Consultancy Services (TCS), to become the most valuable company of the group.

Since his dismissal, Mistry and his firms had filed cases against Tata Sons, alleging that he was dealt an unfair hand. In July 2018, the National Company Law Tribunal (NCLT) had dismissed Mistry’s case and had held the decision taken by Tata Sons as fair, which had exonerated Tata for his actions. Apart from the courtroom battles, there were several other skirmishes that were fought between the two warring groups, as each alleged impropriety against the other. While Mistry had gone underground fighting his legal battles, the group saw several senior executives from its airline business and trusts leave as collateral damage.

The NCLAT order reinstating Mistry, it appears, has rattled Tata enough to come out in the open to fight the battle that he set in motion. For one, if Mistry does come back, his legacy of building and globalising the group will certainly be re-examined in the media. Even if Mistry doesn’t return and walks away having proved himself right, the blemish on the Tata group—which has considered itself a good corporate citizen—will become permanent.

Tata has hit out at the NCLAT ruling, calling it infirm. “The (NCLAT’s) judgment is also infirm because it blatantly indulges in propagating a selective narrative where relevant facts and record have been glossed over, submissions made by the appellant and other respondents have been ignored and if noticed then are not been dealt with in the impugned judgment,” the plea said.

In his plea, the chairman of Tata Trusts argued that the findings of the appellate tribunal were “wrong, erroneous, contrary to the record of the case and required consideration by the SC”. Tata challenged the order that held him guilty of oppression and mismanagement without giving an explanation on any actual or legal ground. “The pretense of reasoning and judicial approach is betrayed by omission to consider the record itself,” Tata said in his plea.

Tata has also pointed out one instance that seems to have shaken his confidence of leaving the group in Mistry’s hand. A glaring example of Mistry’s lack of leadership skills which brought disrepute to the Tata group was the way he handled the DoCoMo litigation, Tata said. “It was during Mistry’s tenure that Tata Sons reneged on its word with DoCoMo under the agreement citing purely legal and technical arguments. Even after an adverse verdict was delivered in the arbitration, Mistry showed complete obstinacy and attempted to resist complying with the legal obligations further,” said the petition. “This is not what the Tata Sons brand stands for. Quite to the contrary, honouring its commitments is one of Tata Sons’ highest virtues it takes great pride in. The spat with DoCoMo, which was widely covered by the press, brought ill-repute and reputational losses to Tata Sons,” it further added.

Tata is now seeking to completely set aside the NCLAT order with a prayer that the ruling of the appellate tribunal is prejudicial to the interests of Tata Sons and all its stakeholders. “Such reliefs, if not set aside by this Hon’ble Court, would cause chaos in the functioning of Tata Sons, undermine shareholder sovereignty and lead to a break-down of its governance structure,” said the plea.