In December, 2012: Cyrus Mistry was appointed as the Chairman of Tata Sons Limited

chosen by a selection panel of Tata Group when Ratan Tata stepped down from the post.

In October, 2016: Cyrus Mistry was removed from the post of Chairman of Tata Sons
Limited by a majority of the Board of Directors for loss of confidence.

On January 12, 2017: Tata Sons names N Chandrashekaran as the Chairman of Tata Sons
Limited, the then TCS Chief Executive Officer and Managing Director.

In February, 2017: Cyrus Mistry was removed as a Director of the board of Tata Sons, by the
shareholders’ vote during a general meeting.

Thereafter, Cyrus Mistry files a suit under Sections 241, 242 and 244 of the Companies Act,
2013 before National Company Law Tribunal (NCLT), Mumbai alleging oppression of
minority shareholder rights and operational mismanagement of the Tata Sons.

Mistry’s charges alleging oppression and mismanagement

Charges that Cyrus Mistry’s made on part of Tata Sons to Show Oppression and
mismanagement by the group:

 Tata Sons abused their powers under few articles and Tata Trust exercised control
over the Tata Sons board.
 Removal of Cyrus Mistry as an executive chairman from Tata Sons Limited.
 Transactions made with Siva and Sterling Group of Companies by Tata Groups.
 Fraudulent transaction worth Rs. 22 crore in Air Asia by Tata Trusts.
 The losses suffered in Nano car project clearly depicts the oppression of minority
shareholder rights and mismanagement by the Tata Group.
 The acquisition of Corus at overpayment by Tata Trusts.
Tata’s contentions
In January, 2020, Tata Sons and Ratan Tata moved to Supreme Court and challenged the
NCLAT decision before the Supreme Court. In its appeal Tata has contended that there was
no wrongdoing involved on the part of Tata Group in the removal of Cyrus Mistry as
chairman of Tata Sons Limited in October, 2016, the Tata Group also added that the board
was “well within its rights to do so”.

Subsequently, in January, 2020 the Supreme Court granted relief to Tata Group and stays the
NCLAT order of December 2019 to reinstate Cyrus Mistry as the executive chairman of Tata
Sons.

Governing Laws
Section 241 of the Companies Act, 2013 – This section provides relief to the members of a
company in cases of oppression.
Any member of a company has a right to apply to the Tribunal if the affairs of the company
have been or are being mismanaged and are conducted in an oppressive manner damaging the
interests of the company, its members or the public at large. The central government can also
make an application to the tribunal under this section if it feels that the affairs of the company
are being conducted in a prejudicial or oppressive manner.
Section 242 of the Companies Act, 2013 – Powers of the Tribunal
Section 242 states that if, on any application made by any member of a company or the
central government under Section 241, the Tribunal believes that the affairs of the company
have been or are being mismanaged and are conducted in an oppressive manner damaging the
interests of the company, its members or the public at large, or the winding-up of the
company would unfairly prejudice such member or members, the Tribunal may, intending to
bring to an end the matters complained of, make an order to regulate the conduct of affairs of
the company regarding the purchase of shares, restriction on the transfer of the share,
termination, setting aside or modification of any agreement, setting aside of any transfer or
any orders as the tribunal thinks fit.
Section 244 of the Companies Act, 2013 – This section provides for the eligibility criteria to
file an application under section 241 of the Companies Act, 2013.
Section 244 of the act lays down the qualification to be met for an application to be
maintainable under Section 241 of the Companies Act, 2013.

Sc judgement
The judgement was pronounced in favour of the Tata Group. The bench dismissed all the
charges of oppression and mismanagement against the Tata Sons Limited made by entities
owned by Cyrus Mistry.

The Supreme Court observed that “unless the removal of a person as a chairman of a
company is oppressive or mismanaged or done in a prejudicial manner damaging the interests
of the company, its members or the public at large, the Company Law Tribunal cannot
interfere with the removal of a person as a Chairman of a Company in a petition under
Section 241 of the Companies Act, 2013.

The court held that mere removal of a person as Chairman of the Company is not a subject
matter under Section 241 unless it is shown to be “oppressive or prejudicial”. The court held
that Sections 241 and 242 of the Companies Act, 2013 do not specifically confer the power of
reinstatement.

Therefore, The Supreme Court set aside the December 18, 2019 order of the National
Company Law Appellate Tribunal (NCLAT) to reinstate Cyrus Mistry as executive chairman
of Tata Sons.

The bench also held that there was never a case, to begin with, the only dispute that arise was
the removal of Cyrus Mistry as chairman of Tata Sons Limited and the companies were
padding up their actual grievance with various historical facts.