Tata Consultancy Service Limited V. Cyrus Investments Pvt. Ltd and Others: Supreme Court Judgement Summary

By Utkarsh, Student at National University of Study and Research in Law (NUSRL)

Background Facts

On 10.08.2006 Cyrus Mistry was appointed as a Non­-Executive Director on the Board of Tata Sons. By a Resolution of the Board of Directors of Tata Sons dated 16.03.2012, Cyrus Mistry was appointed as Executive Deputy Chairman for a period of five years from 01.04.2012 to 31.03.2017, subject however to the approval of the shareholders at a General Meeting. By a Resolution dated 18.12.2012, the Board of Directors of Tata Sons re-designated Cyrus Mistry as its Executive Chairman with effect from 29.12.2012, even while designating Ratan Tata as Chairman Emeritus. By a Resolution passed on 24.10.2016, the Board of Directors of Tata Sons replaced Cyrus Mistry (CPM) with Ratan Tata (RNT) as the interim Non-Executive Chairman. It is relevant to note that Cyrus Mistry was replaced only from the post of Executive Chairman and it was left to his choice to continue or not, as Non-executive Director of Tata Sons. As a follow up, certain things happened and by separate resolutions passed at the meetings of the shareholders of Tata Industries Limited, Tata Consultancy Services Limited and Tata Limited, CPM was removed from directorship of those companies. CPM then resigned from the Directorship of a few other operating companies such as the Indian Hotels Company Limited, Tata Steel Limited, Tata Motors Limited, Tata Chemicals Limited and Tata Power Company Limited, after coming to know of the impending resolutions to remove him from Directorship. Thereafter, 2 companies by name, Cyrus Investments Private Limited and Sterling Investment Corporation Private Limited, belonging to the SP Group, in which CPM holds a controlling interest, filed a company petition in C.P No.82 of 2016 before the National Company Law Tribunal (“NCLT”) under Sections 241 and 242 read with 244 of the Companies Act, 2013, on the grounds of unfair prejudice, oppression and mismanagement. Along with the application for waiver of the requirement of Section 244(1)(a), the complainant companies also moved an application for stay of an Extra­ordinary General Meeting (“EGM” for short) of Tata Sons, in which a proposal for removing CPM as a Director of Tata Sons had been moved.

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