Five years too late

One of the downside risk of legal delays is that many times the court may tend to give a verdict on a subject that is not the bone of contention any longer. In the Tata–Mistry case, the final judgment on 26 March was on a subject which was not the dispute any longer. Now the real case has moved from restoration of Cyrus Mistry’s position as the chairman of Tata Sons to getting a good price for the Mistry family stake in Tata Sons. That issue still remains open and may be another legal battle. But it highlights the risks of delayed legal judgments.

What did the judgment say

The judgment was delivered by a bench headed by Chief Justice Bobde, just few months ahead of his retirement. The bench ruled that all the submissions of the Tata Group were admitted and all the submissions of the Mistry group were rejected. In short, the removal of Cyrus Mistry was legitimate as was the appointment of N Chandrasekharan as the chairman of Tata Sons. The bench also ruled that it did not see an element of oppression of minority shareholders in the recent actions of Tata Sons.

Mostly of academic interest

While Tatas and their counsel, Harish Salve, claimed a moral victory as well as a vindication of their stand from the judgment, it really does not say much. For starters, Cyrus Mistry himself has said that he is not keen on restoration of his position, excepting representation on the board of Tata Sons. There is no talk of that. Secondly, the onus of the case had shifted from Mistry’s position in Tata Sons to the monetization of Tata Sons stake by Mistry family. The real bone of contention today is the basis for the valuation of Mistry family stake in Tata Sons, but the judgment is silent on that subject. In short, on account of the time lag, the court has pronounced its verdict on an issue that is really not the subject of dispute as it stands today. 

An exit for the Mistry family

The real challenge is an honorable and a profitable exit for the Mistry family from Tata Sons. Even Pallonji Mistry admitted that the relationship was not feasible any longer. However, in the last few months, both parties have not been able to either agree upon a methodology for the exit or the valuation for the exit of the Mistry family from Tata Sons. If past cases are anything to go by, such solutions are best found by sitting across the table and talking. The sooner this separation happens amicably, the better it would be both parties. Legal answers may not really work here.