This case analysis is written by Vasundhara Sinha during her internship with Le Droit India.
Bench: Division Bench of the Supreme Court
Judges: V. Ramasubramanian, A.S. Bopanna, S.A. Bobde
Background: CPM, from minority shareholder SP Group, was appointed Executive Chairman of Tata Sons. Tensions arose over boardroom governance, nominee director rights, and the conversion of Tata Sons from a public to a private company. The removal of CPM as Chairman in October 2016 triggered proceedings under Sections 241–242 (oppression & mismanagement). Petitioners alleged misuse of Articles, shadow control by Tata Trusts, and prejudice caused to minority shareholders.
Issues :
1. Were the company’s affairs conducted in a manner prejudicial, oppressive, or mismanaged—justifying relief under Sections 241–242?
2. Was CPM’s removal bona fide and lawful?
3. Were nominee trustee and article-based governance provisions (like affirmative voting rights) used oppressively?
4. Was the conversion of Tata Sons from public to private improper under Section 43A/Section 14?
5. Should the Registrar’s certificate change be set aside?
Rule :
Sections 241–242 of the 2013 Act allow shareholder remedies if affairs are oppressive, prejudicial to members/company/public interest, and winding up would unfairly prejudice
members. The Tribunal has broad powers (e.g., for regulation, share purchases, director removal etc.) provided the aim is to “bring matters complained of to an end.
Application
1. Prejudice/Oppression:
○ Until 29 June 2016, the board, including CPM, supported company strategy, so no oppressive conduct existed prior to removal. ()
○ No misuse of Articles: affirmative vote provisions were contractually valid and not inherently oppressive. ()
○ The mere provision of advice by trustees/directors didn’t amount to misuse or shadow control. ()
2. Removal Process:
○ CPM’s removal followed proper Articles and section 179, including prior legal advice. There was no breach of mandatory notice procedures or minority rights. ()
3. Conversion Legality:
○ Tata Sons’ Articles satisfied the statutory definition of a private company as of 12 Sept 2013.
○ Compliance with section 43A(2A) and no Articles-based change were required. NCLAT erred in demanding conversion procedures under Section 14.
Conclusion
● Oppression/mismanagement allegations were unfounded—no unfair prejudice to CPM or minority, nor misuse of governance rights.
● Nominee and voting rights were valid, not oppressive.
● Removal of CPM was lawful under Articles and the Act.
● Change of company status was lawful, and NCLAT’s contrary view was set aside.
● All challenged actions—including RoC certificate amendment—were upheld, and the petition dismissed.
