TATA CONSULTANCY SERVICES LIMITED versus CYRUS INVESTMENTS PVT. LTD. AND ORS.

Citation: [2021] 12 S.C.R. 903 · Decided: 26-03-2021 · Supreme Court of India · Bench: S.A. BOBDE, A.S. BOPANNA, V. RAMASUBRAMANIAN · Disposal: Disposed off

Cited by 1 judgment(s) · cites 11 · see the full citation network in Lexace

Judgment (excerpt)

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903
TATA CONSULTANCY SERVICES LIMITED
v.
CYRUS INVESTMENTS PVT. LTD. AND ORS.
(Civil Appeal Nos. 440-441 of 2020)
MARCH 26, 2021
[S.A. BOBDE, CJI, A.S. BOPANNA AND
V. RAMASUBRAMANIAN, JJ.]
Companies Act, 2013 – ss. 241 and 242 – Held: The sine qua
non for invoking s.241 is that the affairs of the Company should
have been conducted or are being conducted in a manner
oppressive or prejudicial to some of the members – In a petition u/
s.241, the Tribunal cannot ask the question whether the removal of
a Director was legally valid and/or justified or not – The question
to be asked is whether such a removal tantamount to a conduct
oppressive or prejudicial to some members – Even in cases where
the Tribunal finds that the removal of a Director was not in
accordance with law or was not justified on facts, the Tribunal
cannot grant a relief u/s.242 unless the removal was oppressive or
prejudicial – There may be cases where the removal of a Director
might have been carried out perfectly in accordance with law and
yet may be part of a larger design to oppress or prejudice the interests
of some members – It is only in such cases that the Tribunal can
grant a relief u/s.242 – The validity and justification for the removal
of a person can never be the primary focus of a Tribunal u/s.242
unless the same is in furtherance of a conduct oppressive or
prejudicial to some of the members – On facts, the removal of a
person from the post of Executive Chairman cannot be termed as
oppressive or prejudicial –The original cause of action for the
complainant companies to approach NCLT was the removal of CPM
from the post of Executive Chairman – Though the complainant
companies padded up their actual grievance with various historical
facts to make a deceptive appearance, the causa proxima for the
complaint was the removal of CPM from the office of Executive
Chairman – His removal from Directorship happened subsequent
to the filing of the original complaint and that too for valid and
[2021] 12 S.C.R. 903
903
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904
SUPREME COURT REPORTS
[2021] 12 S.C.R.
justifiable reasons and hence NCLAT could not have laboured so
much on the removal of CPM, for granting relief u/ss.241 and 242.
Company Law – Held: Company Tribunal is not a labour
Court or an administrative Tribunal to focus entirely on the manner
of removal of a person from Directorship.
Company Law – Winding up order on just and equitable
grounds – Held: There must lie a justifiable lack of confidence in
the conduct and management of the company’s affairs, at the
foundation of applications for winding up – The case on hand does
not fall anywhere near the just and equitable standard, for the simple
reason that it was the very same complaining minority whose
representative was not merely given a berth on the Board but was
also projected as the successor to the Office of Chairman – For
invocation of just and equitable clause, there must be a justifiable
lack of confidence on the conduct of the directors – A mere lack of
confidence between the majority shareholders and minority
shareholders would not be sufficient – On facts, Tata Sons is a
principal investment holding Company, of which the majority
shareholding is with philanthropic Trusts – The majority
shareholders are not individuals or corporate entities having deep
pockets into which the dividends find their way if the Company
does well and declares dividends – The dividends that the Trusts
get are to find their way eventually to the fulfilment of charitable
purposes – Therefore, NCLAT should have raised the most
fundamental question whether it would be equitable to wind up the
Company and thereby starve to death those charitable Trusts,
especially on the basis of un-charitable allegations of oppressive
and prejudicial conduct – Finding of NCLAT that the facts otherwise
justify the winding up of the Company under the just and equitable
clause, was completely flawed.
Companies Act, 2013 – ss. 241 and 242 – ss.241 and 242 do
not specifically confer the power of reinstatement, nor there is any
scope for holding that such a power to reinstate can be implied or
inferred from any of the powers specifically conferred – The
architecture of ss.241 and 242 does not permit the Tribunal to read
into the Sections, a power to make an order (for reinstatement) which
is barred by law vide s.14 of the Specific Relief Act, 1963 with or
without the amendment in 2018.
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Company Law – Law relating to oppression and

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