Case: TATA CONSULTANCY SERVICES LIMITED Vs. CYRUS INVESTMENTS PVT. LTD. AND ORS

Act. Therefore, it is clear that Sub- section (4) ceased to exist on and from 13.12.2000 and hence the question of Tata Sons seeking the approval of the Central Government under Sub-section (4) during the period 2000-2013 did not arise. 20.38 The only provision that survived after 13.12.2000 was Sub-section (2A) of Section 43A. It survived till 30-01-2019 until the whole of the 1956 Act was repealed. There are two aspects to Sub- section (2A). The first is that the very concept of deemed to be public company was washed out under Act 53 of 2000. The second aspect is the prescription of certain formalities to remove the remnants of the past. What was omitted to be done by Tata Sons from 2000 to 2013 was only the second aspect of Sub-section (2A), for which Section 465 of the 2013 Act did not stand as an impediment. Section 43A(2A) continued to be in force till 30-01- 2019 and hence the procedure adopted by Tata Sons and the RoC in July/August 2018 when section 43A(2A) was still available, was perfectly in order. 20.39 As rightly held by this court in Darius Rutton Kavasmaneck vs. Gharda Chemicals Ltd ((2015) 14 SCC 277 [see the editors note in the SCC report regarding the conflict between sec.27(3) and sec.3(1)(iii)(d)]), Parliament always recognised the possibility of a deemed public company again reverting back to the status of a private company. Though this court took note of the conflict between section 27(3) and section 3(1)(iii) (d), after the amendment by Act 53 of 2000, this court nevertheless held in Gharda Chemicals that by incorporating the requirement of sub-clause (d) of section 3(1)(iii) in the Articles of Association, a deemed public company can revert back to its status as a private company, in view of sub-section (2A) of section 43A, by incorporating necessary provisions in the Articles. In simple terms, a company which becomes a deemed public company by operation of law, cannot be taken to have undergone a process of fermentation or coagulation like milk to become curd or yogurt, having an irreversible effect. 20.40 Therefore, NCLAT was completely wrong in holding as though Tata Sons, in connivance with the Registrar of companies did something clandestinely, contrary to the procedure established by law. The request made by Tata Sons and the action taken by the Registrar of Companies to amend the Certificate of Incorporation were perfectly in order. 20.41 It was argued on behalf of SP group (i) that in 1995 Tata Sons allowed renunciation of entitlement to rights issue, in favour of rank outsiders, throwing the restriction contained in section 3(1) (iii) to the wind (ii) that till September 2002, Tata Sons accepted deposits from public and hence sub-clause (d) of section 3(1)(iii) was not satisfied (iii) that as per the circular of the Department of Company Affairs, a company which does not approach the RoC for reconversion would be deemed to have chosen to remain as a public company (iv) that as per RBI circular dated 1-1-2002 private companies accepting deposits would become public companies (v) that till the year 2009, Tata Sons chose to describe itself only as a public company in the forms filed under Rule 10 of the Companies (Acceptance of Deposits) Rules, 1975 (vi) that the conversion adversely affected the ability of Tata Sons to raise funds increasing borrowing costs (vii) that Tata Sons will be required to refund the investments made by insurance companies on account of the conversion and (viii) that the act of conversion lacked probity and was also prejudicial to the interests of the minority shareholders and the company as well as independent directors. 20.42 But we are not impressed with the above contentions. Once the company had become a deemed public company with effect from 1-2-1975, the privileges of a private company stood withdrawn and the company was entitled in law to allow renunciation of shares under rights issue. In any case, the validity of what was done in 1995 was not in question. That they accepted deposits from public till September 2002, is the reason why they were not reconverted as a private company at that time. Once a new definition of the expression private company came into force with effect from 12-09-2013 under section 2(68) of the 2013 Act, the only test to be applied is to find out if the company fits into the scheme under the new Act or not. We need not go to the circulars issued by the department or the RBI when statutory provisions show the path with clarity. The description of the company in the forms filed under Rule 10, reflected the true position that prevailed then and they would not act as estoppel when the company was entitled to take advantage of the law. That the ability of the company to raise funds has now gone and that the company will have to repay the investments made by insurance companies, are all matters which the shareholders and the Directors are to take care. The question before the court is whether the reconversion is in accordance with law or not. The question is not whether it is good for the company or not. 20.43 The real reason why SP group and CPM are aggrieved by the conversion is, that most of their arguments are traceable to provisions which apply only to public and listed public companies. If re-conversion goes, they may perhaps stand on a better footing. But that would tantamount to putting the cart before the horse. One may be entitled to a collateral benefit arising out of a substantial argument. But one cannot seek to succeed on a collateral issue so as to make the substantial argument sustainable. 20.44 Therefore, question of law No. 5 is accordingly answered in favour of Tata Sons and as a consequence, all the observations made against the appellants and the Registrar of companies in Paragraphs 181, 186 and 187 (iv) of the impugned judgment are set aside. 21. Conclusion

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]8.1 As pointed out at the beginning of chapter 7, NCLT dealt with every one of the allegations of oppression and mismanagement and recorded reasoned findings. But NCLAT, despite being a final court of facts, did not deal with the allegations one by one nor did the NCLAT render any opinion on the correctness or otherwise of the findings recorded by NCLT. Instead, the NCLAT summarised in one paragraph, namely paragraph 183, its conclusion on some of the allegations, without any kind of reasoning. This Paragraph 183 reads as follows:The facts, as noticed above, including the affirmative voting power of the nominated Directors of the Tata Trusts over majority decision of the Board; actions taken by Mr. Ratan N. Tata (2nd Respondent), Mr. Nitin Nohria (7th Respondent) and Mr. N.A.Soonawala (14th Respondent) and others as discussed above; the fact that the Company (Tata Sons Limited) has suffered loss because of prejudicial decisions taken by Board of Directors; the fact that a number of Tata Companies have incurred loss; in spite of decision making power vested with the Board of Directors with affirmative power of nominated Directors of the Tata Trusts; the action in making change from Public Company to Private Company; the manner in which Mr. Cyrus Pallonji Mistry (11th Respondent) was suddenly and hastily removed without any reason and in absence of any discussion in the meeting shown in the Board of Directors held on 24th October, 2016 and his subsequent removal as Director(s) of different Tata Companies, coupled with global effect of such removal, as accepted by the Company in its Press Statement form a consecutive chain of events with cumulative effect justifying us to hold that the Appellants have made out a clear case of prejudicial and oppressive action by contesting Respondents, including Mr. Ratan N. Tata (2nd Respondent), Mr. Nitin Nohria (7th Respondent) and Mr. N.A.Soonawala (14th Respondent) and other, the nominee Directors.8.2 The allegations relating to (i) over priced and bleeding Corus acquisition (ii) doomed Nano car project (iii) undue favours to Siva and Sterling (iv) loan by Kalimati to Siva (v) sale of flat to Mehli Mistry (vi) the unjust enrichment of the companies controlled by Mehli Mistry (vii) the Aviation industry misadventures (viii) losses due to purchase of the shares of Tata Motors etc., were not individually dealt with by NCLAT, though NCLT had addressed each one of these issues and recorded findings in favour of Tata Sons. Therefore, there is no escape from the conclusion that NCLAT did not expressly overturn the findings of facts recorded by NCLT, on these allegations. We are constrained to take note of this, even at the outset, in view of a contention raised by Shri Shyam Divan, learned Senior Counsel for the SP group, that in an appeal under Section 423 of the Companies Act, 2013, this court will not normally interfere with a finding of fact reached by NCLAT, unless it is found to be wholly perverse.15.27 From the table given above, it could be seen that the changes brought about in India in course of time, were material. These changes can be summarised as follows:(i) While the conduct of the companys affairs in a manner that warrant interference, should be present and continuing, under the 1913 Act and 1956 Act, as seen from the usage of the words are being, the conduct could even be past or present and continuous under the 2013 Act as seen from the usage of the words have been or are being (But the conduct cannot be of a distant past);(ii) Prejudice to public interest and prejudice to the interests of any member or members were not among the parameters prescribed in the 1913 Act, but under the 1956 Act prejudice to public interest was included both under the provision relating to oppression and also under the provision relating to mismanagement. Prejudice to the interest of the company was included only in the provision relating to mismanagement. But under the 2013 Act conduct prejudicial to any member or prejudicial to public interest or prejudicial to the interest of the company are all added along with oppression;(iii) Under the 1913 Act, the Court should be satisfied that winding up under the just and equitable clause will not only unfairly prejudice but also materially prejudice the interests of the company or any part of its members. But in the 1956 Act and 2013 Act, the words and materially do not follow the word unfairly. Moreover, under the 1956 Act and 2013 Act all that is required to be seen is whether the winding up will unfairly prejudice such member or members indicating thereby that the focus was on complaining/affected members.15.28 Having thus seen the shift in the Indian legislative policy under Act 52 of 1951 (amending the 1913 Act) and then under the 1956 Act as amended by Act 53 of 1963 and thereafter under the 2013 Act, let us also see how the shift in the legislative policy happened in the United Kingdom. A table similar to the one given in para 15.26, is presented below insofar as the English Law is concerned:15.29 There are a few notable features of the shift that happened in England. They are (i) from a conduct oppressive to some part of the members the focus has shifted to conduct unfairly prejudicial to the interests of the members generally or of some part of its members: (ii) conduct prejudicial to public interest or prejudicial to the companys interest, does not form part of the scheme of English Law; (iii) any actual or proposed act or omission, can also be challenged under English Law on the ground that it would turn out to be prejudicial; (iv) the question of the Court forming an opinion that the facts would otherwise require an order for winding up on just and equitable ground but that the same will unfairly prejudice the complaining members, does not arise under the English Law any more. 15.30 But despite the huge shift in England, there appears to be a common thread running in all the enactments, both in India and England. In all the 3 Indian enactments, namely the 1913 Act, 1956 Act and the 2013 Act, the Court is ordained, generally to pass such orders with a view to bringing to an end the matters complained of. This sentence is found in Section 153C(4) of the 1913 Act. It is found in Section 397(2) as well as 398(2) of the 1956 Act and it is also found in Section 242 (1) of the 2013 Act. This is also the common thread that runs through the statutory prescriptions contained in the English Acts of 1948, 1985 and 2006. Therefore, at the stage of granting relief in an application under these provisions, the final question that the Court should ask itself is as to whether the order to be passed will bring to an end the matters complained of. Having thus seen the development of law, let us now take up the questions of law one after another.16.2 An analysis of the provisions of Section 241(1)(a) read with clauses (a) and (b) of Sub-section (1) of Section 242 shows that a relief under these provisions can be granted only if the Tribunal is of the opinion –(1) that the companys affairs have been or are being conducted in a manner –(a) Prejudicial to any member or members or(b) Prejudicial to public interest or(c) Prejudicial to the interests of the company or(d) Oppressive to any member or members and(2) that though the facts would justify the making of a winding up order on the basis of just and equitable clause, such a winding up would unfairly prejudice such member or members.16.3 Keeping in mind the above statutory prescription, if we go back to the pleadings, it will be seen that the complainant companies forming part of the S.P. Group pitched their claim in their original petition on the ground:(i) that the affairs of Tata Sons are being carried as though it was the proprietary concern of RNT; and(ii) that though the oppressive conduct of the respondents was such that it would be just and equitable to wind up Tata Sons under Section 241, but such winding up would unfairly prejudice the interests of the complainants.16.4 The specific allegations on which the complainant companies (of the S.P. Group) sought relief are as follows:-(i) The abuse of a few Articles of Association and the control exercised by the Tata Trust and its nominee Directors over the Board of Directors of Tata Sons;(ii) The removal of CPM as Executive Chairman;(iii) Transactions with Mr. C. Sivasankaran of Sterling Infotech and the transactions in which Tata Teleservices got entangled;Group Inc of U.K.;(v) Doomed Nano Car project;(vi) The grant of inter-corporate bridge loan to sterling computers;(vii) The dealings with NTT DoCoMo which eventually led to an arbitration award for a huge sum of money;(viii) The sale of a flat to Mehli Mistry and the grant of huge personal favours to the companies owned and controlled by Mehli Mistry.16.5 Each and every one of the allegations forming the basis of the complaint, was dealt with by NCLT and categorical findings based on evidence was recorded by NCLT. The findings recorded by NCLT allegation-wise, are indicated in paragraph 6.1 above.16.6 None of the above findings, except the one relating to the removal of CPM was specifically and individually overturned by NCLAT. In addition NCLAT focused on the conversion of Tata Sons from a public company to a private company.16.8 NCLAT, being an Appellate Tribunal, conferred with the power under sub-Section (4) of Section 421 to confirm, modify or set aside the order of NCLT, can be taken to be a final court of fact. An appeal from the Order of the NCLAT to this Court under Section 423 is only on a question of law. Considering the nature of the jurisdiction conferred upon NCLAT, it is clear that the findings of the NCLT, not specifically modified or set aside by NCLAT should be taken to have reached finality, unless the parties aggrieved by such non-interference by NCLAT have approached this Court, raising this as an issue. Though SP group has also filed an appeal in C.A. No. 1802 of 2020, the grievance aired therein, as seen from para 3 of the memorandum of appeal, is limited to the failure of NCLAT to grant certain reliefs. The failure of NCLAT to specifically overturn the findings of fact recorded by NCLT, is not assailed in the SP groups appeal. Therefore, we have no hesitation in holding that the allegations relating to(i) transactions with Siva and Sterling Group of Companies;(ii) Air Asia;(iii) Transactions with Mehli Mistry;(iv) the losses suffered by Tata Motors in Nano car project; and(v) the acquisition of Corus reached finality.16.9 The findings recorded by NCLAT for the grant of reliefs, revolved primarily around the removal of CPM, the affirmative voting rights, interference by nominee Directors and the conversion of Tata Sons into a private company. In other words, these are the 4 areas in which NCLAT can be taken to have undertaken a scrutiny and reversed the findings of NCLT. Therefore, for answering the first question of law, we need to focus mainly on these issues on which NCLAT expressly overruled NCLT.16.11 CPM was first removed only from the post of Executive Chairman of Tata Sons, but not from the Directorship, by the resolution of the Board dated 24.10.2016. This acted as the trigger point for CPM, to launch an offensive. On the very next day namely 25.10.2016, CPM wrote a mail alleging total lack of corporate governance and failure on the part of the directors to discharge their fiduciary duties. He also called all the Trust nominee directors as postmen. Though the mail was labelled as confidential, a copy of the mail landed up with the media creating a sensation. NCLT recorded a finding that CPM who owes a duty to explain this leakage of confidential mail, could not provide a satisfactory answer and that therefore, by virtue of section 106 of the Evidence Act, the leakage has to be traced to CPM. NCLAT did not overrule this finding.16.12 The mail compelled Tata sons to issue a Press Statement on 10.11.2016. This was followed by the removal of CPM from the Directorship of Tata Industries Limited, Tata Consultancy Services Limited and Tata Teleservices Limited, all of which happened during the period from December 12 to December 14, 2016. Seeing clearly the course of destiny (which was actually set in motion by none other than himself), CPM resigned from other operating companies of Tatas such as The Indian Hotels Company Limited, Tata Steel Limited, Tata Motors Limited, Tata Chemicals Limited and Tata Power Limited, on 19.12.2016, on the eve of the Extraordinary General Meetings of those companies, convened for considering resolutions for his removal. On the very next day namely, 20.12.2016 the complainant companies, of which CPM is the pivot, filed a petition C.P.No.82 of 2016 before NCLT, Mumbai, under Sections 241 and 242 read with Section 244 of the Companies Act, 2013.16.13 Around this time, as if by coincidence, the Principal Officer of Tata Sons received a letter dated 29.11.2016 from the Deputy Commissioner of Income Tax (Exemptions) seeking certain information under Section 133(6) of the Income Tax Act, 1961 in the case of Tata Education Trust. Tata Sons, through a reply dated 09.12.2016 furnished necessary information along with the requested documents. The Deputy Commissioner of Income Tax also called for some additional information by subsequent letters, and the information so called for, was also furnished.16.14 Claiming that a mail dated 20.12.2016 issued by the Deputy Commissioner of Income Tax seeking further information under Section 133(6) was copy-marked to him, CPM sent a reply to the Income Tax department confirming (i) that the Directors appointed by Tata Trust controlled the decision making processes by virtue of the affirmative voting rights; (ii) that RNT and Soonawala have on many occasions sought prior information and consultation; (iii) that the conduct of the Trustees posed several regulatory risks; and (iv) that the office of RNT, in his capacity as Chairman Emeritus was funded by Tata Sons, including the cost of his overseas travel by private jet. To this letter to the Deputy Commissioner of Income Tax was enclosed certain files purportedly containing the information sought.16.15 Upon coming to know of CPMs letter to the Deputy Commissioner of Income Tax, Tata Sons lodged a protest through a letter dated 26.12.2016. It was followed by a legal notice issued by Tata Sons to CPM on 27.12.2016 pointing out that he was guilty of breach of confidentiality and that he had passed on confidential and sensitive information contained in 4 box files, without any authority. CPM sent a legal reply dated 05.01.2017 claiming that he had a statutory obligation to cooperate with Income Tax authorities. As if to display his courage of conviction, CPM sent another letter dated 12.01.2017 to the Deputy Commissioner of Income Tax sending one more file and assuring the authorities that he would continue to check the records and submit any additional data/information as and when available.16.16 In the light of whatever transpired as narrated above, a Special Notice and Requisition was moved on 03.01.2017 convening an EGM of Tata Sons for considering the removal of CPM as Director of Tata sons. It must be remembered at this stage that by the Resolution of the Board of Tata Sons dated 24.10.2016, CPM was merely removed from the post of Executive Chairman, but he continued to be a member of the Board as a Non Executive Director even after 24.10.2016. It must also be remembered that it was during his continuance as the member of the Board that CPM exchanged correspondence/legal notice with Tata Sons and also passed on information along with certain files, to the Income Tax authorities claiming to be a very law abiding citizen.16.17 Since the EGM of Tata sons was scheduled to be held on 06.02.2017, for considering the resolution for CPMs removal from the Directorship, the Companies (S.P. Group) which filed the complaint before the NCLT moved an interim application before NCLT for a stay of the EGM. NCLT declined stay and the appeal against the refusal to grant stay was also dismissed by NCLAT. Therefore, the EGM proceeded as scheduled on 06.02.2017 and CPM was removed from the Directorship of Tata Sons. In his place Mr. N. Chandrasekharan, was appointed as Executive Chairman.16.18 In the Company Petition as it was originally filed on 20.12.2016, the complainant companies had sought a set of 21 reliefs, one of which was for a direction to the respondents (the company and its directors) not to remove CPM (who was cited as R- 11 in the original petition) from the directorship of Tata Sons. This was in prayer clause (F) of Paragraph 153 of the main company petition. This prayer was in direct contrast to the reliefs sought in prayer clauses (A) and (B). Prayer clause (A) was for superseding the existing Board of Directors and appointment of an Administrator. Prayer in clause (B) was for appointment of a retired Supreme Court Judge as Non Executive Chairman and for appointment of a new set of independent Directors.16.19 After the dismissal of the interim application moved for stalling the EGM scheduled to be held on 06.02.2017 and after the passing of the resolution for the removal of CPM in the EGM held on 06.02.2017, the complainant companies moved an application for amendment of the original petition so as to include two additional prayers namely (i) reinstatement of the representative of the complainant companies on the Board of Tata Sons; and (ii) amendment of the Articles of Association to provide for proportional representation.16.20. However, eventually the prayers made in clauses (A), (B) and (C) were not pressed. Prayers in clauses (F), (Q) & (R) were also not pressed on the ground that they had become infructuous. In Paragraph 3.4 above we have extracted the reliefs as originally sought in the main company petition and in the table in Paragraph 4.11 we have indicated the prayers additionally made and the reliefs either given up or sought to be modified.16.21 In fact the real reason why the complainant companies thought fit, quite tactfully, not to press for the reinstatement of CPM is that the mere termination of Directorship cannot be projected as something that would trigger the just and equitable clause for winding up or to grant relief under Sections 241 and 242. A useful reference can be made in this regard to the decision of this Court in Hanuman Prasad Bagri & Ors. vs. Bagress Cereals Pvt. Ltd. (2001) 4 SCC 420. 16.22 It must be remembered : (i) that a provision for inclusion of a representative of small shareholders in the Board of Directors, is of a recent origin under Section 151 of the Companies Act, 2013 and it is applicable only to a listed company; (ii) that Tata sons is not a listed Company; (iii) that the Articles of Association of Tata sons, to which the complainant companies, CPM and his father had subscribed, do not provide for any representation; (iv) that despite there being no statutory or contractual obligation, Tata Sons inducted CPMs father as a director on the board in the year 1980 and continued him for a period of almost 25 years; (v) that CPM himself was inducted, again without reference to any statutory or contractual obligation, as a Director on the Board in August, 2006; and (vi) that within 6 years of such induction, CPM was identified as a successor to RNT and was appointed as Executive Deputy Chairman and elevated to the position of Executive Chairman.16.23 It is an irony that the very same person who represents shareholders owning just 18.37% of the total paid up share capital and yet identified as the successor to the empire, has chosen to accuse the very same Board, of conduct, oppressive and unfairly prejudicial to the interests of the minorities. In support of such allegation, the complainant companies have pointed out certain business decisions taken during the period of more than 10 years immediately preceding the date of removal of CPM. That failed business decisions and the removal of a person from Directorship can never be projected as acts oppressive or prejudicial to the interests of the minorities, is too well settled. In fact it may be concede today by Tata sons that one important decision that the Board took on 16.03.2012 certainly turned out to be a wrong decision of a life time.16.24 Therefore, the fact that the removal of CPM was only from the Executive Chairmanship and not the Directorship of the company as on the date of filing of the petition and the fact that in law, even the removal from Directorship can never be held to be an oppressive or prejudicial conduct, was sufficient to throw the petition under section 241 out, especially since NCLAT chose not to interfere with the findings of fact on certain business decisions.16.25 The subsequent conduct on the part of CPM in leaking his mail dated 25-10-2016 to the Press and sending replies to the Income Tax Authorities enclosing 4 box files, even while continuing as a Director, justified his removal even from the Directorship of Tata Sons and other group companies. A person who tries to set his own house on fire for not getting what he perceives as legitimately due to him, does not deserve to continue as part of any decision making body (not just the Board of a company). It is perhaps this realisation that made the complainant companies give up their original prayer for restraining the company from removing CPM and singing a different tune seeking proportionate representation on the Board.16.27 First of all, the above contention is in direct conflict with the entire foundation on which the whole case of the complainant companies was erected. If CPM and the members of the Nomination and Remuneration Committee as well as the entire Board were on the same page till 29.6.2016 that the company was doing well under the stewardship of CPM, then there can be no allegation that the companys affairs were conducted in a manner oppressive or prejudicial to the interest of anyone, namely the company or the minority, at least until 29.6.2016. On the contrary if the companys affairs have been conducted in a manner oppressive or prejudicial, even before 29.6.2016, the other members of the Board and CPM could not have formed themselves into a mutual admiration society to laud CPMs performance and CPM acknowledging that the company was doing well when he was in the drivers seat.16.28 An important aspect to be noticed is that in a petition under Section 241, the Tribunal cannot ask the question whether the removal of a Director was legally valid and/or justified or not.16.29 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 under Section 242. The Company Tribunal is not a labour Court or an administrative Tribunal to focus entirely on the manner of removal of a person from Directorship. Therefore, the accolades received by CPM from the Nomination and Remuneration Committee or the Board of Directors on 29.6.2016, cannot advance his case.16.30 A contention was raised that CPMs removal was a pre- meditated act, carried out at the behest of Tata Trusts and RNT and that the removal was not only contrary to Article 118, but also contrary to Article 105(a) read with the second proviso to Section 179(1) and Article 122(b).16.31 As we have pointed out above, the validity of and justification for the removal of a person can never be the primary focus of a Tribunal under Section 242 unless the same is in furtherance of a conduct oppressive or prejudicial to some of the members. In fact the post of Executive Chairman is not statutorily recognised or regulated, though the post of a Director is. At the cost of repetition it should be pointed out that CPM was removed only from the post of (or designation as) Executive Chairman and not from the post of Director till the Company Petition was filed. But CPM himself invited trouble, by declaring an all out war, which led to his removal from Directorship.16.32 It is true that as per the evidence available on record he was requested before the Board meeting, to step down from the post of Executive Chairman. That does not tantamount to the act being pre-meditated. The induction of new members on 8.8.2016 into the Board and the Board securing a legal opinion prior to the Board meeting, cannot make the act a pre-meditated one. There is a thin line of demarcation between a well-conceived plan and a pre- meditated one and the line can many times be blurred.16.34 The sentence in Article 118 reading the same process shall be followed for the removal of incumbent Chairman actually goes along with the last limb of the portion immediately preceding this line. It deals with the appointment of a person as Chairman, pursuant to the recommendation of a Selection Committee, subject to Article 121 which requires the affirmative vote of the Directors appointed in terms of Article 104B.16.35 It is absurd to interpret Article 118 to mean that Selection Committee is to be constituted for the removal of an incumbent Chairman. The necessity for taking recourse to the affirmative voting right under Article 121 is what is meant by the expression the same process appearing in the second part of Article 118.16.36 The argument pitched upon Article 105(a) is also completely unfounded. Article 105(a) deals with the power of the Board to appoint a Managing Director, Joint/Deputy Managing Director or Whole Time Director. The provision relating to Executive Chairman is not to be found in Article 105(a) but in Article 105(b) which reads as follows:The Board shall have the power to designate the Chairman of the Board as the Executive Chairman and pay him such remuneration as, in their opinion, they deem fit.Therefore, the argument on the basis of Article 105(a) is ill-founded.16.37 The contention that the removal was in violation of the second proviso to Section 179(1) read with Article 122(b) is also ill- conceived. The second proviso to Section 179(1) prohibits the Board from exercising any power that could be exercised by the company only in a General Meeting. Article 122(a) is only a reiteration of the principle behind the second proviso to Section 179(1). Article 122(b) says that the Board may exercise all such powers as are not required to be exercised by the company in General Meeting. The designation of a person as Executive Chairman, is not one of the functions to be performed in a general meeting, either under the Act or under the Articles of association.16.38 It is also contended that no advance notice of his removal was given to CPM and no agenda item was placed in advance in terms of Article 121B, which reads as follows:121B. Any Director of the Company will be entitled to give at least fifteen days notice to the Company or to the Board that any matter or resolution be placed for deliberation by the Board and if such notice is received it shall be mandatory for the Board to take up such matter or resolution for consideration and vote, at the Board meeting next held after the period of such notice, before considering any other matter or resolution.16.39 We do not know how Article 121B is sought to be invoked. It deals with a situation where a Director wants to bring up any matter or resolution before the Board. It has no relevance to the agenda that the Board wants to take up. Even according to the complainant companies, the Directors of a Company have a fiduciary relationship. It is a relationship in which one party places special trust, confidence and reliance on another. It is claimed by the appellants (Tata Group) that the removal of CPM was as a result of lack of confidence and trust in him. By his own subsequent conduct, CPM unfortunately enhanced the firepower of the management of Tata Sons, with regard to their claim relating to lack of confidence and trust.16.41 The decision in M.I. Builders Pvt. Limited vs. Radhey Shyam Sahu & Others (1999) 6 SCC 464 , to the effect that an important issue cannot be decided under the residuary agenda item any other item, will not also go to the rescue of the complainant companies, since the matter in M.I. Builders concerned the permission granted by the Municipal Corporation to a builder to construct an underground shopping complex in a park. The Court found the decision taken by the Mahapalika to be in clear breach of Sections 91 and 119 of the U.P. Municipal Corporation Act, 1959. Therefore, the said decision has no application.16.42 In any event 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 justifiable reasons and hence NCLAT could not have laboured so much on the removal of CPM, for granting relief under Sections 241 and 242.16.43 Interestingly, NCLAT has recorded a finding, though not based upon any factual foundation, that the facts otherwise justify the making of a winding up order on just and equitable ground. But as held by the Privy Council in Loch v. John Blackwood [1924] AC 783, there must lie a justifiable lack of confidence in the conduct and management of the companys affairs, at the foundation of applications for winding up. More importantly, the lack of confidence must spring not from dissatisfaction at being out-voted on the business affairs or on what is called the domestic policy of the company. But, wherever the lack of confidence is rested on a lack of probity in the conduct of the companys affairs, then the former is justified by the latter.16.44 A passage from the opinion of Lord President of the Court of Session (Lord Clyde) in Baird v. Lees (1924) SC 83 Scottish Supreme Court, quoted in Loch (supra), reads as follows:-A shareholder puts his money into a company on certain conditions. The first of them is that the business in which he invests shall be limited to certain definite objects. The second is that it shall be carried on by certain persons elected in a specified way. And the third is that the business shall be conducted in accordance with certain principles of commercial administration defined in the statute, which provide some guarantee of commercial probity and efficiency. If shareholders find that these conditions or some of them are deliberately and consistently violated and set aside by the action of a member and official of the company who wields an overwhelming voting power, and if the result of that is that, for the extrication of their rights as shareholders, they are deprived of the ordinary facilities which compliance with the Companies Acts would provide them with, then there does arise, in my opinion, a situation in which it may be just and equitable for the Court to wind up the company.16.45 If the above tests are applied, the case on hand will 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.16.50 Therefore, for invoking the just and equitable standard, the underlying principle is that the Court should be satisfied either that the partners cannot carry on together or that one of them cannot certainly carry on with the other.16.51 In the case in hand there was never and there could never have been a relationship in the nature of quasi partnership between the Tata Group and S.P. Group. S.P. Group boarded the train half-way through the journey of Tata Sons. Functional dead lock is not even pleaded nor proved.16.52 Coming to the Indian cases, this court held in Rajahmundry Electric Supply Corpn. Ltd. v. Nageshwara Rao (1955) 2 SCR 1066  that for the invocation of just and equitable clause, there must be a justifiable lack of confidence on the conduct of the directors, as held. A mere lack of confidence between the majority shareholders and minority shareholders would not be sufficient, as pointed out in S.P. Jain v. Kalinga Tubes Ltd. AIR 1965 SC 1535 .16.54 But all these arguments lose sight of the nature of the company that Tata Sons is. As we have indicated elsewhere, 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. Therefore, the finding of NCLAT that the facts otherwise justify the winding up of the Company under the just and equitable clause, is completely flawed.17.2 As we have indicated in Para 3.4 above, the complainant companies originally sought a set of 21 reliefs listed in para 153 (A) to (U). Subsequently, the complainant companies sought the addition of two more prayers, through an application for amendment filed on 10.2.2017. The additional reliefs sought to be included were for: (i) reinstatement of a representative of the complainant companies on the Board of Tata Sons and (ii) Amendment of the Articles of Association so as to provide for proportional representation on the Board.17.3 Thereafter the complainant companies sought a few more prayers through an application for amendment dated 31.10.2017. However, by a Memo dated 12.01.2018 the complainant companies gave up certain prayers, sought a modification of some other prayers and recorded that they were not pressing certain reliefs. At the cost of repetition, we have to present in a tabular form, the reliefs originally sought and the metamorphosis that they underwent through applications for amendment or Memo.17.5 Out of the aforesaid reliefs that came to stay till the end, NCLAT granted only certain reliefs, which in simple terms, were as follows:-(i) Setting aside the removal of CPM and directing his reinstatement both as Executive Chairman of Tata Sons and as Director of other Tata Companies for the rest of the tenure.(ii) Restraining RNT and the nominees of Tata Trust from taking any advance decision.(iii) Restraining Tata Sons from exercising its power under Article 75 against the complainant companies and other minority members, except in exceptional circumstances and in the interest of the Company and that too after recording reasons and informing the affected parties.(iv) Setting aside the decision of the Registrar of Companies recognising Tata Sons conversion into a Private Company.17.6 Thus NCLAT granted to the complainant companies (and indirectly to CPM) four reliefs namely:(i) reinstatement of CPM;(ii) declaring Tata Sons as a Public Limited Company;(iii) restraining the nominee Directors and RNT from taking any decision in advance and(iv) restraining the invocation of Article 75 except in exceptional circumstances.17.8 As we have seen already, the original motive of the complainant companies, was to restrain Tata Sons from removing CPM as Director. Subsequently, there was a climb down and the complainant companies sought what they termed as reinstatement of a representative of the complainant companies. Thereafter, it was modulated into a cry for proportionate representation on the Board.17.9 In this background it was repeatedly argued both before the NCLAT and before this Court that the objective of the litigation was not to have CPM reinstated, but only to set things right in the State of Denmark (of which CPM himself was the Premier for 4 years). But interestingly, NCLAT understood what the complainant companies and CPM actually wanted, though they attempted to camouflage their intentions with legal niceties. Therefore, despite there being no prayer for reinstatement of CPM either as a Director or as an Executive Chairman of Tata Sons, NCLAT directed the restoration of CPM as Executive Chairman of Tata Sons and as Director of Tata Companies for the rest of the tenure.17.10 While granting much more than what the complainant companies and CPM themselves thought as legally feasible, NCLAT failed to notice one important thing. The appointment of CPM as Executive Deputy Chairman of Tata Sons, was to be for a period of 5 years from 01.04.2012 to 31.03.2017, subject to the approval of the shareholders. In the Meeting of the shareholders held on 01.08.2012, the appointment of CPM as Executive Deputy Chairman was approved and the General Body left it to the Board to re-designate CPM as Chairman. Accordingly, the Board re- designated CPM as Executive Chairman, with effect from 29.12.2012, by a resolution passed on 18.12.2012.17.11 The judgment of the NCLAT was passed on 18.12.2019, by which time, a period of nearly 7 years had passed from the date of CPMs appointment as Executive Chairman. Therefore, we fail to understand : (i) as to how NCLAT could have granted a relief not apparently sought for (though wished for); and (ii) what NCLAT meant by reinstatement for the rest of the tenure. That the question of reinstatement will not arise after the tenure of office had run its course, is a settled position. In this regard, we may refer to the decisions in Raj Kumar Dey vs. Tarapada Dey (1987) 4 SCC 398  and Mohd. Gazi vs. State of Madhya Pradesh (2000) 4 SCC 342. While so, it is incomprehensible that the NCLAT directed reinstatement, and that too, of a Director of a company, after the expiry of his term of office. Needless to say that such a remedy would not have been granted even by a labour court/service Tribunal in matters coming within their jurisdiction.17.12 In fact NCLAT has gone to the extent of reinstating CPM not only on the Board of Tata Sons, but also on the Board of Tata group companies, without they being parties, without there being any complaint against those companies under section 241 and without there being any prayer against them. These companies have followed the procedure prescribed by Statute and the Articles and they have validly passed resolutions for his removal. For instance, TCS granted an opportunity to CPM and held a general meeting in which 93.11% of the shareholders, including public institutions who hold 57.46% of shares supported the resolution. In any case CPMs tenure itself was to come to an end on 16.06.2017 but NCLAT passed the impugned order reinstating him for the rest of the tenure. In respect of other companies which had convened the EGM for considering the resolution for his removal, CPM submitted resignations. But now by virtue of the impugned order, CPM will have to be reinstated even on the Board of companies from which he has resigned. This is why even the complainant companies have found it extremely difficult to support the order.17.14 It is interesting to note that at the time of his appointment in December 2012, what CPM saw and acknowledged, was a great learning experience he had under the direct guidance of RNT, but at the time of departure in October 2016, what he saw was only a conduct for over 10 years, that was oppressive and prejudicial to the interests of the company and of the minority. NCLAT failed to take note of this, while granting reliefs neither sought for nor feasible in law.17.15 NCLAT appears to have granted the relief of reinstatement gratis without any foundation in pleadings, without any prayer and without any basis in law. By doing so, the NCLAT has forced upon the appellant an Executive Chairman, who now is unable to support his own reinstatement.17.16 The NCLAT has found the dismissal to be illegal and not a nullity. In law, a dismissal even if found to be wrongful and malafide is an effective dismissal and may give rise to a claim in damages. In Dr. S.B. Dutt vs. University of Delhi 1959 SCR 1236  this Court held: -The award held that the appellant had been dismissed wrongfully and malafide. Now, it is not consequential to such a finding that the dismissal was of no effect, for a wrongful and malafide dismissal is nonetheless an effective dismissal though it may give rise to a claim in damages. The award, no doubt, also said that the dismissal of the appellant was ultravires but as will be seen later, it did not thereby hold the act of dismissal to be a nullity and, therefore, of no effect.17.17 It is significant that Sections 241 and 242 of the Companies Act, 2013 do not specifically confer the power of reinstatement, nor we would add that there is any scope for holding that such a power to reinstate can be implied or inferred from any of the powers specifically conferred.