Tata trustee Noshir Soonawala says Mistry’s charges are defamatory

Cyrus Mistry’s investment firms in an NCLT petition have accused Tata Trusts of corporate governance lapses and violation of insider trading norms


A file photo of Tata’s Bombay House in Mumbai. Cyrus Mistry was unseated as chairman of Tata Sons in a boardroom coup on 24 October. Photo: Hemant Mishra/Mint
A file photo of Tata’s Bombay House in Mumbai. Cyrus Mistry was unseated as chairman of Tata Sons in a boardroom coup on 24 October. Photo: Hemant Mishra/Mint

Mumbai: Noshir Soonawala, a trustee of Tata Trusts, has termed as defamatory and false the claims made by Cyrus Mistry’s family investment firms in a petition filed before the National Company Law Tribunal (NCLT).

The Mistry firms had claimed that the respondents, including Soonawala, were responsible for mismanagement and lapses in governance at Tata Sons, and that Soonawala had sought and received information on listed Tata entities in violation of insider trading norms.

Soonawala refuted those claims and said that all information sought and shared was at the behest of Mistry, the then chairman of Tata Sons, and when various Tata firms sought his advice.

Mistry was unseated as chairman of Tata Sons in a boardroom coup on 24 October. The two sides have since been sparring and the fight is now at the company law tribunal.

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“All the allegations in their varying forms are defamatory in nature and I reserve my legal rights in this regard,” said Soonawala in an affidavit.

“This is the legal expression of vehemently and categorically denying the allegations,” said a Tata Sons spokesperson.

Mistry’s office didn’t respond.

Investment firms Sterling Investment Pvt. Corp. Ltd and Cyrus Investments Pvt. Ltd, which together hold a little more than 18% in Tata Sons, moved the tribunal to protect their interests against mismanagement and oppression.

In the petition, the firms alleged Tata trustees, including Soonawala, acquired key details related to Tata Motors Ltd and Tata Power Co. Ltd and used this to trade, in violation of Securities and Exchange Board of India (Sebi) insider trading regulations.

The firms alleged Soonawala was briefed about Tata Motors’ proposal to go for a rights issue.

Calling it selective disclosure and a misrepresentation of facts, Soonawala said the meeting which discussed the fund-raising plans, among other items, was called by Mistry. “(During the meeting) the only limited query posed to me was: what would be the entitlement of the differential voting rights of DVR shareholders,” said Soonawala in the court documents.

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DVR shareholders have fewer voting rights; DVR shares trade at a discount and may offer higher dividends for surrender of voting rights.

Citing that he did not remember the terms of the DVR, Soonawala said he asked the firm to seek legal advice.

“It was in that context that the impact of the alternatives was forwarded to me,” he said.

In the affidavit, he also highlighted that his role in the Welspun deal was limited to suggesting a financial structure, and it was up to Tata Power to accept this.

Mint reported on 19 December that the trustees including Soonawala were involved in discussing the structure of the announced acquisition of Welspun Renewables Energy Pvt. Ltd by Tata Power.

In July 2016, the office of Soonawala exchanged at least three emails with Mistry with reference to the Welspun acquisition’s proposed and revised structure.

“Not going into the arguments being presented by both the sides. From a legal standpoint, discussion of unpublished price-sensitive information, or UPSI, should be restricted to people who are relevant to the transaction. Even a mere possession of the information can be construed as a violation of Sebi insider trading regulations,” said Shriram Subramanian, founder and managing director at proxy advisory firm InGovern Research Services Pvt. Ltd.

While agreeing that he indeed sought some information pertaining to some Tata group companies, Soonawala insisted that all the information was related to the companies seeking his “advice”.

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