Mumbai: Cyrus Mistry sought to take the high moral ground in his fight with the Tata group by stepping down from the boards of operating companies ahead of shareholder meetings called to remove him, citing the pressure on stakeholders to take sides, and the consequent uncertainty this has created.

He vowed to continue the fight for governance reform in Tata companies by taking the matter to court. Mistry will continue to remain a director on the board of Tata Sons Ltd, where his family owns a stake of a little more than 18%.

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Mistry said his decision to tackle issues related to corporate governance may well be the reason why he was ousted.

We have brought the dialogue on the table both in terms of governance and ethics. What was important to do was to take me out of the equation, make sure the battle was not about me.- Cyrus Mistry

“We have brought the dialogue on the table both in terms of governance and ethics," said Mistry in an interview, breaking his silence after the 24 October boardroom putsch at Tata Sons that saw his abrupt departure as chairman. “What was important to do was to take me out of the equation, make sure the battle was not about me."

The move is likely to increase pressure on Tata Sons to provide reasons for Mistry’s removal, something it has not satisfactorily done. It also indicates a messy and probably long-drawn legal battle ahead.

Tata Sons in a statement said that Mistry’s resignation is a deliberate strategy as he knows that an “overwhelming majority of the shareholders were not in support of his actions".

A Tata Sons spokesman said that all companies that called the EGMs for Mistry’s removal will call off the EGMs

“Unfortunately, Mr. Mistry continues to make baseless, unsubstantiated and malicious allegations using selective disclosures of information against the very institution he claims to have the highest regard for," the statement said.

A few hours after a board meeting at Tata Sons, the group holding company, Mistry issued a statement saying he was “shifting gears and moving away from the extraordinary general meeting (EGM) platform to a larger platform and also one where rule of law and equity is upheld".

His statement came ahead of shareholder meetings called by five Tata companies—Indian Hotels Co. Ltd, Tata Steel Ltd, Tata Motors Ltd, Tata Chemicals Ltd and Tata Power Co. Ltd—to seek his expulsion as director. Indian Hotels will be the first to hold its EGM on 20 December.

Separately, in a filing to the exchanges, Tata Steel, Tata Motors and Indian Hotel have notified that Mistry has resigned from the boards of these companies. A Tata Sons spokesman said that all companies that called the EGMs for Mistry’s removal will call off the EGMs. Only those that have removal of Nusli Wadia and appointment of new directors on the agenda will convene the meetings.

Unfortunately, Mr. Mistry continues to make baseless, unsubstantiated and malicious allegations using selective disclosures of information against the very institution he claims to have the highest regard for- Tata Sons

“The EGM process has again shown a lack of governance and thrown up issues that have come to the fore in the last eight weeks," Mistry’s statement said.

Mistry’s approach could be to go to the courts, said Sumit Agrawal, a partner at Suvan Law Advisors.

“When someone says that they are going to take the fight to a bigger platform, in what is a fight for principles and governance, and when two words used in his statement ‘rule of law and equity being upheld’, it simply means he is going to go to the courts as well as seek the intervention of Sebi as a regulator, and the government," Agrawal said.

Following Mistry’s refusal to step down from the boards of operating companies after he was forced out as chairman of the holding company, Tata Sons had asked the operating companies to call shareholder meetings to remove him as a director.

“Tata’s attitude is creating a situation of unease," among shareholders, employees and other stakeholders, Mistry said. “I believe the best interests of the group would be served by taking it to a new platform."

Since 24 October, listed Tata group companies have collectively lost Rs80,780 crore, or about 10%, of their market capitalization.

While Mistry has filed a series of caveats against Tata group operating companies, that hardly scratched the surface of his legal strategy, he indicated. He refused to divulge his legal strategy.

Most of the issues raised by Mistry are already known, said J.N. Gupta, managing director of proxy advisory firm Stakeholder Empowerment Services. The courts, Gupta pointed out, will not look into the commercial dealings and can also not get involved in the decisions taken in the past such as Tata Steel’s buyout of Corus.

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“The only thing which Mistry can challenge in the courts, is whether his removal as Tata Sons chairman was legal," he said, adding that matters relating to governance will have to be probed by regulators. 

Mistry said what he is “looking for is governance reform and ensuring the ethical values of the founders" are protected.

Mistry insisted that he hasn’t raised these issues only after he was fired. “Governance issues were part of the board agenda on the day I was removed; they have been an issue from more than six months and close to a year."

Shailaja Sharma contributed to this story.

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