The Tata group separately filed caveats in the courts seeking advance notice from Mistry were he to initiate legal action over the boardroom coup, which unleashed many theories that don’t seem to be grounded in reality.
In another move, Tata Sons named Ralf Speth, CEO of Jaguar Land Rover, and N. Chandrasekaran, CEO and managing director of Tata Consultancy Services Ltd, as additional directors on the board, as Tata consolidated his hold.
Tata, who took over as interim chairman pending the completion of a four-month search for a replacement to Mistry, met with group company chief executives on Tuesday to give them a pep talk.
“I look forward to working with you as we have worked together in the past. An institution must exceed the people who lead it. I am proud of all of you, and let us continue to build the group together," he said at the meeting, according to a Tata Sons Ltd statement.
Tata, 78, reiterated that he had assumed the role of interim chairman to avoid a potential leadership vacuum. “This will be for a short time. A new permanent leadership will be in place," he said.
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He asked the companies to focus on their respective businesses without being concerned about the change in leadership.
Referring to ongoing initiatives in the companies, he said: “We will evaluate and continue to undertake those that are required to. If there is any change, they will be discussed with you."
His meeting with group company CEOs was questioned by proxy advisers. That is because even though Tata is the interim chairman of Tata Sons, the holding company, he doesn’t automatically become chairman of entities such as Tata Motors and Tata Power.
“Can a holding company call a meeting of group CEOs? I would say no. It is more of a custom and it is not correct," said J.N. Gupta, co-founder and managing director of proxy advisory firm Stakeholders Empowerment Services (SES).
Meanwhile, a spokesperson for Shapoorji Pallonji group, of which Mistry is a scion and which is the single largest non-Tata shareholder in Tata Sons, owned two-thirds by Tata Trusts, tried to discount reports about litigation “at this stage" but did not rule it out. “While the circumstances are being studied, there is no basis to media speculation about litigation at this stage," the spokesperson said in a statement.
Abhishek Manu Sanghvi, counsel for Tata, told CNBC-TV18 that the Tatas had filed caveats in some forums. Separately, two people aware of the development said these caveats were filed in the National Company Law Tribunal and the Supreme Court.
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“A caveat is a notice filed by a party fearing legal action seeking notice before action. Tatas have filed caveats seeking notice from Cyrus Mistry fearing legal action. Cyrus has not filed any caveats," said a statement issued on behalf of Mistry.
Mistry’s ouster continued to generate speculation. For instance, media reports said there were conflict of interest concerns raised about the award of contracts to companies belonging to the Shapoorji Pallonji Group.
However, a person close to Mistry said that on 30 October 2013, Mistry had written to Tata group companies that no contracts were to be awarded to Shapoorji Pallonji group.
Mint couldn’t independently ascertain the veracity of this claim and hasn’t seen a copy of this letter. Calls made and messages sent to a Tata Sons spokesperson weren’t answered.
Shapoorji Pallonji group companies have had a history of working for the Tatas—even before Mistry’s appointment. For instance, Sterling and Wilson Pvt. Ltd, a part of the group, had executed or is in the process of executing at least seven projects for companies such as Tata Motors Ltd and Tata Power Co. Ltd, according to its web site.
Secondly, there are reports which say that Mistry had cleared the acquisition of Welspun India Ltd’s renewable energy assets without seeking approval from either Tata or other key shareholders. “All legal and fiduciary requirements with respect to the Welspun acquisition were met as far as shareholders are concerned," said the person close to Mistry cited earlier.
Typically, in a merger and acquisition deal, the board first takes the decision on the deal, which is then put up for approval of shareholders. In any case, giving prior information to a certain set of shareholders, even if they are promoters, would violate the listing obligation and disclosure regulations of the Securities and Exchange Board of India. “Any kind of selective disclosure is prohibited," said Gupta of SES.