BackCyrus Mistry wants Ratan Tata barred from Tata Sons board meetings
Cyrus Mistry has asked the National Company Law Tribunal to appoint an administrator to manage Tata Sons
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Mumbai: Cyrus Mistry, the ousted chairman of Tata Sons Ltd on Tuesday twisted the knife deeper, demanding the dismissal of the board of the holding company and barring the “so-called interim chairman" Ratan Tata from attending its board meetings.
Companies controlled by the Mistry family made these demands in their petition filed against Tata Sons, the Tata Trusts and Ratan Tata before the National Company Law Tribunal (NCLT), taking the fight between Mistry—who was forced out as chairman of Tata Sons in a boardroom putsch on 24 October—and rivals to another level.
As immediate relief, the petitioners sought the appointment of an administrator or a retired supreme court judge to look into the day-to-day affairs of Tata Sons. Mint has reviewed a copy of the petition.
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It is the norm to ask for “the moon" when “such petitions are filed", said Ramesh Vaidyanathan, managing partner, Advaya Legal. “It is extremely unlikely such sweeping prayers will be granted."
Still, the case, and the allegations of lapses in corporate governance in various Tata companies that have been raised by Mistry since his exit are a source of acute embarrassment for a group that has always prided itself on its ethics and integrity.
The petition alleged that Tata Sons was being run as a proprietorship concern of Ratan Tata and Nooshir Soonawala, one of the trustees of Tata Trusts.
The National Company Law Tribunal, Mumbai, will hear the petition on 22 December.
A spokesperson for Tata Sons said that there is nothing more to add at this stage. However, in a statement on Tuesday, Tata Sons had said that the company followed the highest standards of corporate governance.
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“Despite Mistry’s recent assertions that it is not a personal issue, it is evident that it always has been for him a personal issue which reflects his deep animosity towards Ratan N. Tata," Tuesday’s statement had said.
“Mistry was the chairman of Tata Sons for almost four years and it is surprising that he is now making allegations on activities of Tata Sons after doing little to address them," the statement said.
“It is unfortunate that Mistry has not been able to graciously accept the decision of the very same board that appointed him," it added.
The petition in National Company Law Tribunal alleges that Ratan Tata and Soonawala, despite not being part of the board of Tata Sons, regularly sought information pertaining to listed Tata companies in violation of insider trading norms. It seeks an investigation into this.
It also seeks an investigation by regulators and other investigative agencies into some of the other allegations made by Mistry.
Mint reported on 8 December that the Enforcement Directorate (ED) had registered a foreign exchange violation case against AirAsia India Pvt. Ltd for alleged fraudulent transactions of Rs22 crore involving non-existent parties in India and Singapore.
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The petition wants a fresh forensic audit of the transaction and asks that the findings should be referred to Serious Fraud Investigation Office.
It also seeks an independent forensic audit into transactions and dealings of the (C) Sivasankaran group with Tata Sons and its group companies.
It has also asked that all transactions involving Mehli Mistry and his associate companies with Tata group of companies be subjected to an investigation to check for any “unjust enrichment".
Sivasankaran has brokered a few deals for the Tata group in the past and was considered to be close to Ratan Tata. Mehli Mistry, a cousin of Cyrus Mistry, runs M. Pallonji and Co. that has done some work for some Tata companies. He too is considered to be close to Ratan Tata.
If the National Company Law Tribunal finds merit in any of the claims and it is proved that the Mistry companies—which are minority shareholders with a little over 18% stake in Tata Sons—have had to deal with oppression and mismanagement, the National Company Law Tribunal could “pass an order, which includes regulation of the conduct of the affairs of the company in future, removal of the managing directors, manager or any of the directors of the company, restriction on transfer of its shares, purchase of shares of any member of the company by other members," said Amit Vyas, founder partner at Vertices Partners.
But it is unlikely that the tribunal will venture into the area of business decisions. “Bonafide business decisions such as closure/continuance of the UK steel business may not find favour with NCLT, however adverse the outcome may have been of these decisions," said Vaidyanathan.
The petition also seeks that the existing selection committee looking for the new chairman of Tata Sons be replaced by a new selection committee.
“No candidate should be selected without the permission of the court," it says.
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