Ahead of the February 6 shareholders’ meeting to remove Cyrus P Mistry as director on Tata Sons, the salt to software conglomerate has moved the National Company Law Tribunal (NCLT) seeking cancellation of the case filed against its outset chairman’s family investment firms, claiming the petitioners don’t have the necessary qualification to file such a suit.
In its affidavit, Tata Sons said that the Mistry family did not have any right to nominate a director on the board as the Articles of Association do not provide for it.
Tata Sons said that Pallonji Shapoorji Mistry was the first person from the Shapoorji Pallonji family to be appointed as a director on the board of the holding company in 1980 even though it has held 18.4 per cent stake since 1965.
“Pallonji Shapoorji Mistry retired as director in 2004. After a hiatus of almost 2 years, (his son) Cyrus Mistry was appointed as a director on the board of Tata Sons. Neither the appointment of Pallonji Shapoorji Mistry nor Cyrus Mistry was by virtue of any nomination right. In fact, it was Ratan N Tata who proposed the appointment of Cyrus Mistry to the board of directors of Tata Sons. If the Petitioners had any right of nomination of a director to the board, provision for this would have been made in the articles of association of Tata Sons,” it said.
Tata Sons had abruptly removed Mistry as its Chairman on October 24 and sought his ouster from operating companies like Tata Motors and TCS. Mistry subsequently resigned from the board of six companies, but dragged Tata Sons and his interim successor Ratan Tata to the National Company Law Tribunal.
After the board meeting of October 24, 2016, Tata Sons had resolved that Mistry shall, notwithstanding his ceasing to be the Chairman, continue as a director of the company. But his conduct thereafter in levelling ‘unsubstantiated’ allegations and causing ‘enormous harm’ to Tata Group had made his continuation as a Director of Tata Sons ‘untenable’ and therefore, he should be removed, Tata Sons had said in a notice seeking Extraordinary General Meeting on February 6.
In the affidavit, Tata Sons said that the petitioners’ averment that they have been represented at the board of Tata Sons for several decades lays bare the entirely specious and false case.
It added: “Given that the Petitioners themselves acknowledge that they have been represented at the board of Tata Sons, albeit without admitting that the Petitioners have any right of representation or nomination, at no point of time previously has any issue been raised by the Petitioners either in relation to the management structure adopted by Tata Sons or in relation to the business and commercial decisions/ ventures pursued by Tata Sons.”
In fact, no opposition, objection or reservation has ever been expressed by the petitioners and/or Cyrus Mistry in relation to this, it said.
The decision to replace Mistry from the chairmanship of Tata Sons was taken by a majority of the board with 7 out of 9 directors voting in favour. “It is clearly evident that board of Tata Sons in its collective wisdom found it in the best interests of Tata Sons to remove Mistry from the chairmanship of Tata Sons,” it argued.
‘Full and fitting reply will be given’, say sources close to Mistry
Reacting to Tata Sons’ affidavit, sources in Cyrus Mistry camp said that he and the petitioners — the investment firms — will file their rejoinder on all facts and issues that are involved in the proceedings.
“A full and fitting reply will be filed within applicable deadlines,” a source said, adding “it is but natural that Tata Sons and its directors and the trustees of Tata Trusts would deny allegations and level counter-allegations”.
With Agency Inputs