In a fresh affidavit filed in the National Company Law Tribunal (NCLT) on Monday, ousted Tata Sons chairman Cyrus Mistry has sought to prove the breakdown of corporate governance in the Tata Group and how some board members were not only in the know but were also concerned about it.
For instance, in an email sent to Mistry in February 2015, a copy of which is with FE, Tata Sons board member Nitin Nohria had written that even though the memorandum and articles of association of Tata Sons provide some guidelines on the separation of power, they were not operational. “The separation of the leadership of Tata Trust and Tata Sons is more significant than anyone has fully comprehended or internalised,” Nohria wrote.
In fact, Nohria had a few days earlier also written that he sympathised with Mistry’s frustrations, emails show.
Sources in the know told FE that Mistry is trying to convince the NCLT that such emails are proof of the fact that he had ended up becoming a lame-duck chairman due to the constant interference of Ratan Tata and the Tata Trusts. In the fresh affidavit, Mistry has also tried to highlight that the valuation of Tata Sons’ portfolio outperformed the Sensex during his chairmanship and their market capitalisation rose more during his three-and-a-half-year tenure than what they had risen by under Ratan Tata’s last seven years.
Last week, FE first reported that a draft ‘corporate governance framework’ sent by Cyrus Mistry to Ratan Tata that proposed to restrict and streamline the role of the Tata Sons board in the operating companies to just being directional from being prescriptive might have been a reason for him being sacked. The framework, a copy of which is with FE, also proposed providing a proper structure to the group, defining and demarcating the role of the various power centres and more importantly, restricting the role of the Tata Sons’ board to just providing feedback and not approving or disapproving the decisions of operating companies.
Mistry’s affidavit on Monday is the latest in the Tata-Mistry battle that started in the board room but is now in the courts. First, Mistry stepped down as director of all other listed Tata Group companies following him being voted out of the board of Tata Consultancy Services (TCS) at an extraordinary general meeting. Then he approached the NCLT seeking relief under sections 241 and 242 of the Companies Act, 2013.
The Tatas, on their part, claim that Mistry was replaced because of under-performance and not having kept in mind the ethos of the Tata Group. They have also submitted to the NCLT that he doesn’t have a 10% stake in Tata Sons to approach it for relief under sections 241 and 242 of the Companies Act, 2013. Tata Sons has since appointed N Chandrasekaran as its new chairman and convened an EGM on February 6 to seek Mistry’s removal from the board.