Mr Pendse was the managing director of TFL as on May 31, 2001.
Dr Mehta had claimed on behalf of himself and the TFL board that having been appraised of the precarious financial condition of TFL and Niskalp as late as May 25, 2001, Mr Pendse had kept the board in the dark. The board meeting, according to the letter, was where queries were raised with regard to CAR. He also accused Mr Pendse of undertaking financial transactions on behalf of the company, without the authority the board and in blatant violation of the provisions of the Companies Act and the Reserve Bank of India (RBI).
When contacted, the Tata group spokesperson declined to comment.
The letter which is Exhibit B in the TFL case against Mr Pendse, states that the board was kept in the dark in systematic basis by Mr Pendse. In the matter of the precarious financial position of the company, which fact must have been evident to you, certainly by the end of March this year, you have given no indication to the board of the impending precarious financial position and certainly not of its magnitude, nor were the true reasons for the build up of the loss situation stated to the board, the letter stated.
According to Dr Mehtas letter, it was post-April 2001, that an enquiry by some of the TFL board members (former), that had shed light on the situation. It also pointed out that the TFL board had no information about the substantial amounts invested by TFL in Niskalp.
According to Dr Mehta, had Mr Pendse not window-dressed the affair, timely and correct information could have aided the board in suggesting remedial measures.
Despite having been present in the October 21, 2000 special meeting which highlighted the CAR problems of TFL and Niskalp, and receiving daily appraisals on the NAV of Niskalp (according to the now-withdrawn AF Ferguson report on TFL), Dr Mehta stated that the board had been unaware of the capital adequacy lapses of the company till the May 25, 2001 board meeting. He, however, admits in the letter that capital adequacy problems had been cursorily mentioned in September, 2000.
He also addressed in the letter the issue of investments pushed through Inshaallah Ltd and India Emerging Ltd (associate companies of TFL and Niskalp) stating: With the same audacity with which you did not reveal the manner and extent of the deposits you were pushing into Niskalp, here too you, of course, did not at any time reveal to the board the extent of the deposits unauthorisedly pushed into these two companies.
The board is of the opinion that there was a deliberate and systematic suppression and distortion of vital facts, the letter added.
The letter accused Mr Pendse of breach of trust, with a malafide motive and in violation of all norms of corporate governance. The letter further stated that the suppression of facts was the reason behind the former TFL board being paralysed in its ability to address the issue.
It further stated: In light of this information that has emerged during the last few weeks, the motive behind your desire not to seek re-appointment as the managing director appears to be a preconceived and deliberate attempt to disassociate yourself from the company, after having committed a series of deceptions and cover-ups on the damage that you and your unauthorised actions have inflicted upon the company.
It may be noted that while Dr Mehta stated in the letter that the board was made aware of the matter only on May 25, 2001; whereas prior reports by FE have shown that Dr Mehta was privy to the above information post October 2000, along with former TFL vice chairman Kishore Chaukar. The October presentation detailed the fluctuating capital adequacy of TFL. Tata group chairman Ratan Tata had also stated earlier this month that, he had been informed of problems at TFL by Mr Pendse on April 1, 2001 whilst on a trip to Dubai.
TFL sources though added, The October 2000 presentation was for fund requirement for TFL. In that presentation Dr Mehta and Mr Chaukar asked questions only on the requirement and end-use of the funds. Mr Tata got the earliest indications in April 2001 and the board was given the factual information of the irregularities only on May 25, 2001.