Ousted Tata Sons chairman Cyrus Mistry’s counsel on Wednesday told the Mumbai bench of the National Company Law Tribunal (NCLT) that he’s not seeking his reinstatement as the chairman of the holding company but wants a nominee director of his firms to be on the board to protect the interests of minority shareholders. Mistry’s family firms — Cyrus Investments and Sterling Investments — have an 18.4% stake in Tata Sons. Arguing for Mistry’s firms, senior counsel C Aryama Sundaram told NCLT, “I am not seeking that Cyrus Mistry be made chairman, not seeking that relief at all. I am just bringing to the fore acts of oppression towards me the minority shareholder.” The Mumbai bench of the NCLT started hearing Mistry’s plea alleging mismanagement and oppression of minority shareholders upon direction of the National Company Law Appellate Tribunal (NCLAT) in September to hear the plea on merits and decide the matter within three months.
The hearing is slated to continue over the next few days. Sundaram said they are seeking protection as minority shareholders by asking minimal relief which includes bringing into place corporate governance and transparency with regard to the governing of Tata Sons and corporate governance and transparency in how Tata Sons involves itself with other group firms. “Tata Sons today has a value of about Rs 6 lakh crore at the least, my interest is Rs 1 lakh crore at the least so bring in transparency and corporate governance in the running of Tata Sons,” he said. He also argued that since there are basically two groups in Tata Sons — a majority faction represented by the Tata Trusts, Tata family and few individuals, and another block of minority shareholders from the Shapoorji Pallonji Group, the minority shareholders be given a nominee director’s post on the board of Tata Sons. “I am an 18% shareholder, I don’t know what is happening in this company now, for 36 years except for two years I was a director, so please let one nominee director (from the Mistry group) come to the board,” he said.
Sundaram also made a case that the present articles of association (AoA) undermine the sanctity of the board of Tata Sons, and asked for striking down of such articles that allegedly pose a challenge for corporate governance standards and also oppression of the minority shareholders. He alleged that the voice of majority shareholders supersedes independent directors’, which is oppressive. On specific instances, he highlighted that there was constant interference from Tata Trust trustees in the functioning of Tata Sons. In the Tata Power-Welspun renewable business deal, a Tata Trust trustee sought price-sensitive information, while there was interference during Docomo deal as well, among others, he said.
He further said that even the removal of Mistry as the chairman has been against the AoA of Tata Sons. He said Mistry’s removal was not on the agenda of the board meeting of the day he was removed. He said that the agenda for that day among other things included updates on accounts of AirAsia and draft Tata Group corporate governance framework. The legal battle between Mistry and the Tatas is a fallout of the sacking of the former by the Tata Sons board on October 24, 2016. Subsequently, Mistry was removed as director/chairman of all the group firms, leaving him with no option but to take the legal route.
