Cyrus Mistry had ‘overwhelmingly’ lost the confidence of board of directors: Ratan Tata tells Supreme Court

By: |
August 5, 2020 8:00 AM

While Mistry was appointed chairman of Tata Sons in 2012 when Ratan Tata stepped down from the post, the former was removed on October 24, 2016 by the majority of the Board of Directors for loss of confidence.

“The decision to replace Mistry was no exception; in fact it demanded all the more care and sensitivity in how it is conveyed and recorded,” Tata said, adding that that is why he was initially requested to step down on his own.“The decision to replace Mistry was no exception; in fact it demanded all the more care and sensitivity in how it is conveyed and recorded,” Tata said, adding that that is why he was initially requested to step down on his own.

Tata group’s Ratan Tata on Tuesday told the Supreme Court that Cyrus Mistry was removed as the chairman from the Tata Sons as he had “overwhelmingly” lost the confidence of the Board of Directors and there will always be an element of suddenness in such decisions.

While Mistry was appointed chairman of Tata Sons in 2012 when Ratan Tata stepped down from the post, the former was removed on October 24, 2016 by the majority of the Board of Directors for loss of confidence.

Defending Mistry’s “sudden” removal, Tata said that there will always be an element of suddenness in a decision of this nature. “Such decisions are not like commercial launch of a product which will have a precursor. But to say that the decision was ‘hasty’ is totally unjustified,” he said.

The decision to remove Mistry was taken after he threw to the winds all norms of “collegiality and decorum” expected of a Tata director and demonstrated a deep vicious hostility towards the board and the majority shareholders, the Chairman Emeritus said. “Mistry’s conduct made it clear that he had become a Trojan horse and was not suited to continue as a member of collegial body as senior and as important as the board of Tata Sons,” according to the Tata’s reply.

“Under a cloak of oppression and mismanagement petition, the Mistry’s case with all it rambling prolixity is essentially about the personal grievance of a CEO of a company for lost of office. Knowing well the limitation of such a grievance – which at the highest could be a directorial dispute or an employment dispute, Mistry has created a smokescreen of ‘oppression and mismanagement’ around it. And to sustain this premise, which Mistry knows is otherwise legally untenable; he has resorted to ad hominem arguments,” the industrialist contended.

Mistry had overwhelmingly lost the confidence of the Members of the Board of Directors, he said, adding that the Tata companies follow certain decorum and even most unpleasant decisions are conveyed in a dignified manner because such decisions are never personal. “The decision to replace Mistry was no exception; in fact it demanded all the more care and sensitivity in how it is conveyed and recorded,” Tata said, adding that that is why he was initially requested to step down on his own.

“However, Mistry declined the request. A resolution then had to be brought before the Board which comprised of all very eminent, experienced persons. The resolution was carried through in near unanimity. The Tata Sons board, in its collective wisdom, therefore, took the decision to replace its Chairman,” the reply stated.

The Supreme Court in January had stayed the National Company Law Appellate Tribunal’s December last year’s order that directed re-instatement of Mistry as its executive Chairman of the Tata Sons and also termed conversion of the company from public to private company as ‘illegal’.

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