In war with Ratan Tata, Cyrus Mistry blinks, but vows to open new front

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Mumbai | Published: December 20, 2016 7:04:24 AM

The battle lines between Ratan Tata and Cyrus Mistry were drawn afresh on Monday after the latter resigned from six Tata group companies saying he would take the fight to the court and vowing to restore corporate governance and ethics to the Tata Group.

Mistry told FE he intended to take legal recourse. He said, “We will have to see if we succeed. Nobody can give assurance but we will fight legally to make sure it happens.” (Reuters)Mistry told FE he intended to take legal recourse. He said, “We will have to see if we succeed. Nobody can give assurance but we will fight legally to make sure it happens.” (Reuters)

The battle lines between Ratan Tata and Cyrus Mistry were drawn afresh on Monday after the latter resigned from six Tata group companies saying he would take the fight to the court and vowing to restore corporate governance and ethics to the Tata Group.

An emotionally-charged and combative Mistry lashed out at Nausher Soonawala, trustee of Tata Trusts, and Ratan Tata, interim chairman, Tata Sons, saying their interference, post-retirement, had undermined the Tata Sons board. “It is time to be more incisive about securing the interests of the Tata Group and to regain lost ethical ground,” Mistry said in a letter.

Mistry told FE he intended to take legal recourse. He said, “We will have to see if we succeed. Nobody can give assurance but we will fight legally to make sure it happens.”

Corporate and legal experts believe Mistry’s move could have seriously adverse implications for the Tata Group with the regulators and investigative authorities stepping in. Mistry has alleged Tata failed to take corrective action despite evidence of fraud and wrongdoing in Air Asia being presented to him. He also alleged that attempts to recover loans from serial entreprenuer Sivasankaran were “leaked” by Tata Sons.

Legal experts believe voting rights may be restored to public trustees as was the case before 2000 when the laws were amended. Mistry, they said, might approach the government and regulators for a change in the law, especially section 169 of the Companies Act which deals with the rules for directors.

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They pointed out it was a tactical move on the part of Mistry to not be removed from the boards at extraordinary general meetings (EGMs) but to seek out the regulators instead.

Mohan Parasaran, counsel for the Tatas, told a television channel Mistry had no option but to go to court and said he would not give any credence to his allegations.

Mistry appears determined to lay bare all the facts. He told FE he was taking the fight to a platform where the “rule of law and equity is upheld”.

A series of EGMs have been scheduled starting Tuesday and will likely be called off now that the resolution to vote Mistry out is no longer valid. Mistry was ousted as chairman of Tata Sons on October 24. Since then he has been removed as chairman and director of Tata Consultancy Services (TCS) in which Tata Sons has a 73% plus stake. While several independent directors have rooted for Mistry, a surprisingly high share of institutional shareholders voted for him at the TCS EGM. Some Tata Group executives have openly criticised Mistry.

“It is now clear that my attempt to protect and preserve the ethical legacy of our founding father Jamsetji Tata was the real cause for my ouster,” Mistry wrote, adding he has been attempting to resolve the governance breakdown at Tata Sons for a long time.

“It has now been eight weeks, waiting for the concrete reasons to be provided by Mr Ratan Tata for the illegal coup he staged on 24th of October. Nothing cogent has been forthcoming,” Mistry wrote, adding it was time to shift gears and up the momentum. On Monday, Mistry resigned as director from the boards of Tata Motors, Tata Steel, IHCL, Tata Chemicals, Tata Power and Tata Global Beverages. Tata Steel in a notice to the Bombay Stock Exchange said Cyrus P Mistry, member of the board of directors, has stepped down from the board with immediate effect.

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