Group moves four caveats in SC, HC and NCLT while Pallonji group dismisses talk of litigation
Mumbai: The day after Tata Sons removed Cyrus P. Mistry as the group’s chairman, the issue appeared headed to the courts for what may likely be a messy legal battle.
Mistry was said to be in consultation with senior lawyers, even as the Tata Group moved caveats in the Supreme Court, the Bombay High Court and the National Company Law Tribunal (NCLT).
Abhishek Manu Singhvi, who will represent the Tatas in the courts on Wednesday, said the caveats were just “an early warning system” so that the matter is not heard ex-parte.
A caveat is a document that could be served on either a judge or a public official to give him or her notice that he or she should discontinue a certain proceeding until an opposing party was given an opportunity to be heard.
The caveats are filed seeking a chance to be heard by the NCLT before passing any ‘ex-parte’ orders, if Mistry approaches the tribunal.
An ex-parte decision is the one decided by a judge without requiring all of the parties to the controversy to be present.
Sources from the NCLT informed that the Tata group has filed a total of four caveats against industrialist Mistry, so that the tribunal does not pass any interim orders, without hearing the group.
The Shapoorji Pallonji Group, Mistry’s father’s group which holds 18.4 per cent shares in Tata Sons, said they were “studying the circumstances” of the removal.
In response to news on TV, Mistry’s office said that he has not filed any caveats. “He has already made a statement that such concerns are misplaced at this stage,” a statement said. An official spokesman for Shapoorji Pallonji Group said that “there is no basis to media speculation about litigation at this stage.”
Singhvi, who left for Mumbai from Delhi in the evening, told Times Now later that practically the entire board of Tata Sons — seven out of nine directors — had “lost confidence in Mistry”. He added that Ratan Tata was committed to the Tata brand and whatever he did was for the improvement of the group.
INDIA INC SHOCKED: Meanwhile, the surprise move in Tata Sons left India Inc reeling with shock.
Adi Godrej, Chairman of Godrej group, told media that the action would adversely affect the image of the Tata Group. “Clearly, the great reputation of the group would be damaged,” he told CNBC TV18. He said the group could have found better ways to sort out the differences at the top.
Chandramouli, CEO of Trust Research Advisory, said the Tata brand had been “synonymous with trust” gained over 150 years. “Unfortunately, the sudden and unexplained removal of the erstwhile Chairman, Cyrus Mistry, is a contrast to trust,” he said. He said it raised questions, especially when the action came “from a person synonymous with the Brand Tata, Ratan Tata. It brings the question ‘Why?’ — pointing fingers on the intent behind this drastic action,” Chandramouli said.
In his talk with CEOs of Tata Group companies, Ratan Tata also said that “an institution must exceed the people who lead it. I am proud of all of you and let us continue to build this group together.”
Hinting at possible changes in the functioning of the companies, he referred to ongoing initiatives and said these will be evaluated and those required would continue to be undertaken. “If there is any change, they will be discussed with you,” he assured the top bosses of the group companies.
Mistry had taken over from Ratan Tata four years ago at a time when some of the group’s main companies were facing tough operating environments, and his major challenge was to turn around the group’s international steel business and to consolidate the other businesses. The $100 billion group employs some 700,000 persons. The 48-year-old Irish-Indian citizen is the youngest son of Pallonji Mistry, whose construction company Shapoorji Pallonji & Co is the largest shareholder of Tata Sons, with a stake of around 18.5 per cent. Scrips of Tata Group’s subsidiaries closed in the red on Tuesday. Shares of various subsidiaries of the industrial conglomerate fell in a range of about one to four per cent during the day’s trade, even as some recovery was seen during the intra-day trade. At the BSE, shares of major firms like Tata Motors and Tata Steel pared some of their initial losses, yet ended in the red.
‘New leadership will be in place’
Ratan Tata reiterated that he had assumed the role of Interim Chairman “for stability and continuity so that there is no vacuum”. He assured it would be a short-term arrangement and a new permanent leadership will be in place. The Tata Sons board had also constituted a Selection Committee to choose a new Chairman.
The committee comprises Ratan Tata, Venu Srinivasan, Amit Chandra, Ronen Sen and Lord Kumar Bhattacharyya.
The committee, set up as per the criteria in the Articles of Association of Tata Sons, has been mandated to complete the selection process in four months.
NEW DIRECTORS INDUCTED: Later in the day, Ralf Speth, CEO of Jaguar Land Rover, and N. Chandrasekaran, CEO & Managing Director of Tata Consultancy Services (TCS), were appointed as Additional Directors on the Tata Sons Board.
Commenting on their appointment, Ratan Tata, said, “This is in recognition of their exemplary leadership in their companies.”