CHENNAI: Tata Sons’ replacement of Cyrus Mistry with Ratan Tata as Interim chairman on Monday shocked the corporate world, but Tuesday’s developments indicate that the most iconic business conglomerate in India might be getting ready for a messy legal battle.
On Tuesday, Tata Sons preempted any move from Mistry, and the Shapoorji Pallonji Group, to surprise it through the courts by filing separate caveats with the Supreme Court, Delhi High Court and the National Company Law Tribunal. A caveat is a legal tool where the petitioner requests the courts to pass no order without notice to (them) that a case has been filed and without listening to (their) side of the case.
Tata Sons has reportedly enlisted the services of top lawyers Harish Salve and Abhishek Manu Singhvi. Some have pointed out that Mistry and Shapoorji Pallonji Group, as minority shareholders (18.5% stake), might not have legal ground to fight the decision. Tata Trusts holds a 65.2% stake and, as per reports, gave itself the power to nominate, remove and appoint chairpersons months before Mistry took over. Ratan Tata is the chairman of Tata Trusts.
Shapoorji Pallonji Group, whose scion Mistry is, stated that it was not initiating litigation for now. “While the circumstances are being studied, there is no basis to media speculation about litigation at this stage,” it said. However, sources say that the manner of the removal has “irreparably damaged” Mistry’s reputation. A senior lawyer who spoke to Express said that a group like Tata would have checked all the legal boxes but more “decorum” could have been maintained.
“This has opened the door for speculation, tarnishing the image of the Group, Mistry and Ratan Tata. This has also turned into a battle for reputation,” said another source. Ratan Tata, to India Today TV, said this was “not an ownership fight.” Advocate Harish Salve, in TV interviews, pointed out that it wasn’t a fight for “property” or “grabbing a promoter’s position.” The board had lost confidence in Mistry, he added.
Ratan Tata is learnt to have written to the Prime Minister apprising him of the situation. Reports also say that Mistry has sought an appointment with the PM. Salve stated that if the situation deteriorates, then “brand Tata will undoubtedly be damaged.”
‘Not taking legal action’
The Shapoorji Pallonji Group, whose scion Mistry is, announced that it was not initiating litigation against Tata Sons
Ready to say ‘tata’
Tata Trusts gave itself the power to nominate, remove and appoint chairmen before Mistry took over, claimed reports