Mistry’s replacement as TCS chairman needs a board meeting: Sources

MUMBAI: Tata Consultancy Services needs to convene a board meeting to replace Cyrus Mistry as its chairman and the hasty act of replacing him pays little regard to the due of law, sources close to Mistry told ET.

However, TCS source said that all due process was followed in the decision to remove the chairman.

The sources from Mistry's camp said that Article 90, which Tata Sons has been quoting in its removal of Mistry, only allows Tata Sons to nominate a chairman. The nominee then has to be appointed by the board.

"TCS had to then convene a board meeting and table the nomination at the board at a meeting or through a circular resolution. Nothing of this nature was done. In pre-mediated haste, by a letter of the same date, TCS has directly gone on to announce that Mistry stands replaced," the source said.

The source added that the 'hasty actions appear to have been done at night' given the stock exchange announcement at 8.00 am on Thursday.

Read More: Tata Sons' 9-page letter bomb to Cyrus Mistry

"Cloak and dagger machinations with little regard to due process of law have come to define the angry strategy of the Ratan Tata camp," the source said.

An executive at TCS countered the charge that the company’s statement was hasty.

"In accordance with Article 90 of the company's Articles of Association which gives Tata Sons as the majority shareholder the right to nominate the chairman. All board members of TCS were informed of the decision of Tata Sons to nominate Ishaat Hussain as the new chairman," the TCS source said.

The duelling sources come after TCS informed the Bombay Stock Exchange that it had received a notice from its parent Tata Sons nominating Ishaat Hussain as Chairman of the company, immediately replacing Cyrus Mistry.

"In view of this, Mr Mistry has ceased to be the Chairman of the Board of Directors of the Company and Mr Hussain is the new Chairman of the Company. The Company has been further informed that Mr Hussain shall hold office as Chairman of the Company until a new Chairman is appointed in his place,” the company said in the filing. TCS said the notice was sent yesterday.

Tata Sons has also issued a notice calling for an extraordinary general body meeting to remove Mistry as a director of the company. The EGM will have to be held in 45 days.

This is the first time that Tata Sons has moved to replace Mistry as the Chairman of a group company and they have started with the crown jewel. TCS’ dividends, together with that of Jaguar Land Rover, have been bankrolling for the rest of group. Tata Sons also holds a majority of the shares in TCS making it easier for them.