Tata Trusts pegs Cyrus Mistry's NCLT plea a bid to rewrite regulations

MUMBAI: Tata Trusts has termed former Tata Sons Chairman Cyrus Mistry’s petition at the National Company Law Tribunal as an attempt aimed at rewriting the articles of association of the holding company and taking over the group.

Ramachandran Venkataramanan, managing trustee of the Tata Trusts that owns two-thirds of Tata Sons, made the allegation in a reply filed on January 6, 2017, with the tribunal in response to Mistry’s petition.

People close to Mistry called the allegation furthest from the truth. It is the conduct of the trustees that is undermining the board of Tata Sons, they said.
In his petition filed on December 20, Mistry had sought interim relief on three counts from the tribunal: that the Tatas should not issue any further shares which would result in dilution of the current 18.5% stake owned by the Mistry family in Tata Sons; he should not be removed from his directorship at the holding company; and the articles of association should not be altered without the consent of the tribunal.

Mistry had also pleaded to either replace the board of Tata Sons or name a retired Supreme Court judge as a non-executive chairman.

The petitioners — Mistry’s investment firms Cyrus Investments and Sterling Investments Corporation — alleged that he was not given a “free hand” to run the group despite being made its chairman, and that there was constant interference from its former head Ratan Tata. The “free hand”, said Mistry, was promised to him by Tata at the time of appointment.

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In his response, Venkataramanan said, “There is no evidence of the so called ‘free hand’ which was allegedly promised to Mistry”. In law, there is no concept of free hand, he added. “A director of the company, who is appointed as the executive chairman, has rights which he or she gets by virtue of the terms of the appointment, articles of association and applicable law — no more, no less.”

The “free-hand” construct of the petitioners is misplaced, has no basis in law and, if accepted, will militate against the collective authority of the board which the petitioners themselves purportedly claim to espouse, said Venkataramanan in his response, a copy of which EThas seen.

Sources close to Mistry said Ratan Tata on record had stated in December 2012 that “I don’t think it is right to have a ghost to shadow over somebody”. “You should be your own person, you should take your own call and you should decide what you want to,” one of them quoted Tata as telling Mistry.

“However, Tata’s actions since have shown that he never intended to cede control or power. It is surprising that he changed the very laws on retirement age, not once, but thrice to hang onto power,” the source said in an emailed response to ET’s queries.

Venkataramanan, who was earlier executive assistant to Tata, also alleged that Mistry expected Tata Trusts to play a passive role and “wanted to make the governance structure and the charter documents that clearly identified rights of the Trusts, a mere formalism”.

“This did not happen and Mistry lost the trust of the Tata Sons board post which he has been making allegations out of personal grouse,” he said.

The National Company Law Tribunal has refused to give any interim relief to Mistry till his petition alleging mismanagement at Tata Sons is fully heard and disposed of, and has asked him to prove his charges. The hearing for the case is scheduled next on January 31.