MUMBAI: The Bombay high court on Wednesday posted a shareholders’ plea against EGMs to be held by Tata Motors, Tata Steel and Tata Chemicals Boards for hearing on Friday.
The court did not immediately allow a plea made by Tata Sons to be joined as a party to the suit filed by the minority retail shareholders or its plea to be given a copy of the suit but said it would consider the group Promoter company’s plea on Friday before passing any interim order that might affect its rights.
Senior counsel Aspi Chinoy appearing for Tata Sons said the relief that the shareholders may seek would directly affect the rights of Tata Sons who made the requisitions for the extraordinary general meetings (EGMs) to be held on December 21-23. But, senior counsel Navroz Seervai who appeared for Janak Mathuradas and the three other shareholders said Tata Sons has no rights to be given a copy of the suit in which they are not even a party. “We do not consider Tata Sons to be a proper or correct party in the suit,” he said.
The shareholders have challenged the right of promoter shareholders to vote on the forthcoming EGMs which has on its agenda the removal of independent director Nusli Wadia and removal of Cyrus Mistry as director from the board of the three listed Tata Companies.
Justice SJ Kathawalla allowed the shareholders to serve their suit on the Centre
The suit seeks to restrain the company’s promoters from voting to remove independent directors in the EGMs at Tata Chemical, Tata Motors and Tata Steel. It is the first time that the Central Government has been dragged into the boardroom battle. The shareholders have also made the law ministry and Securities Exchange Board of India (SEBI) parties.
The shareholders point to “fiduciary roles” that independent directors have in a company and want orders to restrain Tata Chemical, Tata Motors and Tata Steel from counting votes cast by the promoter or promoter group while ascertaining the result for removal of independent director.
An alternate interim plea is for orders to not declare the result of the three EGM votes on removal of Nusli Wadia as an independent director in these three Tata Group companies.
The interim plea will also be for directions from the HC to the three Tata listed companies not to put “item two” in the special EGM notices to vote as an ordinary resolution
The main plea is for a declaration by HC that “section 169 of the Companies Act does not apply to Independent Directors” and to direct the Center to prevent the Tata group promoters from voting on any resolution seeking removal of an independent director at the EGMs…”
The suit said that the urgency in moving the court was because shareholders had received EGM requisitions of November that had “all in identical language sought the removal of one and the same Independent Director from the Board of each of these three companies, Nusli Wadia. It gives rise to extremely far reaching and important questions as to the tenure of Independent Directors under the Act as also the role of Independent Directors on the Board of public listed company,” it said.