New Delhi/Mumbai: Four minority shareholders of Tata Group firms approached the Bombay high court on Tuesday challenging Tata Sons Ltd’s move to remove Nusli Wadia as independent director from three group companies.
They want the court to restrict the promoters from voting in the resolutions proposing to remove Wadia. Tata Sons has requested the court to make it a party to the proceedings.
This suit also drags the government into the legal wrangling set off by the sacking of Cyrus Mistry, as the ministry of corporate affairs and the law ministry have also been made defendants. Justice S.J. Kathawalla asked the complainants to forward a copy of their complaint to the government. The next hearing is on 16 December when the court would also hear Tata Sons’ plea to let it become a party.
Minority shareholders Janak Mathuradas, Yogesh Mathuradas, Chanda Mathuradas and Pramila Mathuradas, have also challenged a rule in the Companies Act which allows promoters to vote on a resolution seeking removal of independent directors.
Only public shareholders should be allowed to vote on a resolution on removal of independent directors as these directors discharge a fiduciary duty towards minority shareholders and protect their interests, they said. Independent directors cannot be equated with non-independent directors and cannot be removed under section 169 of the Companies Act, 2013, the suit said.
Tata Sons have sought to remove Wadia from the board of Tata Motors Ltd, Tata Steel Ltd and Tata Chemicals Ltd.
This suit comes at the heel of another one last week when another group of minority shareholders moved the high court claiming damages from Tata Sons’ interim chairman Ratan Tata and others for losses suffered by investors after shares of group companies fell following Mistry’s sacking.
Separately, both groups are also filing caveats against each other as they explore legal options. On 13 December, Mallika Srinivasan, an independent director on two Tata listed firm boards, became the latest in a long list of caveat filers in both camps in the seven weeks since Mistry was removed from the chair of the Tata Sons board. A caveat ensures that a case is not heard by the court without giving due notice to the party which is anticipating a legal action against them.
According to a lawyer who is representing Mistry, the Tatas and their associates have filed as many as 50 caveat petitions in the Supreme Court, Delhi high court and the National Company Law Tribunal. The Bombay high court web site shows that Cyrus Mistry himself has filed at least six caveats against various Tata group firms such as Tata Motors and Tata Steel.
When asked why she filed a caveat, Srinivasan redirected the query to V. Madan, vice-president and company secretary at Tata Global Beverages Ltd (TGBL).
“As Cyrus Mistry has filed a caveat petition against TGBL at several places, some of our directors have also filed the caveat. If he apprehends some action, so do we. There’s nothing in particular that we are planning. It’s just a precautionary measure,” said Madan.
Bombay high court records show that several other TGBL directors such as Harish Bhat, V. Leeladhar and Ranjana Kumar have filed caveats in the days after its contentious board meeting of 15 November when Mistry was replaced as chairman. However, Mint couldn’t find records of directors of say, a Tata Sons or Tata Steel filing such caveats.
After the TGBL board meeting, Mistry had disputed the version of events presented to the stock exchange. The Mistry camp later also claimed that the video recording of the meeting—one is required by law—wasn’t made available to Mistry by Madan, who eventually told him in an email on 21 November that the recording didn’t happen because of “systemic failure”.