Mumbai: Tata Sons Ltd’s board had serious differences with Cyrus P. Mistry, its ousted chairman, over the fundraising plans of Tata Motors in 2015, show the affidavit and annexure filed by Ratan Tata and Cyrus Mistry at the National Company Law Tribunal (NCLT).
The affidavits were filed in response to a suit filed by Cyrus Investments Pvt. Ltd and Sterling Investment Corp. Ltd, the Mistry family investment firms, alleging mismanagement of Tata Sons and oppression of minority shareholders.
In his affidavit, Tata alleged that Mistry didn’t keep the Tata Sons board informed about the details of the Rs7,500-crore Tata Motors rights issue. This was even as Tata Sons as a principal shareholder and sole underwriter to the issue was expected to pick up the unsubscribed portion of it. He said no directors, including the trusts’ nominated ones, had the opportunity to express views on a matter of such importance.
“This, in my view, conflicted with the letter and spirit of the Articles of Association of Tata Sons which contemplate that all major issues of significance should come before the board of Tata Sons for deliberation so that all directors including the Trusts nominee directors who have an affirmative vote in relation to matters before board can effectively and in a meaningful way exercise their judgment,” Tata said in the affidavit.
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This was just one instance of Tata being concerned with the manner in which critical decisions were being taken by the operating companies under Cyrus Mistry’s chairmanship, shows a hand written personal note sent by Tata to Mistry. The note was filed as an annexure along with Mistry’s affidavit.
In his affidavit filed on 26 December, Mistry alleged that they (Ratan Tata and trustee Noshir Soonawala) “would regularly go on to allege a breach of articles of association every time he wished to have his way”.
Tata’s personal note to Mistry on 30 January 2015 said that “Mistry needs to accept” that in absence of a prospective agreed, long term business plan for Tata Sons, “it would be difficult for the Trusts to give their consent as a principal shareholder.
Mistry’s response to the note said that he could not have shared further details as it would have violated insider trading norms.
The ousted chairman also said that all the relevant board papers where the discussions on fund requirements were captured from time to time were delivered to Tata regularly (in his capacity as chairman emeritus).
Moreover, the trust nominated directors took active participation in a presentation made by each company on the extent of equity infusion and instruments, Mistry clarified, adding that he had asked C. Ramakrishnan, chief financial officer, and H.K. Sethna, company secretary at Tata Motors, to seek guidance from Soonawala on the equity issue and the type of instrument the company should be using and it was only after getting his views and suggestions that the proposal was taken to board of Tata Motors.
Soonawala, in his subsequent response to the Mistry’s letter on 16 February 2015, refuted that he was fully aware of the company’s specific fund raising plans or approved specific form of issue. He said the meeting with Tata Motors’ Ramakrishnan and Sethna, were brief and no specifics were discussed.
Mistry in his 4 February 2015 response to Tata also said it would be inappropriate to prepare a long term strategic plan at that juncture owing to external volatility.
Mistry’s souring relationship with Ratan Tata and Tata Trusts, which controls two-thirds of the holding company, reached its peak on 24 October when Tata Sons removed Mistry as the chairman of the $103 billion group. Both sides have since then been engaged in a bitter feud.
The NCLT heard the matter on 22 December. The next hearing is on 31 January.