The Tata Sons told the National Company Law Tribunal (NCLT) on Wednesday that Cyrus Mistry was removed from the chairpersonship of the company as its board had lost confidence in him. Tata Sons' counsel Abhishek Manu Singhvi, who was arguing before the Mumbai bench of the NCLT, reaffirmed that the nominee trustee directors of the company had no personal interest in Mistry's removal.
Mistry was removed only because the company's board had "lost confidence in him," he said, adding it was purely a "commercial decision." Singhvi also refuted the charge levelled by Mistry in the past that due process was not followed in ousting him and that his removal was not even on the agenda of the day's meeting.
"The Companies Act permits addition to a day's agenda following the permission of majority shareholders, and one independent director. In our case, the majority shareholders and one independent director, Ronen Sen, approved the amendment to the agenda," he said.
The procedure for removal of the company's chairperson or managing director mandated that it be approved by a majority of the trustee directors of Tata Sons nominated by the Tata Trust, he said. "There were nine such directors, including Mistry himself. Of these one abstained from voting while seven approved the removal with affirmative voting," he said.
Singhvi also told the NCLT that the board of Tata Sons had lost confidence in Mistry following his "lackadaisical performance" over the four years that he was the company's chairperson. The board was concerned about the falling revenue since Mistry took over, and he failed to turn around the problematic performance of the group companies such as Tata Motors and Tata Telecom, he said.
Mistry, Singhvi said, made a habit of writing off the losses of problematic group companies to push the problems under the carpet. The NCLT bench, however, reminded Singhvi that Mistry was not challenging his removal before the tribunal. Instead, he had alleged oppression of minority shareholders of the company, and had demanded that he be permitted to participate in the board meetings of Tata Sons by virtue of being an 18 percent shareholder.
Singhvi, however, argued that Mistry cannot resort to the argument of oppression when it came to his removal. "This is not a family-run company. There can't be any vested claims to continue as a director or a chairperson only by virtue of the fact that one is a shareholder," he said. Singhvi said Mistry's removal canot be termed as an act of oppression of a minority shareholder, and added there are no statutes to support such an argument.
Mistry and the Tatas are locked in a legal tussle since 2016, after the former was removed from the chairmanship of the Tata Sons, the holding company of the Tata Group. Mistry has alleged rampant mismanagement at Tata Sons, frequent interference from his predecessor Ratan Tata and other nominee trustees in the holding company, and its smaller listed entities. He has sought some safeguards to be introduced within the group to protect the interest of minority shareholders.
Published Date: Jan 17, 2018 18:53 PM | Updated Date: Jan 17, 2018 18:53 PM