Mistry Taps Court in Feud With Tatas After Quitting Unitsby , , and
Battle not about position but about governance reform: Mistry
Aggressive Tata stance forced Mistry to exit company boards
Cyrus Mistry, the ousted chairman of Tata Sons Ltd., filed a case in an Indian court against his abrupt removal as head of India’s biggest conglomerate.
Mistry, who also resigned as a director in six group companies on Monday on the eve of shareholder meetings to remove him, filed the case at the National Company Law Tribunal, according to a statement from Tata Sons, which said “it will contest the allegations.” While Mistry’s office declined to comment on the lawsuit, the executive said in an interview earlier on Tuesday that he will take his fight for better transparency at the $100 billion group to court.
Mistry’s steps to take the legal route are the latest twist in a battle that began with his removal from group holding company Tata Sons in October. Ratan Tata, the patriarch who mentored Mistry for the chairman job in 2012 and replaced him in October, is re-asserting control at the group, which has products ranging from the luxury Jaguar Land Rover cars to table salt. After weeks of bitter public accusations and recriminations between the two, Mistry said he plans to go to a larger “external forum” with his grievances.
“My fight will actually continue, and not only continue, it will strengthen,” Mistry said in the interview in Mumbai. “The larger platform is partly on the legal platform. There will be other platforms as well which I don’t want to discuss.”
The feud, which has now dragged on for almost two months, wasn’t about his own position but about reforming the organization and ensuring the process for selecting the next chairman was transparent, Mistry said. Tata Sons in the statement on Tuesday said that filing of the law suit reflects “his deep animosity” toward Ratan Tata.
Ratan Tata and four other prominent leaders -- Venu Srinivasan, Amit Chandra, Ronen Sen and Kumar Bhattacharyya -- are part of a panel formed to find a new Tata Sons chairman by the end of February.
“I am asking for the right person and that is not me,” Mistry said. “More than that I am asking for the right governance framework to be there in trusts and Tata Sons,” he said, referring to the charitable trusts set up by the founding family, which control a majority of group holding company Tata Sons.
Tata Trusts have always complied with Indian rules, R Venkataramanan, managing trustee of the charities, said in an interview on Tuesday.
“There was always a symbiotic nature on how the trusts worked with each other and with the Tata entity,” Venkataramanan said. “Our governance framework is there.”
Mistry, whose family owns about 18.5 percent of Tata Sons, will remain a director on the holding company’s board “as long as they keep me,” he said.
Mistry said he decided to leave the boards of Tata Steel Ltd., Tata Power Co., Tata Motors Ltd., Tata Chemicals Ltd., Tata Global Beverages Ltd. and Indian Hotels Co. on Monday due to the “coercive and aggressive” stance of Tata Sons, which meant these organizations risked losing the Tata brand name and financial support, should he stay with the firms. Shareholders of Tata Consultancy Services Ltd. last week removed Mistry as a director.
Tata Sons had warned Nov. 13 that boards of the conglomerate’s listed companies must ensure their future is protected and pledged to do “whatever is required” to deal with the situation.
“It is now important for both parties to move forward in a constructive way,” said Vimal Bhandari, managing director and chief executive officer at IndoStar Capital Finance, who studies family-run conglomerates. The Tata group needs to bring in clear-cut governance structures and the right leadership, while Mistry needs to put forward specific ideas on how to ensure better management and performance within the group, he said.
“It is time for mutually respectful dialogue and discussions, not more acrimonious legal fights," Bhandari said.