Moving swiftly to ensure that no ex-parte order is passed in case ousted Tata Sons chairman Cyrus Mistry decides to move court, the Tata group Tuesday filed caveats against Mistry and his firm Cyrus Investment Pvt Ltd at various legal forums.
The caveats have been filed by Tata Sons, Ratan Tata and Sir Dorabji Tata Trust in the Bombay High Court and the National Company Law Tribunal, sources familiar with the development said. The Tata move comes a day after a Tata Sons board announcement said Mistry would be immediately replaced by Ratan Tata, for an interim period of four months.
However, the Cyrus Mistry camp said they have not moved the court against the decision of the Tata Sons board. “A caveat is a notice filed by a party fearing legal action seeking notice before action. Tatas have filed caveats seeking notice from Cyrus Mistry fearing legal action. Cyrus has not filed any caveat. He has already made a statement that such concerns are misplaced at this stage,” an official statement from Cyrus Mistry said.
While Tata Sons has appointed law firm Shardul Amarchand Mangaldas and Karanjawala & Co to advise them, Mistry has approached Desai & Diwanji for legal advice.
Meanwhile, Tata stocks came under selling pressure and fell by up to 3.16 per cent on the Bombay Stock Exchange Tuesday. The market capitalisation — or the market value of listed shares — of top listed Tata companies lost close to Rs 10,877 crore. Tata Steel fell 2.51 per cent, TCS 1.20 per cent and Indian Hotels 3.16 per cent. There are 29 publicly-listed Tata enterprises with a combined market capitalisation of about $116 billion (around Rs 775,000 crore) as on March 31, 2016.
The Pallonji Mistry group holds around 18 per cent stake in Tata Sons which makes them the largest individual shareholder. Tata Trusts and some of the Tata Group companies hold the remaining stake.
Meanwhile Tuesday, Ratan Tata, speaking to journalists in Mumbai, said his appointment was for a short-term and the process to succeed him would soon begin. “Assumed role of interim chairman for stability and continuity so that there is no vacuum,” Tata said.
Mistry, who was chosen by a five-member panel in 2011 to succeed Ratan Tata, took over the reins of the conglomerate when the industrialist retired on December 29, 2012, when he turned 75.
Mohan Parasaran, former Solicitor General who gave his legal opinion to Tata Sons before it replaced Mistry, said he stands by his opinion. “The opinion we gave was right from our perspective,” he said.
Parasaran also said that Ratan Tata and one other director of the company did try to persuade Mistry to step down from the chairmanship of Tata Sons before conducting the board meeting on October 24. “In a private meeting, he (Mistry) was put on notice… There is no compulsion (on the board) for giving any grounds for removal of a chairman… Mistry has been replaced and not removed. He continues to be a director of Tata Sons,” Parasaran said.
The Tatas also called top officials of group companies for a briefing on the developments.
Ratan Tata asked Tata companies to act as leaders in their respective markets and enhance returns to shareholders. Asking them to focus on their businesses without being concerned about the top-level change, Tata said his appointment was for a short term and the process to find a permanent to succeed him would soon begin.
“The companies must focus on their market position vis-à-vis competition, and not compare themselves to their own past. The drive must be on leadership rather than to follow,” he said, addressing managing directors and senior leaders of Tata companies.
“I look forward to working with you as we have worked together in the past. An institution must exceed the people who lead it. I am proud of all of you, and let us continue to build the group together,” Tata told a meeting called at Bombay House.