Mistrys don't have rights to nominate director: Tata Sons

Cyrus Mistry's appointment in 2006 was proposed by Ratan Tata, company tells NCLT

Tata Sons has said the Mistrys do not have any rights to nominate a director on its board, despite their significant shareholding. This was stated by the holding company of the Tata group in its response to a petition filed by Cyrus Investments and others with the National Company Law Tribunal (NCLT).
 
“Petitioners do not have right to nominate directors on the board of Tata Sons,” claimed the reply, dated January 6.
 
This could become a significant point of argument in the NCLT, even as Tata Sons has called for an extraordinary general meeting to remove Cyrus Mistry from the position of non-executive director, which he now occupies after his removal from the chairman’s post in October.
 
Mistry family investment vehicles Cyrus Investments and Sterling Investments, which own 9.19 per cent each, are the largest non-promoter shareholders of Tata Sons. They moved NCLT last month, challenging the removal of Cyrus Mistry, citing company law provisions relating to oppression and mismanagement.
 
Recalling the history of the Mistry family shareholding, Tata Sons said the family did not have any board seat for 15 years. “Admittedly, Mr Pallonji Shapoorji Mistry was the first person from the Shapoorji Pallonji family to be appointed as a director of Tata Sons in… 1980. The Shapoorji Pallonji family has held shares in Tata Sons since 1965.”
 
The petition also referred to the two-year gap between Pallonji Mistry’s retirement (2004) and his son’s appointment (2006) as a director on the board of Tata Sons. “Neither the appointment of Mr Pallonji Shapoorji Mistry nor Mr Cyrus Mistry was by virtue of any nomination right which the petitioners had. In fact, it should be noted that Mr Cyrus Mistry’s name for appointment as a director was not put forward by the petitioners, but was instead put forward by Mr Ratan N Tata.”
 
The petition cited the board minutes of Tata Sons dated August 7, 2006.
 
Sources in the Cyrus Mistry camp said it was but natural that Tata Sons and its directors and the trustees of Tata Trusts would deny allegations and level counter-allegations.
 
“The petitioners and Cyrus Mistry will indeed file their rejoinder on all facts and issues that are involved in the proceedings. Meanwhile, as stated earlier, since the matter is before a judicial tribunal, there is no question of participating in a trial outside the tribunal. A full and fitting reply will be filed within applicable deadlines. It is unfortunate although not surprising that the replies of the respondents seem to be widely circulating in the media. This is consistent with expectation set by the conduct of the team since October 24, 2016,” the Mistry camp sources said.