Ratan Tata, not professional board, was running Tata Group: Mistry to SC

Mistry counsel Sundaram claims Ratan Tata was able to achieve this through the Tata Trusts-nominated directors on Tata Sons board

The Tata group was not run by professionally managed boards but by the Chairman of Tata Trusts, Ratan Tata, through the Trust nominated directors on Tata Sons board, C A Sundaram, the counsel for the Mistry family, informed the Supreme Court today.

Tata Sons owns several listed companies running into Rs 65 trillion with public shareholders and there should be some kind of independence in decision making by the group companies, Sundaram said today. “If they (Tata Sons) wanted to keep it a family affair, then they should have remained so instead of making it public,” he said.

Tata Trusts, which owns 66 per cent stake in Tata Sons, is chaired by Tata, the patriarch of the group while the Mistry family owns 18.4 per cent stake in the company.

Sundaram said a public charitable trust cannot legally run such companies and that’s the reason why Tata Sons needs it be board run. They cannot use the Articles of Association of Tata Sons to claim that they have absolute right over affairs of the company, he said.

The Articles of Association of Tata Sons have come into sharp focus which gives veto powers to Trust nominated directors on Tata Sons board even if Trusts' stake falls to 40 per cent.  The Tata group counsel, Harish Salve had said in the past, the Mistry family have voted for the change in the articles of associations and they started complaining only after Cyrus Mistry, the scion of the Mistry family, was removed as the Chairman of Tata group in October 2016.

To this, Sundaram said the SP group voted in favour of Articlesdue to the relationship of trust they had with Tata Sons and they could not have conceived that the same articles would be used against them.

The Supreme Court is hearing an appeal filed by the Tata group against an order by the National Company Law Appellate Tribunal (NCLAT) last December. The NCLAT order had reinstated Cyrus Mistry as Tata group chairman, while terming his successor N Chandrasekaran’s appointment as illegal. 

A bitter legal and public battle between the two sides erupted when Mistry was removed from Tata Sons board as its chairman in October 2016. While the NCLT Mumbai sided with the Tatas, the NCLAT had termed Mistry’s removal as illegal. The matter is now in the Supreme Court.

The hearing will continue tomorrow