Even as the actual reasons behind the removal of Cyrus Mistry from Tata Sons are still vague, the modus operandi followed by the Tata Sons’ board to decide his fate is enough to gauge the magnitude of the eventual crisis. Contrary to media reports that Cyrus Mistry will not file a caveat against the Tatas, he has sought legal opinion from a Mumbai-based law firm and is all set to take recourse to the court of law.
If well-placed sources privy to the family of Cyrus Mistry are to be believed, on the advice of his family friends, he is in touch with a law firm in Mumbai. As soon as the legal experts come out with their opinion, Mistry would decide his future course of action in the matter, sources said.
Sources confided that Mistry was, however, under the close vigil of his adversaries who are trying to persuade him to accept the truth in order to ward off the possible threat of legal complications. Mistry, however, is said to have refused to comply with their dictates and has asked experts for their opinion at the earliest.
Mistry is said to have raised stiff objections over the board’s decision to remove him without prior notice and dubbed it as an illegal step and contemplating counter steps to wage a legal war against the Tatas. Insiders privy to the top management of Tata Sons (the holding company of the Tata group) confirmed that Mistry was shell-shocked with the sudden decision by the board to remove him from the post. He was not aware of the well-hatched conspiracy against him by none other than his board members nor did he have a clue from the agenda of the meeting. Sources claimed that the agenda of the meeting did not include the issue to be taken up for his removal.
Of the nine board members, six members endorsed the proposal to remove Mistry from the post of Chairman while two abstained. The ninth member was Mistry himself who was not part of the process.
In an immediate reaction to the decision, Mistry is said to have denounced the process and claimed that at least 15-days’ notice should have been served to ratify the move. He is said to have pointed out in the meeting that as per the Tata rule book, it was mandatory to serve a 15-days’ notice to dispense with the services of any board member or employee.
He was reportedly told that the board had already sought legal opinion in the matter. Mistry further asked for the copy of the opinion. But he was refused with the contention that it was not a court hearing.
Mistry, now seeking legal opinion to challenge the board decision in a court of law, is an heir of the single largest shareholder in the company, Pallonji Mistry and was elevated to the plum post in 2012 – taking over from Ratan Tata who had been Chairman of the company for the past 21 years.
Insiders opined that possibilities of political intrigue could not be ruled out in the removal of Mistry. Mistry was brought in after Mamata Banerjee’s party, the TMC, came to power in West Bengal. Ratan Tata was at loggerheads with Mamata Banerjee who was opposed to the proposed Tata Nano plant at Singur allegedly to be built over large chunk of farmers’ land. The protest led by Mamata Banerjee in favour of farmers forced the Tatas to shift the plant to Gujarat at the invitation of then Chief Minister of Gujarat, Narendra Modi and helped the TMC to come to power in the next elections in West Bengal.
On May 20, 2011 Mamata Banerjee was sworn in as Chief Minister of West Bengal and announced the first Cabinet decision to return 400 acres of land to the Singur farmers. Subsequently, on June 14, 2011, the Singur Land Rehabilitation and Development Bill, 2011 was passed in the West Bengal Assembly. However, the bill was challenged in the High Court and quashed. In order to continue with her populist exercise, Mamata Banerjee kept on fighting legal battles against the land acquisition by the Tata Sons in the High Court and the Supreme Court as well.
Meanwhile, Ratan Tata singed by the continuous wrath of Banerjee, appeared to have been left with no option except to step down and was succeeded by Cyrus Mistry in 2012. Tata stayed away from the helm of the affairs of the company presumably with the objective to avoid Banerjee’s barbs. Cyrus Mistry was, however, believed to be a confidant of Banerjee, but failed to resolve the issue and in its historic judgment, the Supreme Court on August 31, 2016 ordered the company to return the land to the farmers.
Insiders opined that with the SC judgment against the company, the credentials of Mistry came under a cloud. He was alleged to have taken care of Banerjee and her party rather than that of the company. Besides, the BJP leadership was not happy with the victory of Banerjee in the court case and started posing a political threat to the Tatas allegedly under a pro-Benerjee Mistry.
Tata Sons is claimed to have suffered an estimated loss of about Rs 1,500 crore by losing the legal battle. Insiders believe that the loss could have been avoided if Mistry had negotiated with the Government in the larger interest of the company. Instead, Mistry is believed to have refused to accept the package offered by Chief Minister Mamata Banerjee in lieu of Singur and preferred to a truce that was not acceptable to the CM while working in tandem with her. The CM offered alternative land to set up the Tata Motors plant in the State. But Mistry tried to negotiate with the Government on a compensation package of Rs 154 crore instead. The compensation package was similar to the amount the company gave to the erstwhile Government of CPM in the State while acquiring 997 acres of land for its plant.
It is widely believed that the BJP at the centre aims to cash-in on the situation by roping in Banerjee’s bete noire Ratan Tata to carry out a proxy war against the TMC, in particular, in Bengal. More, after losing the court case on the Singur land, Mistry had become a spent-force to deal with Mamata Banerjee.
To top it all, the uncalled for message conveyed by Ratan Tata to Prime Minister Narendra Modi about his return to the post of Chairman of Tata Sons has reasons to spark off speculation about political machinations behind the crisis.
BW Reporters
D.P. Sharan has been a journalist for the past 30 years and has served many national dailies, magazines and channels. He has also been a member at the Central Board of Film Certification, Mumbai under I&B Ministry, Government of India
