Tata Sons replaced Cyrus Mistry as chairman in October 2016
Safeguards should be built within the Tata group to protect the interests of minority shareholders, the counsel of former Tata Sons Ltd chairman Cyrus Mistry told the National Company Law Tribunal or NCLT on Monday.
Mr Mistry's counsel C Arya Sundaram told the tribunal's Mumbai bench that the safeguards would ensure the $105 billion salt-to-automobile conglomerate works like a "board-managed" entity.
Tata Sons had replaced Mr Mistry as chairman, less than four years after he took charge, in October 2016.
Tata Sons is the holding company of Tata group and holds a bulk of shares in its companies.
Mr Sundaram represents the firms where the ousted chairman is a stakeholder. He said Mr Mistry was made to leave Tata Sons as a "consequence of the company's rampant practice of allowing the nominee trustee directors of Tata Trusts to override the opinions of the minority shareholders and even the company board".
"Increasingly, all decisions for Tata Sons as well as other group companies were being taken or approved by the two nominee trustee directors of the Tata Trust, who superseded the decisions of even the Tata Sons board," Mr Sundaram told the tribunal.
Cyrus Investments Pvt Ltd and Sterling Investments Corporation Pvt Ltd had moved the tribunal against Tata Sons after Mr Mistry's ouster, alleging oppression of minority shareholders and mismanagement.
Mr Sundaram said the former Tata Sons chairman approached the tribunal to seek protection for minority shareholders through safeguards such as ensuring a "transparent corporate governance" for Tata Sons.
He said the opinions of the majority shareholders always superseded those of minority ones and there "was a constant interference from the nominated trustees of the Tata Trust in the functioning of Tata Sons as well as that of the smaller group companies", news agency Press Trust of India reported.
"The articles enable the trustees to reduce the company board to a dummy board," Mr Sundaram told the tribunal. "One of these articles allows the Tata Trusts to nominate one-third of the directors of Tata Sons. Another article permits the majority shareholders to force the minority shareholders to sell their shares or to allow transfer of shares," he said.
Mr Mistry's arguments will continue on Tuesday. Since his ouster in 2016, his family firms and the Tatas have been fighting it out in courts.
Tata Sons has had six chairmen in its history, and Mistry had the shortest tenure at less than four years. While he had been at the helm, growth at the group's top earner Tata Consultancy Services Ltd had been slowing down due to global headwinds, Tata Steel was facing trouble in Europe, and Tata Teleservices Ltd and NTT DoCoMo Inc was starting the process to end their partnership.
With inputs from PTI