Cyrus Pallonji Mistry’s near unceremonious removal as chairman of the Tata group of companies is now set to turn into an extended legal battle.
The removal has been followed by bitter outbursts from the ousted chairman who even wrote a scathing five-page letter to the board thus transforming a boardroom feud into a public row.
Interim chairman Ratan Tata and his team have moved to file caveats in Bombay High Court, Delhi High Court and the National Company Law Tribunal as a preventive measure from any legal action that Mistry may initiate. Mistry has not announced any legal action yet and hasn’t filed caveats either.
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While this mother of all legal troubles is brewing, here are the other run ins with the law the $104 billion salt-to-software conglomerate had to deal with in 2016:
SC verdict on Singur land acquisition for Nano plant
On August 31, 2016 the Supreme Court quashed the CPI (M)-led West Bengal government’s acquisition of 997 acres of agricultural land for industry captain Tata Motors’ Nano “small car” plant in Singur..The 204-page judgment, which might be deemed as a political victory for the current Mamata Banerjee government, said the “brunt of development” should not be borne by the “weakest sections of the society, more so, poor agricultural workers who have no means of raising a voice against the action of the mighty State government.”
The acquisition had seen widespread protests in the State, forcing the Tatas to shift base to Gujarat in 2008.
Tata-DoCoMo arbitration
Tata Teleservices and DoCoMo have been locked in a long tussle over the Japanese company's move to exit a partnership formed in 2009. Under the terms of that deal, in the event of an exit, DoCoMo was guaranteed the higher of either half its original investment, or its fair value. When DoCoMo decided to get out in 2014, Tata was unable to find a buyer for the Japanese firm's stake and offered to buy the stake itself.
However, Reserve Bank of India blocked Tata's offer, saying a rule change the previous year prevented foreign investors from selling stakes in Indian firms at a pre-determined price. In an attempt to resolve the matter, Mistry said he asked DoCoMo to join the Tatas in seeking approval from RBI, but DoCoMo refused, and initiated arbitration in a London court in June. DoCoMo won that arbitration, and Tata was asked to pay a penalty of $1.17 billion, which it has deposited with the Delhi High Court. The issue is still under litigation.
Taj Mahal hotel auction
The Delhi High Court recently dismissed the plea against the auctioning of the Taj Mahal Hotel by New Delhi Municipal Council (NDMC).
The appeal was filed by the Indian Hotels Company Ltd (IHCL), which runs the Taj Mahal Hotel on 1, Man Singh Road in the national capital. A bench of Justice Pradeep Nandrajog and Justice Pratibha Rani pronounced the judgment. In its defence, the Tata group has told the Delhi High Court that the group has invested 21 times more than what New Delhi Municipal Corporation (NDMC) has done. On 5 September, Justice V Kameshwar Rao had ruled that there was no automatic extension of the licence given to IHCL for running the hotel and allowed the auctioning of the hotel.