Confidants of Cyrus Mistry, the ousted chairman of Tata Sons and now Tata Consultancy Services (TCS) — India’s largest firm by market capitalisation — reacted strongly to his removal as chairman of India’s largest software exporter argue that he was replaced without any board resolution being passed.
The TCS in a statement on Thursday morning said that its chairman Cyrus Mistry has been removed with immediate effect and has been replaced by Ishaat Hussain as the Chairman of the Board of Directors of the Company.
“The Company has received a letter dated November 09, 2016 from Tata Sons Limited nominating Mr. Ishaat Hussain as the Chairman of the Board of Directors of the Company in place of Mr. Cyrus P. Mistry with immediate effect. In view of this, Mr. Mistry has ceased to be the Chairman of the Board of Directors of the Company and Mr. Hussain is the new Chairman of the Company, said the TCS statement adding that the Company has been further informed that Mr. Hussain shall hold office as Chairman of the Company until a new Chairman is appointed in his place.
“The culture of poor governance in the Tata-Mistry saga continues. TCS has sent a notice to all stock exchanges stating that Cyrus Mistry "stands replaced" as Chairman by Ishaat Hussain without even a board resolution being passed,” sources in Mr. Mistry’s camp said, adding that TCS has quoted Article 90 of its Articles of Association to do so, which only enables Tata Sons to nominate a Chairman. If so, the Board has to appoint the person nominated.
Tata Sons had asked TCS on Wednesday that it would like Mr. Mistry replaced by Mr. Hussain - it made a nomination. TCS had to then convene a board meeting and table the nomination at the meeting or through a circular resolution. Nothing of this nature was done. In pre-mediated haste, by a letter of the same date, TCS has directly gone on to announce that Mistry stands replaced, said a statement from the Mr. Mistry’s camp.
The TCS statement said that Tata Sons Limited has issued a special notice under Section 169 read with Section 115 of the Companies Act, 2013 and a requisition for convening an extraordinary general meeting of shareholders of the Company under Section 100(2) of the Companies Act, 2013 to consider a resolution for the removal of Mr. Cyrus P. Mistry as Director of the Company.
The “hasty actions” appear to have been done at night as the stock exchange announcement came at 8 am, said sources in Mistry’s camp adding that cloak and dagger machinations with little regard to due process of law has come to define the angry strategy of the Ratan Tata camp.
On October 24, Mr. Mistry was replaced by Ratan Tata (at a board meeting without notice of the replacement). Till date no reasons have been forthcoming - just vague statements about "culture" and "trust deficit", said the source in Mr. Mistry’s camp.
