Mumbai: Curtains appear to have fallen, perhaps momentarily, on months of unsavoury intrigue and infighting at Tata Trusts, with a majority of trustees voting out Mehli Mistry, a long-time confidant of the late group patriarch Ratan Tata and an influential figure in the affairs of the trusts and the broader Tata group.
Mistry's ouster by majority decision might be legally challenged, though there was no word on Tuesday about anyone having moved court. At the offices of Charity Commissioner of Maharashtra, who has oversight of all trusts registered in the state, there was little conspicuous action on Tuesday, and people in the know said no grievance had been filed.
Mistry was informed on Tuesday that the circular seeking his reappointment "has not been carried," a person familiar with the developments said.
This was "owing to lack of unanimity," and his term as trustee, accordingly, comes to an end effective October 28, the person said.
Tata Trusts chairman Noel Tata, vice-chairman Venu Srinivasan and trustee Vijay Singh voted against his reappointment, even as trustees Darius Khambata, Jehangir HC Jehangir and Pramit Jhaveri voted in favour.
Due to the differing compositions of the two key trusts - Sir Ratan Tata Trusts (SRTT) and Sir Dorabji Tata Trust (SDTT) - and as Mistry cannot vote on his own reappointment, the opposing vote by three trustees carried the day at both trusts, which between them own 51% of Tata Sons, the powerful holding company of the sprawling, 156-year-old business enterprise.
In their communication, trustees addressed Mistry's argument that the resolution passed by the trusts unanimously on October 17, 2024, which said trustees would be renewed for life upon expiry of their current tenure, require him to be reappointed without needing a further round of approvals.
"I cannot agree with Mehli Mistry's suggestion that all reappointments were already approved on October 17. The resolutions cannot be interpreted in a way that reduces critical decisions -such as trustee reappointments - to a mere formality. Such an interpretation is inconsistent with the law and our fiduciary obligations as trustees," one trustee wrote.
"The decision to reappoint a trustee can never be a procedural formality. Such a suggestion undermines our fiduciary duty and runs contrary to the law," another trustee wrote.
Mistry's "disruptive" behaviour at trust meetings and alleged instances of intimidation of trustees resulted in the vote to oust him, people close to the development said.
"These statements are false and motivated," Mistry wrote in an email responding to a request for comment. "The minutes of the TT (Tata Trusts) meeting (of October 17, 2024) are the correct record of the meeting. The non-sharing of information was one of the key governance concerns, because it resulted in the TT acting contrary to the 2021 ruling of the Supreme Court, which mandated sharing of information to TT by TS (Tata Sons), given its public charitable nature."
The sharing of information about proceedings at Tata Sons' board meetings by Trusts' nominee directors with other trustees was among the key issues that split trustees into two camps. Nominee directors felt they couldn't share information, especially privileged details that would amount to non-public, price-sensitive information under securities laws about key publicly-listed companies of the group.
Some trustees, led by Mistry, felt nominee directors had an obligation to share a full account of board proceedings of Tata Trusts.
This difference, in fact, is said to be one of the sources of friction between erstwhile Trusts chairman, the late Ratan Tata, and former Tata Sons chairman, the late Cyrus Mistry, which led to the latter's ouster and the prolonged legal battle that followed.
Tata insiders noted the touch of irony in the October ouster of Mistry, a cousin of the former chairman, who was also ousted in October. While the Mistry families are related, the cousins were estranged.
Mehli Mistry is understood to be opposed to the listing of Tata Sons, mandated by the central bank under its new rules for large shadow banks, which would give liquidity to the debt-ridden Shapoorji Pallonji Group, the second-largest shareholder (with an 18% ownership stake) in Tata Sons after the Trusts.
New Chapter
Mistry's apparent exit from Tata Trusts paves the way for Noel Tata, Ratan Tata's half-brother who was appointed chairman of Tata Trusts last year, to assert his authority and discharge his responsibilities with more clarity, independence and institutional normalcy.
"If recordings of Mistry's conduct during meetings were to be made public, the Charity Commissioner would have intervened long ago and appointed their own nominees," said one trustee, who spoke on the condition of anonymity. "His disruptive and threatening behaviour was well noted."
With Mistry's exit, new trustees are likely to be inducted, with one trustee indicating that another incumbent, whose term comes up for renewal early next year, could face a similar outcome.
Legal experts said the Trusts Act is quite general in nature and leaves internal governance and procedural aspects to bye-laws made by the Trust. The SDTT deed, written in 1932, prescribes that quorum requires three trustees to be present and the decision of a majority of the trustees present at a meeting shall bind the minority.
As long as the bye-laws are not in conflict with the Trusts Act, they are valid.
Therefore, if there is a bye-law which provides for automatic renewal, it would be considered valid as there is no legal bar prohibiting it, said Ashish K Singh, managing partner of law firm Capstone Legal, adding that in case there is a variance of opinion among trustees on interpretation of a particular bye-law, the mechanism to resolve it is generally provided for in the bye-law itself.
Experts also feel trust laws are very fluid, open to interpretations and constantly evolving, compared with the more established norms and jurisprudence around company law.
Supreme Court lawyer HP Ranina said it is now up to Mistry to challenge the move against his reappointment as a life trustee - either before the Office of the Charity Commissioner (a quasi-judicial body) or before the Bombay High Court, depending on the grounds he will take.
"A resolution has been passed last year granting existing trustees a life term. This resolution is like a family settlement, and once arrived at, it cannot be rescinded. You are bound by it. This can be rescinded only when all seven trustees unanimously agree to do it," said Ranina.
Appointments of trustees, as other decisions, have been done unanimously at Tata Trusts. Trustees broke from convention on September 11, when they voted by majority decision to remove former defence secretary Vijay Singh as a nominee director on the board of Tata Sons. That set off a chain of events that drew nationwide attention to the infighting at India's most high-profile public trusts, and culminated on Tuesday with Mistry's unceremonious ouster.
(With additional reporting by Indu Bhan in New Delhi, and Maulik Vyas and Rashmi Rajput in Mumbai)
Mistry's ouster by majority decision might be legally challenged, though there was no word on Tuesday about anyone having moved court. At the offices of Charity Commissioner of Maharashtra, who has oversight of all trusts registered in the state, there was little conspicuous action on Tuesday, and people in the know said no grievance had been filed.
Mistry was informed on Tuesday that the circular seeking his reappointment "has not been carried," a person familiar with the developments said.
This was "owing to lack of unanimity," and his term as trustee, accordingly, comes to an end effective October 28, the person said.
Tata Trusts chairman Noel Tata, vice-chairman Venu Srinivasan and trustee Vijay Singh voted against his reappointment, even as trustees Darius Khambata, Jehangir HC Jehangir and Pramit Jhaveri voted in favour.
Due to the differing compositions of the two key trusts - Sir Ratan Tata Trusts (SRTT) and Sir Dorabji Tata Trust (SDTT) - and as Mistry cannot vote on his own reappointment, the opposing vote by three trustees carried the day at both trusts, which between them own 51% of Tata Sons, the powerful holding company of the sprawling, 156-year-old business enterprise.
In their communication, trustees addressed Mistry's argument that the resolution passed by the trusts unanimously on October 17, 2024, which said trustees would be renewed for life upon expiry of their current tenure, require him to be reappointed without needing a further round of approvals.
"I cannot agree with Mehli Mistry's suggestion that all reappointments were already approved on October 17. The resolutions cannot be interpreted in a way that reduces critical decisions -such as trustee reappointments - to a mere formality. Such an interpretation is inconsistent with the law and our fiduciary obligations as trustees," one trustee wrote.
"The decision to reappoint a trustee can never be a procedural formality. Such a suggestion undermines our fiduciary duty and runs contrary to the law," another trustee wrote.
Mistry's "disruptive" behaviour at trust meetings and alleged instances of intimidation of trustees resulted in the vote to oust him, people close to the development said.
"These statements are false and motivated," Mistry wrote in an email responding to a request for comment. "The minutes of the TT (Tata Trusts) meeting (of October 17, 2024) are the correct record of the meeting. The non-sharing of information was one of the key governance concerns, because it resulted in the TT acting contrary to the 2021 ruling of the Supreme Court, which mandated sharing of information to TT by TS (Tata Sons), given its public charitable nature."
The sharing of information about proceedings at Tata Sons' board meetings by Trusts' nominee directors with other trustees was among the key issues that split trustees into two camps. Nominee directors felt they couldn't share information, especially privileged details that would amount to non-public, price-sensitive information under securities laws about key publicly-listed companies of the group.
Some trustees, led by Mistry, felt nominee directors had an obligation to share a full account of board proceedings of Tata Trusts.
This difference, in fact, is said to be one of the sources of friction between erstwhile Trusts chairman, the late Ratan Tata, and former Tata Sons chairman, the late Cyrus Mistry, which led to the latter's ouster and the prolonged legal battle that followed.
Tata insiders noted the touch of irony in the October ouster of Mistry, a cousin of the former chairman, who was also ousted in October. While the Mistry families are related, the cousins were estranged.
Mehli Mistry is understood to be opposed to the listing of Tata Sons, mandated by the central bank under its new rules for large shadow banks, which would give liquidity to the debt-ridden Shapoorji Pallonji Group, the second-largest shareholder (with an 18% ownership stake) in Tata Sons after the Trusts.
New Chapter
Mistry's apparent exit from Tata Trusts paves the way for Noel Tata, Ratan Tata's half-brother who was appointed chairman of Tata Trusts last year, to assert his authority and discharge his responsibilities with more clarity, independence and institutional normalcy.
"If recordings of Mistry's conduct during meetings were to be made public, the Charity Commissioner would have intervened long ago and appointed their own nominees," said one trustee, who spoke on the condition of anonymity. "His disruptive and threatening behaviour was well noted."
With Mistry's exit, new trustees are likely to be inducted, with one trustee indicating that another incumbent, whose term comes up for renewal early next year, could face a similar outcome.
Legal experts said the Trusts Act is quite general in nature and leaves internal governance and procedural aspects to bye-laws made by the Trust. The SDTT deed, written in 1932, prescribes that quorum requires three trustees to be present and the decision of a majority of the trustees present at a meeting shall bind the minority.
As long as the bye-laws are not in conflict with the Trusts Act, they are valid.
Therefore, if there is a bye-law which provides for automatic renewal, it would be considered valid as there is no legal bar prohibiting it, said Ashish K Singh, managing partner of law firm Capstone Legal, adding that in case there is a variance of opinion among trustees on interpretation of a particular bye-law, the mechanism to resolve it is generally provided for in the bye-law itself.
Experts also feel trust laws are very fluid, open to interpretations and constantly evolving, compared with the more established norms and jurisprudence around company law.
Supreme Court lawyer HP Ranina said it is now up to Mistry to challenge the move against his reappointment as a life trustee - either before the Office of the Charity Commissioner (a quasi-judicial body) or before the Bombay High Court, depending on the grounds he will take.
"A resolution has been passed last year granting existing trustees a life term. This resolution is like a family settlement, and once arrived at, it cannot be rescinded. You are bound by it. This can be rescinded only when all seven trustees unanimously agree to do it," said Ranina.
Appointments of trustees, as other decisions, have been done unanimously at Tata Trusts. Trustees broke from convention on September 11, when they voted by majority decision to remove former defence secretary Vijay Singh as a nominee director on the board of Tata Sons. That set off a chain of events that drew nationwide attention to the infighting at India's most high-profile public trusts, and culminated on Tuesday with Mistry's unceremonious ouster.
(With additional reporting by Indu Bhan in New Delhi, and Maulik Vyas and Rashmi Rajput in Mumbai)
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