In a surprise move, Cyrus Mistry on Monday stepped down from the board of all Tata Group companies with immediate effect, eight weeks after he was ousted as the Chairman of Tata Sons.
Mistry said he would now take the battle to the court, where he expected the rule of law to be upheld.
“Having reflected deeply, I think it is time to shift gears, up the momentum, and be more incisive in securing the best interests of the Tata Group,” Mistry said in a statement.
“In order to be more effective, serve the objective of governance reform, and to regain lost ethical ground, I have decided to shift from the forum of the EGMs to a larger platform and also one where the rule of law and equity is upheld,” the statement said.
The move comes after three Tata Group entities showed Mistry the door at their respective EGMs last week. However, the outcome at these three EGM was a foregone conclusion, given that the Tatas owned majority shares in them.
The real test would have been at the upcoming EGMs of companies such as Indian Hotels and Tata Steel, where the Tata Group holds between 30 per cent and 40 per cent stake.
Mistry ‘stood a chance’ Market watchers had given Mistry a chance to win at these EGMs if some of the large public institutions voted in his favour.
Shriram Subramanian of Ingovern Research Services, a proxy advisory firm, said: “It is very surprising to see him (Mistry) resign on the eve of the EGMs, especially in boards where the independent directors had expressed their confidence in him.
Many institutional and retail investors voted against his removal at the TCS EGM. Obviously, this is not the end of the story as it is going into litigation.”
Mistry said his objective was not to fight for a position, but to fight for long-term reform at Tata Group. “I had initially not thought that one would need to seek an external forum to adjudicate issues that should have never arisen in the first place,” he said.
Mistry accused Tata Sons of following “coercive behaviour” that has created a “huge amount of insecurity” among employees and shareholders.
“I had to take a call, I had to reflect and sit back and see what’s in the best interest of the group from a longer perspective. I think it’s important that I do not create a disruption and I do not let them create a disruption,” he told BusinessLine .
In a separate video message, Mistry said that during the past eight weeks, he had been waiting for Ratan Tata to provide concrete reasons for the “illegal coup staged on October 24”. He added: “Nothing cogent has been forthcoming.”
Mistry said: “The time has come to take matters to their logical conclusion. I will work on protecting the interests of the Tata Group and realising the vision of our Founder, Jamsetji Tata, until my last breath.”