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Tata Trusts trustee Mehli Mistry’s reappointment may be put on hold. Chairman Noel Tata, Vice Chairman Venu Srinivasan and Vijay Singh may refuse to approve it.
Mehli Mistry’s tenure ends on October 28. The decision on his reappointment can be taken today on October 27. However, its official information has not come.
Mehli Mistry is a trustee in two big trusts
There are some other trusts in Tata Trusts including Sir Ratan Tata Trust. Mistry is a trustee of Sir Dorabji Tata Trust (SDTT) and Sir Ratan Tata Trust (SRTT) since 2022.
Both these trusts have 51% stake in Tata Sons, the holding company of Tata Group. The proposal to extend his tenure was made by Tata Trusts CEO Siddharth Sharma on Friday.
Economic Times has published a report regarding this in which it has written quoting sources that trustees like Darius Khambatta, Pramit Jhaveri and Jahangir HC Jahangir have given their consent to this. Whereas Noel Tata and Venu Srinivasan have sought legal opinion.
Legal battle may break out after Ratan Tata’s departure
Insiders say this could lead to a legal battle. Decisions in Tata Trusts have always been taken with consent, but after the death of Ratan Tata, this tradition has started breaking.
Nearly a year after Ratan Tata’s demise, the trustees, by a majority vote, removed former defense secretary Vijay Singh from the board of Tata Sons. This decision was so big that the entire country’s attention went to the internal strife of Tata Trusts. The government also had to intervene.
In case of differences, nothing was clearly said about whether the trustee can be reinstated by majority vote or whether a unanimous decision is necessary. This is completely new for the trusts, because in the last few decades when Ratan Tata took charge of the group, the decisions of the trust had never reached voting.
While governance in companies is standardly governed by the Companies Act and other applicable laws, matters in trusts are governed by a combination of the rules of the Maharashtra Public Trusts Act, the trust deed and resolutions passed from time to time by the trustees.
- The trust deed of Sir Dorabji Tata Trust, written in 1932, states that a meeting will be considered legally valid only if at least three trustees are present. At the same time, if there is voting in the meeting, then the decision taken by the majority of the trustees present will have to be accepted by everyone.
- There is another resolution which is important in this matter. The trustees meeting was held on October 17, just nine days after Ratan Tata’s death. It was decided that after the end of the term of every trustee, he would be reinstated without imposing any term limit.
Mistry had approved Srinivasan’s reinstatement with conditions.
Last week, Mistry had conditionally approved the reinstatement of Srinivasan as trustee and vice chairman of Sir Dorabji Tata Trust.
He had said in an email – If any trustee does not pass a resolution to reinstate Venu Srinivasan or does not bring a similar unanimous resolution for the other trustees when their terms end, then I will not give my formal approval to the reinstatement of Srinivasan.
Mistry can challenge the board’s decision in court
The report quoted sources as saying that an internal debate was going on whether Mistry would withdraw Srinivasan’s approval or challenge the decision of not approving his reinstatement in court.
Noel Tata, Srinivasan and Singh have taken legal advice on this. But a trustee clearly said that the conditional approval cannot stand legally. Once any resolution is passed, it cannot be withdrawn. This is not legally correct.
Mehli Mistry is the cousin of Cyrus Mistry
Mistry is the promoter of M Pallonji Group, which has businesses like industrial painting, shipping, dredging, car dealership. His company Sterling Motors is a dealer of Tata Motors.
Mistry is a cousin of Shapoorji Mistry and his late brother Cyrus Mistry. Shapoorji Pallonji Group holds 18.37% stake in Tata Sons.
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