Ousted Tata Sons Chairman Cyrus Mistry, in an affidavit to the Supreme Court (SC), has claimed that some trustees of Tata Trusts frequently solicited inside details of information from the management of listed Tata companies. He also alleged that they were in violation of SEBI's (securities and exchange board of India) unpublished price sensitive information (UPSI) rule.
"The blanket exposure to UPSI of listed Tata group companies with trustees of Tata Trusts in the name of "advice" poses serious governance risk to listed firms of Tata and also exposes their public shareholders to the risk of misuse of price sensitive information," Mistry said in his affidavit cited by the Business Standard.
He is locked in a legal battle with Tata Sons over his ouster and is demanding proportional board representation as the largest stakeholder in the holding company of Tata Group.
Mistry, in the affidavit, urged the SC to issue an order to SEBI to probe the matter as well as the role of trustees in it, comprising Tata Group emeritus chairman Ratan Tata and Noshir Soonawala, who is a Tata Trusts trustee and a confidant of Ratan Tata.
The affidavit further highlighted the way trustees procured UPSI relating to listed Tata Group companies and obstructed the corrective measures taken by Mistry to regulate the sharing of information and adherence to need to know principles. It demands that all these misdeeds merit judicial notice by the top court.
According to the affidavit, the governance rules framed by Mistry were geared towards ensuring a legally compliant protocol for information sharing and not as an endorsement by Mistry for Rata Tata and Soonawala to meddle in the affairs of Tata Sons and Tata Group firms.
Demanding strong checks and balances, Mistry pointed out in the affidavit that "it is critical that serious decisions of severe magnitude are not taken whimsically without much thought or for unstated collateral objectives."
"It is necessary to have a strong method of checks and balances in the trustees decisions, particularly if decisions they could take have a widespread impact on the Tata Group," the affidavit underscored.
Mistry claimed that the reason given by the Tatas for removing him unceremoniously from Tata Sons that the trustees had lost confidence in him was untrue.
Mistry was removed as the chairman of Tata Sons on October 24, 2016, in a boardroom coup offering no reason.
But later, in select press statements, the group claimed that Mistry was removed primarily for his non-performance and asserted that Tata Sons was at a loss under his watch.