Cyrus P Mistry did not follow the requisite protocol on matters of critical interests to Tata Trusts, the majority shareholder of Tata Sons, the Mumbai Bench of the National Company Law Tribunal (NCLT) said in its order. Mistry did not call for a board meeting of Tata Sons prior to Tata Power’s Rs 90-billion deal with Welspun, even as he sent the papers to the directors. This was in contravention of Article 121 A of Tata Sons’ Articles of Association. Tata Power had announced on June 12, 2016 that it would acquire Welspun in a Rs 92.49-billion deal and completed the process in September. JM Financial acted as the exclusive transaction adviser to Tata Power on the deal. According to the Article, any matter affecting the shareholding of Tata Trusts in the holding company needs to be discussed by the board before any of the group companies decides in favour of making an investment exceeding Rs 1 billion. This is particularly applicable to those decisions that are not part of the annual business plan. “Such issue should have come before the board of Tata Sons prior to Tata Power Company taking a decision to acquire such a project, because it is Tata Sons that has to provide debt to finance acquisition,” the order said. It pointed out that though the papers were sent to the nominee of Tata Trusts on Tata Son’s board, Mistry did not hold any board meeting before Tata Power Company signed the documents in respect to Welspun transaction on June 12, 2016 itself.
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