In an affidavit submitted to Supreme Court, Cyrus Mistry also alleged that some trustees of Tata Trusts sought company-related information from top executives of listed Tata companies.

Cyrus Mistry alleges Tata group entered into related-party deals to benefit select few
Money Tata Vs Mistry Tuesday, June 16, 2020 - 16:13

As the legal battle between the Tata group and its ousted chairman Cyrus Mistry rages on, in an affidavit submitted to the Supreme Court, Mistry has accused Tata group of related-party deals, including one involving an aircraft purchase.

According to a Livemint report, the affidavit, filed on Friday, alleged that the Tata group awarded  “regulatory and corporate affairs liaising’ work for AirAsia India to HNR Trading PTE Ltd, a Singapore-registered entity and that it was paid Rs 22 crore for its services.

 Air Asia is a joint venture between Tata group and Malaysia’s AirAsia Bhd.

Mistry also alleged that Ratan Tata forced Tata Motors to sign a joint venture with Jayem Auto, compelling the company to give additional business to Jayem. Mistry also flagged various transactions entered between the Tata group and businessman C. Sivasankaran through his group companies, which benefitted Sivasankaran.

Mistry alleged that these related-party transactions were ‘designed to benefit a select few’.

He also alleged that some trustees of Tata Trusts sought company-related inside information from the top executives of listed Tata companies in the form of advice, thus violating markets regulator SEBI’s norms on unpublished price sensitive information (UPSI) rule as it would risk misuse of price sensitive information.

Mistry and the Tata group have been locked in a legal battle ever since Mistry was ousted as the chairman of Tata Sons in 2016. Cyrus Investments Pvt. Ltd and Sterling Investments sued Tatas alleging oppression and mismanagement, which they won after the National Company Law Appellate Tribunal (NCLAT) reinstated Mistry as the executive chairman of the company in December 2019 and said that there was oppression.

However, Tata Sons moved SC in January 2020 challenging Mistry’s reinstatement. Following this, Mistry challenged the NCLAT’s reinstatement order in May, saying that it reinstated him till his tenure, which was to end within a few months. He has sought a permanent seat on the board of Tata Sons for the Mistry family as the largest shareholder in the the holding company (Tata Sons). The Mistry family owns 18.5% in Tata Sons.

In the affidavit, Mistry also detailed all businesses, which he claims failed because of business decisions taken by Ratan Tata.

As per a Business Standard report, Mistry also said that all the concerns he had expressed over value destructive acquisitions made by Ratan Tata have become a reality three and a half years later.

Mistry outlined value destruction in the group’s telecom business. According to him, investment made in the telecom sector by the Tatas made huge losses. He alleged that ‘for reasons best known to them’, the management of Tata Teleservices sold all existing and valuable assets to Bharti Airtel for ‘no consideration’. This included spectrum licences, access to an extensive fibre network, and 40 million customers. He also alleged that the Tata Sons management didn’t sell the enterprise and retail business, even though it had a suitor offering over $1 billion for the same.

And with adjusted gross revenues (AGR) liability worth Rs 14,000 crore surfacing for Tata Teleservices, Mistry pegs the the value destruction to Tata Sons will be close to Rs 60,000 crore.

The petitions will be heard by the SC from next month.

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