Continuance of loss-making Nano example of mismanagement:
The lawyer of Cyrus Mistry, the ousted chairperson of Tata Sons, today told the NCLT here that the Nano car project and the holding company's decision to grant concessions to business acquaintances that resulted in major losses were prime examples of "mismanagement" at the Tata group.
Two firms controlled by Cyrus Mistry's family have moved the National Company Law Tribunal against the Tata group, alleging oppression of minority shareholders and mismanagement.
Senior advocate C Aryam Sundaram, Mistry's lawyer, said the Tata group's practice of funding without proper risk assessment, particularly in the case of Nano, resulted in liabilities worth thousands of crores of rupees.
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The fact that the Nano project continued after Mistry's removal -- when the board of Tata Motors had unanimously decided to discontinue the production of the loss-making car in early 2016 -- just for "emotional reasons" highlighted the mismanagement, he said.
"The continuation of the Nano project and the reversal of the Tata Motor board's decision after Mistry's removal is a clear example of interference by the majority shareholders and the nominee trustees of Tata Sons," Sundaram argued.
Sundaram also alleged that Tata Sons extended undue favours and concessions to Chennai-based businessman and Aircel founder C Sivasankaran. The Sivasankaran-owned Sterling was given shares in Tata Teleservices at a discounted price and several favours were extended to him at the behest of Ratan Tata, he said.
"The largesse given to Siva ranged from management contracts and shares being allotted at a huge discount," he said.
When Mistry decided to introduce a proposal to litigate against the Siva group to recover the Rs 694 crore it owed to Tata Sons, the latter's board agreed unanimously. However, at the very next board meeting, he (Mistry) was removed as the chairman, the lawyer said.
Mistry is locked in a legal battle with the Tatas since his unceremonious exit as chairman of Tata Sons -- the promoter company of the USD 105 billion car-to-software group -- in October 2016.
Cyrus Investments and Sterling Investments Corporation moved the NCLT against Tata Sons after Mistry's ouster, alleging oppression of minority shareholders and mismanagement.
Mistry has sought safeguards to protect the interests of minority shareholders.
While Sundaram will continue his arguments tomorrow, the Tatas are likely to put forth their plea from January 11.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)