Bombay High Court today refused to restrain the promoters of Tata Chemicals, Tata Motors and Tata Steel from voting on the resolution that sought removal of Nusli Wadia as the independent director of these three companies. Although the single bench of Justice SJ Kathawalla did restrain these companies from appointing any new directors on their board.
Tata Chemicals, Tata Motors and Tata Steel have called an Extraordinary General Meeting for removal of Nusli Wadia, who is currently serving as an Independent Director on their boards. These meetings will be held from December 21 to 23.
Three minority shareholders in Tata Chemicals, Tata Motors and Tata Steel had filed a suit challenging the removal of Wadia as an Independent Director by Tata Sons. Plaintiffs had contended that since independent directors have fiduciary duties and represent the interest of the minority shareholders, they have a special status. Hence, they cannot be removed under Section 169 of the Companies Act. Plaintiffs
After the 2013 amendment to the companies act, duties of directors have been classified in two categories, one of them is fiduciary duties “which ensure and secure that the directors of companies always keep the interests of the company and its stakeholders, ahead and above their own personal interests.”
Senior Advocate Navroz Seervai appearing for the plaintiffs argued that since independent directors of a company represent the interests of minority shareholders instead of promoters, they(minority shareholders) should be allowed to vote for the removal of independent directors. Appearing for Tata Sons, Senior Advocate P Chidambaram contended that the general body that appointed Wadia has the powers to remove him. He cited this as an example of corporate democracy.
Court has now asked Tata Sons to file it’s reply in the matter by January 15. 2017. The next date of hearing is February 6.
In the meantime, Nusli Wadia has filed a 3000 crore defamation case against Tata Sons. This suit is yet to come up for hearing, it was filed yesterday. Speaking to Livelaw, sources at Veritas Legal, the law firm that is representing Wadia said that the allegations levelled against their client in the notice for the said EGM were that he had galvanised other independent directors board, and lost his independence by siding with Cyrus Mistry after his removal. This was alleged in the notice, however no explanation has been provided for the same, hence the defamation.
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