The row over the sudden removal of Cyrus Mistry as Tata Sons Chairman may have investors in the group’s companies worried, but it has turned out to be a surprise Diwali bonanza for India’s bulge bracket lawyers and law firms.
Either the Tatas or the Mistrys of the Shapoorji Pallonji Group have already approached eight among the top 10 law firms in India. A few of these are officially advising either of the parties, while others have their senior counsels consulted in their private capacity.
Tata Sons has roped in Shardul Amarchand Mangaldas & Co, Karanjawala & Company and AZB & Partners, all from the top rung of India’s corporate legal entities. Apart from these firms, the group has also enlisted a battery of top lawyers including Harish N. Salve, Abhishek Manu Singhvi and Aspi Chinoy. The holding company had consulted ace lawyer and former Union minister P. Chidambaram, former Solicitor General of India Mohan Parasaran and Justice (retd.) R.V. Raveendran before taking the decision to remove Mistry.
On the other side of this legal battle are top firms Desai & Diwanji and J. Sagar Associates. Senior counsels roped in for Mistry include his father-in-law Iqbal Chagla, Virag Tulzapulkar and Janak Dwarkadas.
Top firms and ace corporate lawyers charge anywhere between Rs 5-10 lakhs per appearance and the Tata-Mistry litigation is set to bring them tens of crores of rupees in billing.
According to Deb Mukherjee, a Partner at one of India’s premier corporate law firms, Fox & Mandal, the complexities of this case might make it a long drawn legal tussle that could stretch to a few years. He said that corporate battles in India Inc are not a new phenomenon, but the scale in this case is of a different order.
“The scale at which this legal dispute between Tata Sons and Cyrus Mistry is shaping up is unprecedented. The pace at which the events are unfolding is also making this case very complicated,” he told News18.
The Tata Sons board of directors removed Mistry as the chairman on Monday after market hours without giving any specific reason. Reports from Mumbai indicate the Shapoorji Pallonji group – Mistry is son of the construction behemoth’s chairman Pallonji Mistry – is mulling approaching the National Companies Law Tribunal questioning the board decision. Meanwhile, the Tatas have already filed caveat petitions in the National Companies Law Tribunal, the Bombay High Court and the Supreme Court to prevent any ex-parte decision without getting a chance to present their side.
Legal experts said the race for legal brains is as much to get the best advice as it is to limit the choices available to the other side. “This is a very clever strategic litigation strategy adopted to render the opponent party helpless,” said a senior lawyer practicing at the Delhi High Court who requested anonymity.
Ajit Kumar, Chief Legal Counsel for the Jaypee Group, told News18 that this tactic is prevalent among the crème de la crème of India Inc. The idea is to block all the senior counsels and reputed law firms for them so that the opponent cannot resort to their services.
“But for a corporate legal war, it’s for the first time that it has shaped up in such a large scale,” he said.
However, Fox & Mandal’s Mukherjee said there could be more than what meets the eye.
“Caveats ensure that the other does not get an ex-parte order, but in this case, it looks like Tatas may have reasons like impropriety, misappropriation of funds, etc against Mistry to approach the court. As for Mistry, no one knows if he is apprehending civil or criminal action against him, but certainly this issue is of Mistry’s ego being hurt,” he said.
Answering a pointed question on reports that Shapoorji Pallonji could approach the company tribunal invoking a little-known clause that is meant to safeguard minority shareholders – the group holds 18% in Tata Sons where Tata Trusts led by Ratan Tata control 66% of the shareholding - Mukherjee said the issue could get further complicated if the clause is invoked.
However, legal experts seem divided on the issue.
Anil Gor, senior professor at NL Dalmia Institute of Management Studies and Research, Mumbai, felt such a proceeding would not guarantee success.
“Invocation of this section requires one to prove that the decisions of the majority shareholders have caused losses to the company or its reputation, hence it is being prejudicial to the interest of the minority shareholder,” Dr Gor said, adding that there is nothing for Pallonji to approach the Tribunal on this basis.
Aspi Chinoy, senior advocate at the Bombay High Court confirmed to News18, that law firm Shardul Amarchand Mangaldas & Co have briefed him on this issue on behalf of the Tatas.
Shardul Shroff and Pallavi Shroff of Shardul Amarchand Mangaldas & Co. refused to speak for this story.
Lalit Kumar, partner at J Sagar Associates, told News18 that his firm has an internal disclaimer, which prohibited him from divulging any case details to the media as the Tatas are “an extremely reliable client”. Other involved law firms and senior counsels were not available for comment.
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