Don’t Need A Reason, Legal Or Otherwise, To Seek Nusli Wadia’s Removal: Tata Sons
Don’t believe it is necessary or worthwhile to even comment on Nusli Wadia’s allegations: Tata Sons
Tata Sons, in a letter addressed to the chairman of Wadia group, Nusli Wadia, said that it does not need a reason – legal or otherwise – to remove him as a director from the board of Tata Steel.
Tata Sons’ legal counsel Bharat Vasani said this in a letter dated November 24, 2016, a copy of which is with BloombergQuint.
Nusli Wadia had sought the withdrawal of a special notice by Tata Steel seeking his removal as director of the company. In a letter dated November 21, 2016, Wadia had alleged that the reasons used by the company to seek his removal were defamatory in nature and harmed his reputation.
In his letter to Wadia, Vasani said he has been instructed to respond to the letter on behalf of all directors of the Tata Sons board except Cyrus Mistry and Farida Khambatta, since these two directors did not sign the resolution for the special notice.
The letter further stated that Wadia, instead of responding to Tata Steel under Section 169 (4) of the Companies Act , 2013, sought to address the directors and officers of Tata Sons, alleging defamation.
Section 169 of the Act deals with the removal of a director and its sub-section 4 allows the director in question to make a representation in writing and request notification of the representation to the shareholders of the company.
What Does The Act Say
Where notice has been given of a resolution to remove a director under this section and the director concerned makes with respect thereto representation in writing to the company and requests its notification to members of the company, the company shall, if the time permits it to do so, (a) in any notice of the resolution given to members of the company, state the fact of the representation having been made; and (b) send a copy of the representation to every member of the company to whom notice of the meeting is sent (whether before or after receipt of the representation by the company), and if a copy of the representation is not sent as aforesaid due to insufficient time or for the company’s default, the director may without prejudice to his right to be heard orally require that the representation shall be read out at the meeting: Provided that copy of the representation need not be sent out and the representation need not be read out at the meeting if, on the application either of the company or of any other person who claims to be aggrieved, the Tribunal is satisfied that the rights conferred by this sub-section are being abused to secure needless publicity for defamatory matter; and the Tribunal may order the company’s costs on the application to be paid in whole or in part by the director notwithstanding that he is not a party to it.
“You are aware that the legal position is fairly well settled that there is no requirement, legally or otherwise, for us as a shareholder to even provide any reasons while seeking your removal in terms of Section 169 of the Act. Your correspondence is obviously an attempt to try and carry on a media trial on your defamation notice which is misconceived and unfounded”, the Tata Sons letter said.
Tata Sons denied that the special notice constitutes a personal vendetta, or was intended to cause damage to Wadia’s reputation as a professional, or has caused irreparable injury, or that it is a vindictive action as alleged.
Tata Sons further cautioned Wadia that, “We hope that your defamation notice is not an attempt to coerce our directors and officer not to perform their fiduciary obligations to Tata Sons Ltd and its stakeholders, when Tata Sons has decided to and issued the special notice”.
Wadia had alleged that the special notice was issued to threaten independent directors and prevent them from discharging their fiduciary duties.
“We do not believe it is necessary or worthwhile to even comment on the allegations made by you”, the letter said.
Here is a full reproduction of the letter.
