The bitter boardroom battle that led to the ouster of Cyrus Mistry as the Chairman of Tata Sons is all set to become a full-blown courtroom war, with both sides gearing up for a legal showdown.

Mistry’s position within the group was further diminished after he was asked to step down as Chairman of several group companies, including Tata Motors, TCS and Tata Steel.

While Tata Sons has filed a caveat in the Bombay High Court pre-empting any legal action by Mistry, the ousted honcho played his cards close to his chest. A statement issued by Mistry's office said: “A caveat is a notice filed by a party fearing legal action seeking notice before action. Tatas have filed caveats seeking notice from Cyrus Mistry fearing legal action. Cyrus has not filed any caveats.”

Sources close to both camps said that a battery of lawyers has been put in place by both Tata Sons and Mistry in preparation for the upcoming battle. Sources said Mistry could approach both the Bombay High Court and the Company Law Board to challenge the board’s decision to ease him out.

What lies beneath? Analysts said this could raise governance issues. JN Gupta, MD at proxy advisory firm Stakeholders Empowerment Services, said, “Logically speaking, something serious has come out. If I had been a board member of Tata Sons, I would never have agreed to this. So the million-dollar question is: what is hidden, what is not in the public domain? And is that a corporate governance concern for a group company?”

This comes amid an action-packed day that saw the appointment of Ralf Speth, CEO of Jaguar Land Rover, and N Chandrasekaran, CEO & Managing Director of Tata Consultancy Services (TCS), as Additional Directors on the Tata Sons Board. Ratan N Tata, Interim Chairman of Tata Sons, said, “This is in recognition of their exemplary leadership in their companies.”

Chandra seen as front-runner The move is being seen by many as an indication that Chandrasekaran is among the front-runners to take over as Chairman of Tata Sons. Chandrasekaran, or Chandra as he is popularly called, has been a rockstar performer and has played a stellar role in making TCS the jewel in Tata Son’s crown.

Earlier in the day, Chairman Ratan Tata met the CEOs of Group companies and urged them to focus on getting back to the leadership position without being concerned about the change in leadership.

“The companies must focus on their market position vis-à-vis the competition, and not compare themselves to their own past. The drive must be on leadership rather than to follow,” he said, addressing Managing Directors and senior leaders of Tata companies.

Worrisome opacity One of the group executives said on condition of anonymity that the opacity over the reasons for Mistry’s exit was unsettling. Many blamed the now-disbanded Group Executive Council for Mistry’s downfall.

“Some members of the GEC were becoming very powerful. There was also concern over the handling of various issues, including the NTT DoCoMO dispute, the future of troubled companies within the Group and the overall management style,” said another executive close to the Tata camp.

Tata scrips mostly down The market clearly does not like these developments. Share prices of all the Tata group companies, barring Tata Teleservices (Maharashtra) Ltd and Tayo Rolls, closed in the red on Tuesday after market-men shorted the scrips.

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