The spat between Cyrus Mistry and Tata Sons may have had its genesis with the former highlighting alleged favours shown by the Tata group under Ratan Tata to C Sivasankaran for his stake in Tata Teleservices.

Mistry had also sought an investigation into whether a key decision of the board to initiate legal proceedings against the Chennai-based businessman was leaked.

According to documents accessed by BusinessLine , it emerges that Mistry had convinced the Tata Sons board to approve legal action against Sivasankaran’s company (Siva Industries & Holdings Ltd) on September 15, 2016.

But even before any action could be taken, Siva, through his legal counsel, sent a notice to Tata Sons, Tata Teleservices and NTT DoCoMo seeking damages for the losses sustained by his company. This letter was also dated September 15.

An email sent by Mistry on September 19 to key executives reveals that the ousted Chairman was suspicious that someone had leaked the board decision to Siva.

“Wonder how this came just after our decision at the Tata Sons board to go legal? We need to check this out,” Mistry wrote in that email. Just over a month later, on October 24, Mistry was removed as Chairman of Tata Sons.

The action was being taken by Tata Sons after Siva failed to deposit ₹694 crore towards meeting the claims raised by Japanese telecom major NTT DoCoMo.

While other Tata group companies that hold shares of Tata Teleservices contributed their share of the claim amount in proportion to their equity holding, Mistry informed the board that Siva Industries and Holdings Ltd had not been responding to several reminders. The board then agreed to serve a legal notice to Siva and, if necessary, file a suit for recovery of the money.

The wrangling between Siva and Cyrus had started way back in 2013 when the latter wrote a letter highlighting how the former had benefited from Tata Group under Ratan Tata. Siva’s company Sterling Infotech Ltd (now known as Siva Industries & Holdings Ltd) had been given shares in Tata Teleservices (TTSL) at ₹17 a share through an agreement on February 24, 2006.

Just a few days later, on March 8, 2006, Temasek Holdings, an investment company owned by Singapore Government, was sold TTSL shares at ₹26 per share. Then in 2008, NTT DoCoMo bought stake into TTSL at ₹116.09 per share, “thereby providing an opportunity to the Siva Group to recoup ₹240.78 crore through sale of 20.74 million shares...a substantial premium to its acquisition cost,” Mistry wrote in the letter to Siva dated October 31, 2013. This was again flagged by Tata Sons’ legal team in a communication to Siva’s lawyers on October 20, 2016, just four days before Mistry’s ouster.

The documents seen by BusinessLine also show that the initial corpus of ₹782 crore invested by Siva to buy TTSL shares was also supported by Tata Group under Ratan Tata. Of this ₹650 crore was provided to Siva by a loan from Standard Chartered Bank against a buyback guarantee by Tata Sons if Siva defaulted on the loan repayment.

The balance ₹132 crore was given by Kalimati Investments, a subsidiary of Tata Steel, as a short-term loan. That Ratan Tata and Siva had a great relationship is further highlighted in an email exchange in 2005 in which Siva says he has created two email IDs for Ratan Tata, including the passwords.

Siva did not respond to email questions sent by BusinessLine, but the legal notice sent by his company to Tata Sons suggests that the investments in TTSL were made to “support Tata group” and his company had suffered capital and opportunity cost as an investor.

Group Spokesperson for Tata Sons said all the allegations of impropriety are baseless. Sivasankaran, he added, had made an investment commitment much before Temasek.

“Considering the industry was in a growth phase at that time, the investment price was finalised accordingly,” the spokesperson said adding that on the amount to settle DoCoMo claims, Tata Sons is pursuing all legal options for the recovery of ₹694 crore from Siva.

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