TATA-Mistry tussle: Who is Nusli Wadia and why is he in news?
Nusli Wadia is an Indian Parsi businessman and is the Chairman of the Wadia Group. He is also the grandson of Muhammad Ali Jinnah, the founder of Pakistan.
Nusli was born to Neville Wadia and Dina Wadia. He has an elite lineage where his maternal grandmother was Rattanbai Petit, who was born in the Petit and the Tata family. Fatima Jinnah, a strong force in the Pakistan Movement, was his grandaunt.
He is married to a former air hostess, Maureen Wadia who also heads the Gladrags magazine. She is also one of the major forces behind the Mrs India beauty pageant. The couple has two sons- Ness Wadia and Jehangir Wadia.
Why is he in news?
Nusli Wadia is an independent director in the Tata group. The recent tussle between Tata and Mistry, however may change the equation. It is rumoured that Tata Sons may be moving resolutions to remove directors, including independent directors from the board of Tata group-listed companies that form a part of the salt-to-steel conglomerate.
Removal of directors under the Companies Act
Section 284 of the Companies Act, 1956 is adopted on the following recommendation of the Company Law Committee, which says:
"In future, a director of the company, whether under an agreement or not and notwithstanding anything to the contrary in its articles would be removable by an ordinary resolution of which special notice has been given. The right proposed to be given to a director, who is likely to be affected by any such resolution, to make a representation to the company at the company's expense will ensure the consideration of the pros and cons of any such resolution by the general body of shareholders, before a decision is taken by them to remove him. In our opinion, the general body of shareholders should have greater powers to remove a director with whom they are dissatisfied whether such director is under a contract of service or not."
SEction 284 is considered to be just an eyewash and does not state much about the position of the directors. In fact, it is just statutory recognition of shareholder's democracy. The provisions of this section reflects the principle of managing the shareholders.
Incidentally, the shareholders do not have any power to interfere in the company functioning. However, the above-mentioned section was designed to enable them to control the directors by removing them.
Section 284 applies to all directors, but has certain exceptions:
• In case of a private company, it is not applicable for a director holding office for life on 1 April, 1952.
• Not applicable in companies, which have adopted the system of electing two-thirds of their directors by the principle of proportional representation.
Bombay High Court makes it clear
In a court case detailed by Bombay High Court in Escorts Ltd vs Union of India, the former had clearly stated that the power of removing a director lay in the hands of the shareholders. However, the shareholders have to make their intentions clear beforehand so that the director concern can make preparations for a representation to the shareholders. On the flip side, the representation can also be cancelled if the shareholders refuse to state the grounds on which the director is being removed.
In such a situation TATA will have to prove the incompetence of Wadia, which is even more difficult since he has been the director with the group since 1981.