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Daily Vocab Capsule 24th December 2019

Sound the Horn OK Please

Last week’s NCLAT ruling in favour of Mistry could push India Inc from the realm of law to business morality.

In the savage and fickle world of politics, where the balance of power is a function of time and events, the role of

‘margdarshak’ (guide) is a bit part often forced upon a patriarch. He struts and frets, and then is heard no more.

In business, where the reins of control are coded in legal rights, the person in question may well have the last

word — till an unpredictable judge turns the table and tilts the powers, even if it is for a few fleeting weeks.

Irrespective of which way the country’s highest court rules, Cyrus Pallonji Mistry will, at least till then, feel like

a king after the latest verdict in a feud that is not only a high-stake war for power and prestige, but is also a battle

of perceptions. As charges and counter-charges once again come to the fore, the rift threatens to push bystanders

and corporate India beyond the confines of the law to the realm of business morality.

Step Back, or Step on the Gas?

The simple, almost prosaic, point relating to the power to sack a director who has the confidence of the board is

pitted against other overwhelming questions: how far can the top executive exercise his free will, disregarding

the diktats of the chairman emeritus (a non-statutory role) and his acolytes? Is there a Lakshman rekha for hands-

off promoters, who seemingly keep a majestic detachment from companies they once led, but nonetheless

continue with backseat driving?

Having slipped into the shoes of mentor, should someone act like master? Should a holding company — which

is closely held, but nonetheless a deemed public entity — exercise archaic powers that gives overriding rights

to promoters? Are such preemptive powers on transferability of shares and investment decisions — like the kind

enjoyed by a few Tata Trusts nominees on the board of Tata Sons — justified in a company that influences the

course of several businesses and destinies of thousands of stakeholders? And, why did the Tatas rush to convert

Tata Sons into a private limited company?

As the ruling by the National Company Law Appellate Tribunal (NCLAT) — the second-highest court on

corporate cases — bears out, such questions, even if somewhat esoteric, can be unsettling. They can delay

decisions, alter plans and even hurt business by adding a dose of uncertainty. It’s a case that will probably add a

chapter in the B-school syllabus on ‘family business’. This could well be a legacy of Mistry, who understandably

feels vindicated by the NCLAT ruling.

The legal eagles hired by the Tata Group will probably challenge the key points that the ouster of Mistry is not

an act of ‘oppression’ of the rights of a minority shareholder, and that certain decisions taken by the majority

shareholding group on the back of special rights does not construe ‘mismanagement’. They would probably

highlight the fact that Mistry was well aware of these rights, and Tata companies could not have been led by a

director who lost the trust and confidence of the group.

The Mistry camp could point out that the NCALT ruling is based on allegations of interference from senior

members of the Tata Group, which led to undermining the board of Tata Sons — with 550 emails to substantiate

the extent of such interference — and his fall from grace following unpalatable, yet sensible, proposals pursued

by Mistry — like folding up the Nano project and cutting losses in Indian Hotels.

Flying on False Wings

It is unclear whether the Supreme Court will dwell on arguments that challenge commercial decisions taken by

the majority of the shareholders. But some of the concerns — like investing in AirAsia — voiced by Mistry in an

open letter during his exit from Tata in 2016 have, indeed, turned out to be valid. Not only have AirAsia’s losses

grown, but a forensic audit has also exposed a fraud. It was the old dalliance with aviation that dragged the group

to commit investments when it had to allocate funds in businesses like power, steel and automobiles.

In the letter, Mistry had also bluntly made the point that the Nano project needs to be shut down, and only

emotions were holding back the decision. Under N Chandrasekaran, the project was apparently given a quiet

burial with the Tata Motors Sanand shopfloor stopping production of the micro car earlier this year due to poor

demand.

Even if the Supreme Court rules against the argument that Mistry’s removal did not amount to oppression of

minority rights, but upholds a part of the NCLAT ruling to disallow the conversion of Tata Sons into a private

company, for Mistry it would be a war worth waging. While a public company identity may not pave the way for

Mistry to regain the crown he lost, it could put a question mark on some of the pre-emptive rights — particularly

on the transferability of shares. (Supreme Court rulings say that shares of even ‘unlisted public company’ are

‘marketable securities’.) That could forever change the power equation in Tata Sons, and even light up the

Shapoorji Pallonji Group’s chances to claim a seat on the company’s board.

Outside the theatre of law, the case is a grim reminder to the club of ‘retired’ promoters that it’s time to let go.

Ratan Tata and his men may never admit the follies of some of the jumbo acquisitions, or stepping into telecom

and aviation. But they may quietly agree that RNT had erred in offering the top job to Mistry.

Courtesy: The Economic Times (National)

1. Fret (verb): Meaning: To be nervous or worried. (बेचैन रहना)

Synonyms: Worry, Agonise, Bother, Be Distressed

Antonyms: Relax, Calm Down, Settle Down, De-Stress

Example: He frets away all the time when she isn't at home.

2. Rift (noun): Meaning: A serious disagreement between people that stops their relationship from continuing.

(मनमुटाव, दरार)

Synonyms: Division, Falling-Out, Altercation, Contretemps

Antonyms: Harmony, Unison, Comradeship, Rapport

Example: He was anxious to mend the rift between the two men.

3. Bystander (noun): Meaning: A person who is present at an event or incident but does not take part. (दर्शक,

तमार्ाई)

Synonyms: Observer, Onlooker, Spectator, Sightseer

Antonyms: Participant, Partaker, Entrant, Contributor

Example: Police warned bystanders to keep away from the blazing building.

4. Prosaic (adjective): Meaning: Ordinary and not especially interesting or unusual. (सामान्य, नीरस)

Synonyms: Plain, Banal, Mundane, Vanilla, Humdrum

Antonyms: Extraordinary, Astonishing, Phenomenal, Remarkable

Example: Only a few prosaic tables and chairs remained by the time we got to the auction.

5. Overriding (adjective): Meaning: More important than any other considerations. (अतत महत्वपूर्श, अतिभावी)

Synonyms: Dominant, Paramount, Prevailing, Preponderant

Antonyms: Minor, Insignificant, Inconsequential, Trifling

Example: The government's overriding concern is to reduce inflation.

6. Esoteric (adjective): Meaning: Intended for or likely to be understood by only a small number of people with

a specialized knowledge or interest. (गूढ़, गुप्त)

Synonyms: Abstruse, Arcane, Recondite, Cryptic, Delphic

Antonyms: Exoteric, Familiar, Straightforward

Example: These symbols are really too esoteric for common folks to understand.

7. Construe (verb): Meaning: To understand the meaning of something in a particular way. (समझना)

Synonyms: Interpret, Elucidate, Decode, Gloss

Antonyms: Misunderstand, Confuse, Obfuscate, Obscure

Example: Different lawyers may construe the same law differently.

8. Wage (verb): Meaning: Carry on (a war or campaign). (संचातित करना, जारी रखना)

Synonyms: Conduct, Pursue, Prosecute, Undertake

Antonyms: Cease, Halt, Quit, Terminate

Example: CHP leader says AKP is waging smear campaign against his party.

9. Folly (noun): Meaning: The fact of being stupid, or a stupid action, idea, etc. (मूखशता; मूखशतापूर्श कार्श)

Synonyms: Foolishness, Inanity, Lunacy, Indiscretion

Antonyms: Sanity, Prudence, Rationality, Soundness

Example: She said that the idea was folly.

10. Unpalatable (adjective): Meaning: (of facts, ideas, etc.) unpleasant and not easy to accept. (अतिर्,

असंतोषजनक)

Synonyms: Disagreeable, Distasteful, Objectionable, Obnoxious

Antonyms: Pleasant, Acceptable, Satisfactory, Sapid

Example: His views on capital punishment are unpalatable to many.