The secret history of the Tata, Mistry, Wadia feud

The histories of the Tata, Wadia and Mistry families are integral parts of the saga of the Bombay Parsis—fraught with long and bitter confrontations

Most shell-shocked of all, and divided on the issue of the Tata–Mistry–Wadia confrontation, is the country’s minuscule, closely-knit Parsi community. All three adversaries are Parsis. And a community that was used to making the news for its varied and impressive achievements found itself in the spotlight for all the wrong reasons.

Many Parsis thought that the feuding plutocrats, by washing their dirty linen in public, had stained the iconic Tata group’s unblemished 150-year-old reputation in India for its excellence and ethical probity….

Indians at large were surprised that a popular minority community known as upright, gentlemanly, peaceful and law abiding should engage in such an unseemly public spat. But, as Vicaiji Taraporevala, a senior Parsi advocate with half a century’s experience, once told me Parsis have ‘a history of litigation’, that ‘countless Parsi families have fought excessively over trifles.’ There is, he said, ‘a tradition that when two Parsis fight they never settle.’ In the early twentieth century, the Bombay High Court was flooded with cases in which both litigants were Parsis, as were the lawyers representing them. Fali Nariman, one of the country’s most respected lawyers and a Parsi, concedes that ‘Parsis are bad losers and seldom shy away from a court battle.’ Lawyer Berjis Desai wrote, ‘In the Parsi DNA, there is an as yet unidentified litigation gene which is transmitted from one generation to the next’…

For an insight into the dispute, one needs to step back a little and revisit the history of the three remarkable families (Tata, Wadia, Mistry) whose heirs are presently at war with each other.

They have old and complex relationships with each other that have at various times been both congenial and contentious….

The popular belief, aired frequently in the financial press, is that Shapoorji Pallonji surreptitiously purchased shares in Tata Sons, a tightly owned Tata family business, from the heirs of F.E. Dinshaw.

The low-profile Dinshaw was in his heyday considered among the wealthiest members of his tribe. A leading financier, he had loaned the Tata companies large sums of money and the debts were outstanding.

Lawyer Berjis Desai wrote, ‘In the Parsi DNA, there is an as yet unidentified litigation gene which is transmitted from one generation to the next.’

Dinshaw is the common thread that binds the stories of these three feuding tycoons, as we will see later. However, this generally accepted story about how the Mistrys got a foothold in Tata Sons is false. In fact, the Shapoorji Pallonji group purchased shares in Tata Sons as late as the 1960s and early-1970s. Far from being secret, the first two tranches of shares were bought with the knowledge and blessing of J.R.D. Tata, the group’s then chairperson. Shapoorji bought the shares from JRD’s younger sister Rodabeh Sawhny and from the Ratan Tata Trust. Later, though, when JRD’s younger brother, Dara Tata, sold his shares unannounced to the SP group in 1974, the former was furious. A change in company laws at the time, with the introduction of the Monopolies and Restrictive Trade Practices (MRTP) Act of 1969, meant that the SP Group’s purchase of shares rattled the Tatas. Until then, the group’s companies were run by a managing agency controlled by the Tatas. But after the managing agency system was abolished in 1970, the numerous Tata companies became independent of the parent board and the unity of the group was in jeopardy. Tata Sons did not have a majority holding in most Tata companies, and it was only the respect that JRD commanded that held together a group that had, in actual fact, become a loose confederation of companies. The group was especially vulnerable to a hostile takeover since, according to government rules, charitable trusts could not vote directly in corporate matters but only through a neutral nominee appointed by the charity commissioner….

The Tatas and the Wadias go back much further. The Wadias, Tatas and Petits (Nusli’s mother’s family) dominated Bombay’s textile industry in the mid-nineteenth century. J.R.D. Tata’s elder sister, Sylla, married into the Petit family (her husband was Fali Petit, Nusli’s grandmother, Rati’s brother). JRD always had a special fondness for Nusli and treated him like a son.

The histories of the Tata, Wadia and Mistry families are integral parts of the saga of the Bombay Parsis. Each one of these venerable Parsi clans left a distinct impress on the city— the Tatas and Wadias as industrial pioneers, and the Mistrys as builders of major city landmarks. And because Bombay Parsis are a tiny, endogamous community, their dizzying familial ties tend to be too complicated and confusing for outsiders to fully grasp. In the last generation, old timers recall that JRD and Naval Tata, Ratan’s father, barely spoke to each other though they were on the same boards for half a century. Naval and Pallonji Mistry were good friends, banding together to prevent JRD from making Nusli Wadia a member of the Tata Sons board. Nonetheless, Ratan and Nusli developed a close friendship when they entered their respective family businesses. While in recent years, Nusli has abandoned his old friend Ratan to frequently defend Cyrus, the son of the man who prevented Nusli from being appointed to the Tata Sons board….

The biggest favour that Nusli did for Ratan Tata has never been officially acknowledged or recorded. During Atal Bihari Vajpayee’s tenure as prime minister, from 1998 to 2004, Nusli’s old contacts with the Sangh leaders gave him total access to the corridors of power. He could walk into the prime minister’s residence whenever he chose, and he addressed the prime minister as ‘Babji’ (father), a term used only by Vajpayee’s immediately family. He was also very close to L.K. Advani, the deputy prime minister, with whom he was on first-name terms. Section 153A of the Companies Act of 1956 had for long been a thorn in the side of the Tatas. It empowered the government to appoint a public trustee to act on behalf of private trusts. Until this section was amended, the Tata Trusts, and Ratan as the head, had technically no say over the running of Tata Sons. (The Tata Trusts, along with the Birla Trusts, are the only two trusts permitted to hold shares in corporate entities, since they had followed this practice long before rules were framed after India became independent.) Wadia first pleaded the Tata case along with JRD when Manmohan Singh was the finance minister in Narasimha Rao’s government. However, Rao’s government changed the law only for mutual funds, not charitable trusts. With Vajpayee as prime minister, Nusli’s task became much simpler. Ram Jethmalani, as minister of both law and company affairs, assured Nusli, a personal friend, that he would ensure the law was changed. But since introducing a bill in Parliament would take time, he passed an order that Ratan Tata would be a government nominee and remain a public trustee with voting rights. In 2002, the Companies Act was amended on several counts, but few seemed to have noticed that the change in Section 153A was Tata specific. It allowed Tata trusts to vote directly on the Tata Sons Board and not through a government-nominated trustee. Nusli’s help was invaluable to the addition of this crucial amendment. Fourteen years later, it was because of this amendment that Ratan held complete sway at Tata Sons and was in a position to fire Cyrus.

Extracted with permission from The Tatas, Freddie Mercury & Other Bawas: An Intimate History of the Parsis by Coomi Kapoor, published by Westland Non-Fiction.

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