Sacking ousted chairman Cyrus Mistry as head of the group’s flagship business and blaming him for nearly pushing the group holding firm into losses, India’s $100-billion steel-to-software Tata conglomerate sharply escalated a battle with its ousted chairman.

Group veteran Ishaat Hussain was appointed as the interim chairman as Mistry was removed as chairman on Thursday at Tata Consultancy Services (TCS), India’s No. 1 software services firm by revenue.

Under Mistry’s leadership, it would have reported operating losses over the past three years if not for dividends from TCS,  Tata Sons said in a nine-page statement to the media.

“Significant dependence” on TCS under Mistry’s stewardship was a source of concern for its directors and shareholders, Tata Sons said in its statement.

Family patriarch Ratan Tata was brought back to helm the company temporarily after Mistry was axed as chairman of Tata Sons in a boardroom coup last month and the move comes after that development.

Leading to a drop in share prices of listed Tata entities and sparking concern among shareholders and other stakeholders as over the past two weeks the Tata and Mistry camps have traded barbs on a regular basis.

Due to a ‘trust deficit’ between him, its directors and top shareholder Tata Trusts, Mistry was removed, Tata Sons has said. On Thursday it said that it would like to put forward some facts so the decision is seen in the “desired perspective” and said it has received queries from across the globe about the move.

Mistry in turn has alleged that failures in corporate governance at Tata Sons and some group companies some of the company’s biggest debacles and decisions were blamed on  Ratan Tata.

It received a letter from top shareholder Tata Sons nominating Hussain as chairman, TCS, the cash cow for Tata Sons, said in a statement.

“In view of this, Mistry has ceased to be the chairman of the board of directors of the company, and Hussain is the new chairman of the company,” it said.

Saying the TCS board needs to approve it, a source close to Mistry, however, challenged Hussain’s appointment.

Interim chairman Tata is now working to wrest control of other key group companies still chaired by Mistry while the move to remove Mistry from the helm of TCS had been expected by analysts.

To consider a resolution to remove Mistry as director, it has called an extraordinary general meeting of shareholders, Indian Hotels Co, a Tata group company, said in a separate statement on Thursday. Indian Hotels owns the Taj hotels.

The board of directors of key Tata group companies like Tata Steel, Tata Motors and Tata Chemicals will meet over the next few days to discuss quarterly results where Mistry is still the chairman.

Lawyers have noted that removing Mistry from TCS in which Tata Sons’ shareholding is more than 73 percent, was relatively easy but doing the same in these companies where Tata Sons owns about 30 percent stakes, would not be easy.

In a Mumbai market that was up 0.9 percent, shares of Indian Hotels fell nearly 4 percent and shares in TCS were down more than 1 percent in late afternoon on Thursday.

(Adapted from Reuters)