Cyrus Mistry today said he was resigning as director from the boards of all Tata group listed firms, but he insisted he would continue to fight to improve the $100bn (£79bn) conglomerate's governance.
A source confirmed Mistry's plans to file a lawsuit in the coming days, according to Reuters.
The former Tata Sons chairman quit just ahead of a series of shareholder meetings called by Tata Sons to oust him.
Since Mistry was sacked as chairman of the group in late October, the group's boardroom has been locked in battle for weeks.
A statement from Tata Sons said Mistry's move to resign came as he was aware the group was likely to succeed in its move to secure the support needed to oust him at the upcoming meetings.
In a letter to shareholders today, Mistry said he would keep campaigning from outside the company.
"It is time to shift gears, up the momentum and be more incisive in securing the best interests of the Tata Group," he said.
"It is with this thought that I have decided to shift this campaign to a larger platform and also one where the rule of law and equity is upheld," Mistry added.