The Supreme Court on Monday started final hearing on the bitter, legal feud between Tata Sons and Shapoorji Pallonji Group, which includes the contentious issue of the separation of the two firm which entails the former buying out the latter’s 18.4% stake in the Tata group’s holding firm.
Beginning his arguments, senior counsel Harish Salve, appearing for Tata Sons and Tata Group chairman emeritus Ratan Tata, told a Bench led by Chief Justice SA Bobde that the total worth of Shapoorji Pallonji Group’s 18.4% shareholding in Tata Sons is worth anywhere between Rs 70,000 to Rs 80,000 crore only. This is in contrast to SP group’s claim of the stake’s worth around Rs 1.75 lakh crore.
In its affidavit filed on October 29, the Mistry group had told the Supreme Court that it wanted to exit Tata Sons and had offered a pro-rata division of all the assets of the holding firm as part of the settlement and.
During the hearing, the CJI asked, “if the NCLAT has suo-moto powers to grant reliefs which haven’t been sought. Can the NCLAT select and appoint an executive chairperson?”
The Tata Sons counsel said that “NCLAT can’t take it upon itself to overrule shareholders, make appointments by itself. Being private co, Trustees of Tata Trusts with a 68% shareholding in Tata Sons would be within their rights to pack the board with their nominees.”
He further said that “Mistry’s appointment as executive chairman would’ve ended in March 2017. His appointment wasn’t life long.”
Cyrus was removed in October 2016 and after March 2017 he had no right to seek reappointment, he added.
Since October 24, 2016, when Cyrus Mistry was unceremoniously sacked as chairman Tata Sons, the SP Group and the Tatas have fought bitterly. While the SP Group claimed they had been oppressed as minority shareholders, the Tatas have alleged that Mistry had mismanaged the affairs of the group. Mistry countered this charge stating that Tata Group had suffered because of several acquisitions.
Assailing the National Company Law Appellate Tribunal order that had termed ouster of Cyrus Mistry as oppressive to minority shareholders and also referred to mismanagement in Tata Sons, Salve said that unless it is proved that there is “unfair abuse of power” or “lack of probity” in management, oppression of minority shareholders cannot be proved.
He said that Mistry wrote an email with scathing comments against Ratan Tata and Tata Sons, supposedly for Board, but was leaked to media. CJI Bobde asked, “This happens in corporate world also?” Salve said that in fact, this was invented by corporate world and the practice has now been followed in other areas also.
Salve further contended that that many of the NCLAT findings would have held ground if only it was found that Tata Sons set up a parallel company to siphon of money, “but nobody has even made any such accusation”.
On the contrary, Tata Trust, which holds 68% share in Tata Sons, had lost money proportionate to its shareholding whenever Tata Sons have lost money, the senior lawyer argued.
He also countered the allegation that there was any “mismanagement” in Tata Sons under the leadership of Ratan Tata.
He said that between 1991 and 2012 market cap of Tata Sons went up 500 times even though a few projects, such as Nano car project didn’t entirely go as per plans.
On the issue of launch of Nano car, he said that if a strategy doesn’t work out for various reasons, that strategy cannot be termed mismanagement, but can be seen as a “bad decision”.
Salve submitted that 2012 amendment in the Tata Sons’ Article of Association and further amendments in 2014 were approved by Cyrus Mistry, who was on board of Tata Sons at that time, therefore the appellate tribunal stand that these changes were “oppressive” to minority shareholders and prejudicial was not correct.
He further clarified that Cyrus Mistry was due to retire in March 2017. If he had demitted office on March 2017, there are no provisions that would have helped him make a case for reappointment, but would have continued as a director on the board of Tata Sons.
The top court, on January 10, had stayed in entirety the NCLAT’s December 18 order that reinstated Mistry as chairman of Tata Sons after calling his removal in October 2016 as “illegal.”
The apex court will continue to hear the case on Wednesday.
Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.