SC restrains Shapoorji group, Mistry from pledging or transferring Tata Sons shares
A bench comprising judge S A Bobde and Justices A S Bopanna and V Ramasubramanian also directed the Tata Sons and therefore the SP Group to not take any longer action on the shares which have already been pledged till October 28, subsequent date of hearing.
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On September 5, Tata Sons had moved the highest court seeking to restrain the Mistry group from raising capital against their shares.
The Supreme Court Tuesday restrained till October 28 the Shapoorji Pallonji (SP) group and Cyrus Mistry from pledging or transferring their shares in Tata Sons Pvt Ltd (TSPL).
A bench comprising judge S A Bobde and Justices A S Bopanna and V Ramasubramanian also directed the Tata Sons and therefore the SP Group to not take any longer action on the shares which have already been pledged till October 28, subsequent date of hearing.
The SP group, which owns 18.37 per cent in Tata Sons, had said TSPL moved the highest court to dam its decide to pledge shares for raising funds which reeked of vindictiveness and oppression of minority shareholder rights.
On September 5, Tata Sons had moved the highest court seeking to restrain the Mistry group from raising capital against their shares.
Through the plea, the Tatas had sought to stop the SP Group from creating any direct or indirect pledge of shares.
The SP Group was getting to raise Rs 11,000 crore from various funds and had signed a affect a marquee Canadian investor for Rs 3,750 crore within the first tranche against some of its 18.37 per cent stake in Tata Sons.
The SP Group share holding within the country’s largest business home is valued at over Rs 1 lakh crore. during a hearing conducted through video conferencing, the highest court said that it might hear the plea after four weeks and “in the meantime, parties shall maintain established order regarding pledging/transfer of shares”.
“We will say established order on transferring/pledging and any longer action with reference to transfer/pledge already made,” the bench said.
Senior advocate C A Sundaram, appearing for the SP group, said they were being stopped from pledging the shares and “it is creating havoc for me”.
On the opposite hand, senior advocate Harish Salve, representing TSPL, said that the purpose was “something else” because the TSPL features a right to shop for the share at market value , but the SP group was pledging them.
“We are of the view tentatively that pledging may be a limited transfer,” the bench observed while saying that it’ll “conduct final hearing in four weeks”.
Earlier, the TSPL had told the highest court that it had been not a ”two-group company” and there was no ”quasi-partnership” between it and Cyrus Investments Pvt Ltd.
TSPL had said this in an affidavit filed within the apex court while responding to the cross-appeal filed by Cyrus Investments seeking removal of alleged anomalies in NCLAT order for getting representation on the TSPL”s board in proportion to the stakes held by his family.
The apex court had on January 10 granted relief to Tata group by staying the National Company Law Appellate Tribunal (NCLAT) order of December 18 last year, by which Cyrus Mistry was restored because the executive chairman of the salt-to-software conglomerate.
Then, the highest court had on May 29 issued notice to TSPL et al. on a cross-appeal filed by Cyrus Investments Pvt Ltd.
Cyrus Mistry had also filed an affidavit to the apex court saying the Tata Group had an adjusted net loss of Rs 13,000 crore in 2019 — the worst losses in three decades.
In his reply to the Tatas’ petition challenging his reinstatement by the NCLAT last December, Mistry had also demanded that group chairman emeritus Ratan Tata should reimburse all the expenses to Tata Sons since his departure in December 2012 keep with best global governance standards.
Mistry, the ousted chairman of Tata Sons, is seeking representation within the company in proportion to the 18.37 per cent stake held by his family, the cross-appeal has said.
In its affidavit filed within the top court, these has alleged that the thrust of Cyrus Investments” focus “has now shifted to propagating the quasi-partnership theory to secure the relief of ‘proportionate representation”.”
In the petition, the appellant (Mistry group firm) has described the group”s relationship with Tatas as “a quasi-partnership relationship of a vintage of over 60 years, holding 18.37 per cent within the equity share capital of Tata Sons and whose stake is now worth over Rs 1.5 lakh crore”.
According to the petition, the Mistry group firm has sought remedies for several anomalies within the NCLAT order, including not watching alleged oppression of minority shareholders also as converting Tata Sons into a personal Ltd. as a post-facto move.
As per the petition, the tribunal order clearly and unequivocally found the prejudicial conduct by Tata Sons, but did not provide certain important reliefs that might have put an end to the oppressive conduct of the bulk shareholder.
Reinstating Mistry because the chairman, NCLAT had also termed the action of the Registrar of Companies to permit conversion of Tata Sons into a personal Ltd. illegal.
Mistry had succeeded Ratan Tata as chairman of Tata Sons in 2012 but was ousted four years later.
While listening of appeal of Tata group on January 10, the apex court had stayed the NCLAT order restoring Mistry as executive chairman of the Tata Group, observing that there have been “lacunae” within the orders gone by the tribunal.
