“Get to the point. They seek to divide the assets of Tata Sons in order to obtain an 18% stake in all of Tata’s companies,” argued lead attorney Harish N Salve in favor of the company before a three-judge tribunal led by the president. of the Supreme Court of India SA Bobde The lawyer for SP Group, opening their arguments, said that they were only looking for a transparent operation and that the trustees of Tata should not manage companies operated by the board.
The court was hearing appeals and cross-appeals from Tatas and the Mistry family of the SP Group against the decision of the National Court of Appeals for Company Law in December 2019 to reinstate Mistry as CEO. The superior court has suspended the NCLAT order.
Mistry was removed by the board as chief executive officer in October 2016. Four years later, the SP Group sought separation of the holding company from the Tata Group and said in October that it is ready to exchange its 18.4% stake in Tata Sons, which valued at more than Rs 1.75 lakh crore, for shares of Tata’s listed companies.
“Such an application was terrible at this stage,” argued Salve. He said the Tatas can buy the Mistry family stake at a fair value, but what they are asking for is the liquidation of the Tata Sons. They are also asking for a portion of the value of the Tata brand, Salve said in concluding his arguments against the NCLAT order.
The CJI reacted: “They are demanding compulsory acquisition.”
Opening arguments for Cyrus Investments and Sterling Investments, both SP Group entities, lead counsel CA Sundaram argued that Mistry had objected to two Tata trustees running Board-managed Tata companies and had demanded a better governance code. .
“Mistry was, in fact, removed the day it was due to present a government code at the board meeting,” he said. While admitting that removal per se will not amount to oppression of a minority shareholder, he said the law had destroyed the relationship of trust between the two groups.
“The SP Group, which had enjoyed the participation of the management for 30 years, was systematically sought to be expelled,” he alleged.
ET OfficeSundaram claimed that under the new Companies Act, a minority shareholder only had to show “unfair treatment” or “prejudice” and not oppression.
“Tata Sons has no other job. His only income comes from the dividends of these (operating) companies. The way Tata Sons is run, the way these companies operate increases and their value decreases, it affects me, ”he said.
Seeking to back up his claim of bias, he said that Mistry’s removal was not on the agenda for the board meeting on Oct. 24, 2016. The board had praised his work and significantly increased his compensation just three months earlier.
The CJI demanded to know whether the alleged unfair conduct was of a magnitude that justified the dissolution of the company. Sundaram responded by saying that such a situation in the company cannot continue. “A dead end is not a sine qua non. The majority can always trample the minority, ”he said.
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