Mumbai: The Shapoorji Pallonji Group (SP), which is struggling to pay its debt, sent a notice for damages to the members of the Tata Sons board, for blocking the Mistry family’s fundraising against the actions of Tata Sons, said a senior company official.
In the legal notice, a copy of which was reviewed by mint, the Shapoorji Pallonji group questioned the complicity of the board members in the decision. They called Tata Sons’ move to block fundraising against the Mistry group’s involvement in Tata Sons oppressive and sought an explanation as to whether the company took those steps in accordance with the board.
Board members have three days to respond to the notification, otherwise the Shapoorji Pallonji Group would seek appropriate remedies, including a claim for damages inflicted on the SP Group, said a spokesperson for the SP group.
In the legal notice, the group further said that this action by Tata Sons has created panic among its lenders and financial institutions and caused damage to the Shapoorji Pallonji group.
A Tata Sons spokesperson declined to comment.
This comes a day after Shapoorji Pallonji Group missed a deadline to reimburse dues to the group company Sterling and Wilson Solar Ltd. The promoters ended up paying only ₹103 crore from ₹Rs 1 billion owed to the company, which is due this month.
On September 5, Tata Sons filed an “urgent” petition with the Supreme Court to prevent the promoters of the Shapoorji Pallonji Group from raising capital by pledging their shares in Tata Sons. The company had tried to avoid creating any direct or indirect pledge on its shares. Tata Sons argued that any pledge will amount to the transfer of shares and under the company’s bylaws (AoA); The Tata Sons board has the first right to purchase the shares at fair market value.
The Shapoorji Pallonji group, through its two investment firms, Cyrus Investments and Sterling Investments, has an 18.4% stake in Tata Sons.
At the request of Tata Sons, Cyrus Investments has pledged its full 9.19% stake in Tata Sons. Of this 7.5% of its stake in Tata Sons, it has committed to Axis Trustee for ₹825 crore in January and February of this year. In April the charge was modified to guarantee a loan of ₹3,958 crore. An additional 1.83% of this participation was committed to the IDBI Trusteeship to secure a loan amount of ₹1117 crore.
Tata’s in its application to the court said that these shares have a market value of ₹75,000 crore. There were clauses incorporated into the pledge document to reassure lenders that the pledged shares of the private company would be transferable in the event of default.
Mistrys filed a counter-application on September 7 stating that this measure was solely intended to inflict irreparable harm to the Shapoorji Pallonji Group.
“The bad faith motive for Tatas’ move was made more apparent by the fact that Tatas kept his application on hold, supposedly to cure defects, despite filing an urgent petition with the Supreme Court,” said a spokesman for the Shapoorji Pallonji group.
“The sequence of events is evidently only in objective: to jeopardize the financial closure of our client (Shapoorji Pallonji group) to handle the conditions of extreme illiquidity that are met in these times of pandemic,” the SP group said in the notice. legal.
“A garment does not necessarily mean the execution of the garment, therefore, the transfer of shares. It is an established legal position. In most situations, only about 20% of the total garments are invoked. Even the AoA This is a financial asset for the Shapoorji Pallonji group and they have the right to monetize it to raise funds right now, “said Jeevanandham Rajagopal, partner at Fox Mandal. , a law firm.
.
