Opposition to SP Group’s proposal to seek shares of other listed company in exchange for Tata Sons
The Tata group on Thursday termed the proposal of Shapoorji Pallonji Group (SP) in the Supreme Court to give shares of another listed company of the group in exchange for its 18.37 per cent stake in Tata Sons as ‘fruitless’. The market value of this stake in SP Group’s Tata Sons is around Rs 1.75 lakh crore. The Tata group rejected the share swap proposal put by the SP group to separate from Tata Sons before a bench headed by Chief Justice SA Bobde.
The bench is hearing a decisive hearing on the appeals of Tata Sons and Cirrus Investments filed against the order of the National Company Law Appellate Authority (NCLAT). The bench also consists of Justices AS Bopanna and V Rama Subrahmanyam. The NCLAT has ordered Cyrus Mistry to be reappointed as the executive chairman of Tata Sons. The SP Group holds 18.37 stake in Tata Sons Private Limited (TSPL), the holding company of the Tata group.The SP group has demanded a stake in a listed Tata group company in return for this stake.
Tata group counsel Harish Salve said, “It is purposeless. Such relief cannot be given. ‘ He argued that accepting such a proposal meant that the SP Group would again become a minority shareholder in another listed company of the Tata Group. Lawyer CA Sundaram, appearing for Cyrus Investments on the third day of the hearing, submitted his arguments after Salve.
Quoting the legal provisions, Sundaram said, “The entire action of Tata Sons which makes it a private limited company seems to be to sideline minority shareholders (SP Group)”. He said that the process of converting the public company into a private limited company was based on prejudice as it deprived the SP group of the patronage which it had got as a public company.However, the bench asked to show that what is the action which the SP group considers to be a suppressor of prejudice and authority.
Sundaram said that a lack of justifiable trust in management or diversion of stake from the management is a reasonable basis for liquidation of a company. He cited the example of the previous long association of the SP Group with Tata Sons and said that Tata Sons is the only investment company that does not do any work by itself. But its directors make decisions for other group companies.
He said that the entire tussle between Tata Sons and Mistry was based on the fact that Mistry was to introduce a corporate operating system that would regulate Tata trusts in Tata Sons so that the two nominated directors would not be all for the other companies of the group be fixed.
