Tata Sons spurn Cyrus Mistry truce offer in Supreme Court
Tata Sons on Thursday told the Supreme Court that Cyrus Mistry’s Shapoorji Pallonji group wanted to acquire pro rata 18 per cent share in all the companies run by Tata Sons as a severance package for the group’s 18 per cent in Tata Sons — which was “nonsense”, not acceptable to the company.
Winding up his arguments for Tata Sons, senior advocate Harish Salve told a bench headed by Chief Justice S.A. Bobde that R.N. Tata as chairman emeritus has to be kept in loop for the smooth functioning of the company which was not done by Mistry when he was at the helm.
According to Salve, “they wanted 18 per cent share in all the group companies at the time of severance but they (Pallonji group) are kind enough to say we (Tatas) will have the control of the companies. Such an argument is not tenable and is just a nonsense”, Salve told the court.
The bench also comprising Justices A.S. Bopanna and V.Ramasubramanian is hearing an appeal filed by Tata Sons challenging the National Company Law Appellate Tribunal’s (NCLAT) order of December 18, 2019, directing the reinstatement of Cyrus Mistry as the executive chairman of the company. The Supreme Court subsequently stayed the NCLAT order in January.
He said Ratan Tata cannot be faulted by the Pallonji group as all that the he wanted was that certain issues that arose should have been discussed, particularly with regard to the appointment to the board of directors.
The Chief Justice pointed out that the resentment against Tata’s participation is that he did not have any authority to demand anything in a particular way and yet he was asking the board to discuss about how things are being done.
Salve said nominee directors have to vote in favour and they — the nominee directors — are representing the trust of which Ratan Tata is the chairman, “so what’s so wrong in that?” The senior counsel said allegations for misconduct are primarily related to downstream companies, not Tata Sons.
Senior advocate C.A. Sundaram appearing for Cyrus Investments and Sterling Investments said the group was forced to move the tribunal for the winding up proceedings as the business was being run in a manner prejudicial not just to minority shareholders but to the company itself.
“Tata Sons is only an investment company. It invests in the group companies. It does no other work. Tats Sons board takes decisions on what direction the group companies should take. That is why functioning of group companies become important,” he said.
But when it came to the question of group companies, the Tata Sons as a majority shareholder effectively takes all decision even with regard to the group companies, he said.