There was also a fresh twist in the fight between the two groups, which began with the removal of Cyrus Mistry from the post of chairman of Tata Sons. The SP Group accused Ratan Tata of breaching his promise to Pallonji Mistry in 1991, immediately after he was appointed chairman of Tata Sons, that he would “never do anything consciously to hurt you and your family”.
The SP Group alleged that in September, the Tatas impeded the banking of its Tata Sons shares. The SP Group wanted to use this route for raising money from the market. “The Mistry family was raising funds against security of their personal assets to meet the crisis arising from the global pandemic. This move was undertaken to protect the livelihoods of its 60,000 employees and over 1 lakh migrant workers. On September 5, a day after definitive documents were signed to raise funds, Tata Sons served the SP Group with notice of an ‘urgent’ application, which they had filed before the SC, seeking to block this crucial fund-raise, without any heed to the collateral consequences that such action might have on the livelihood of tens of thousands of employees,” it said.
Tata Sons had offered to buy out SP Group’s stake in the Tata Group. The SP Group, in its application through senior advocate C A Sundaram, said it “proposes separation of the interests of the two shareholder groups as an alternative remedy, which could be granted by the SC under Section 242 of the Companies Act as a means to put an end to the matters complained of”. It added, “The relief, invariably granted, are to direct the majority, guilty of oppression, to provide fair value compensation to the minority shareholder.”
A bench of Chief Justice S A Bobde and Justices A S Bopanna and V Ramasubramanian told Sundaram that the matter could not be heard piecemeal and that contentions of both sides would be heard and adjudicated through a final hearing. It scheduled the final hearing for December 2.
The SP Group said, “By proposing this remedy, the SP Group seeks to propose a resolution that would take care of the best interests of both shareholders and all stakeholders of Tata Sons. A separation of interests would equitably give the SP Group, as shareholders in Tata Sons, access to their proportionate share value in Tata Sons and would not let two warring shareholders to have to live with each other only under the fiat of a court.”
“Such a scheme of separation through a reduction in capital with consideration paid through shares in underlying listed companies could also be used to provide much needed liquidity to other Tata Group companies that have a shareholding in Tata Sons, thereby unlocking value,” it said.