Tata Sons on Thursday rejected estranged minority shareholder Shapoorji Pallonji Group’s proposal to swap its 18.4 percent stake with shares of the company’s listed downstream entities. The holding company of India’s largest conglomerate termed the proposal as nonsense because the “relief sought as a matter of right” was akin to restructuring of the company.
“They are seeking to have the assets of Tata Sons divided so that they can get an 18% share in all Tata companies,” senior advocate Harish N Salve argued for the company before a three-judge bench led by Chief Justice of India SA Bobde.
Shapoorji Pallonji has sought separation from Tata Sons as a relief in its minority shareholder oppression case.
“Shapoorji Pallonji is seeking 18.4% stake in the Tata brand value as well. How can they be rewarded for damaging the Tata brand?”, Tata Sons argued. It is interesting that the minority share holders who are crying of oppression, wants to compound its woes by seeking pro-rata shares in the listed Tata companies in lieu of 18.4 percent stake in Tata Sons, the holding company said.
Opening arguments for Cyrus Investments and Sterling Investments, both Shapoorji Pallonji Group entities, senior advocate CA Sundaram contended 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 he was to table a governance code in the board meeting,” he claimed. While he conceded that the removal per se won’t amount to oppression of a minority shareholder, he said the act had destroyed the relationship of confidence and trust between the two groups.
Sundaram further claimed that under the new Companies Act, a minority shareholder only had to show “unfair treatment” or “prejudice” and not oppression.
Seeking to back his claim of prejudice, he said Mistry’s removal was not on the agenda of the board meeting on October 24, 2016.
On Tuesday Tata Sons had told the Supreme Court that it had valued Shapoorji Pallonji stake at Rs 70,000 to 80,000 crore which is 55-61 percent lower than the minority shareholders estimation of Rs 1.78 lakh crore.