New Delhi, Dec 8 : The Tata Group on Tuesday told the Supreme Court that as per its calculation, the Shapoorji Pallonji (SP) Group shareholding, which is around 18.37 per cent, is not more than Rs 70,000 crore to Rs 80,000 crore. However, the SP Group has claimed that the value of its shareholding is over Rs 1.75 lakh crore.
Senior advocate Harish Salve, representing the Tata Group, opened the argument on the first day of hearing of the legal battle in connection with the appointment of Cyrus Mistry as the Executive Chairman of Tata Group.
In December 2019, the National Company Appellate Law Tribunal (NCLAT) had passed the order restoring Mistry as Executive Chairman and held the appointment of Natarajan Chandrasekaran to the post as illegal. On January 10, the apex court stayed the NCLAT order.
The SP Group became shareholder of Tata Sons in 1965 and over the years it acquired some more shares and subscription to rights issue coming to their current shareholding of 18.37 per cent.
Salve submitted before a bench, headed by Chief Justice S.A. Bobde and also comprising Justices A.S. Bopanna and V. Ramasubramanian, that the starting point of the controversy was on October 24, 2016, when in the Tata Sons Board meeting, a decision taken to replace Mistry as Executive Chairman.
He said that the SP Group’s shares are not more than Rs 70,000 to 80,000 crores, as per their calculations, and cited that in 2016, the shares was Rs 58,000 crore despite so-called losses. However, as per the SP Group plan, submitted in the Supreme Court, where it sought an end to its association with Tata Group, it claimed their holding in the Tatas at Rs 1.75 lakh crore.
As on today, the Tata Trusts together hold approximately 66 per cent of the equity share capital of Tata Sons. The shares form the principal ‘corpus’ of the Tata Trusts, who spend their entire resources (predominantly dividend received from Tata Sons, which in turn receives dividend from the operating Tata companies) on public charity.
Salve cited that Mistry’s appointment as Executive Chairman would have ended in March 2017, as it was not a lifelong appointment.
As the Chief Justice asked: “Does the NCLT has the power to appoint director?”, Salve responded that it canm but the appointment must be pro-term and the shareholders have the right to appoint, insisting that the NCLAT virtually restrained the operation of various Articles going beyond the scope of judicial review.
“A person who has 18 per cent shares now must have full run of the company. That is how the absurd the order is,” he said. He insisted that the NCLAT overlooked the fact that the primary contract between the shareholders and the company is the Articles of Association.
The Chief Justice further queried Salve, if there is a complaint that Ratan Tata is running affairs in such a manner that the investment of Tata Sons is being jeopardised by other projects, why can’t these allegations be made?
Citing the Tata small car project, Salve responded there could be different perceptions about the decisions, but they could not be termed mismanagement. “There is not a single allegation about mismanagement within Tata Sons Ltd,” he said.
Citing the tenure of Ratan Tata, he contended that the company had been running and during his tenure, between 1991 to 2012, the market cap of Tatas went up 500 times. The hearing in the matter will continue on Wednesday.