The Tata Group has categorically rejected the Shapoorji Pallonji (SP) Group’s share-swap separation proposal and called it “nonsense”.
SP Group had proposed that its 18.37 per cent stake in Tata Sons, which it claims to be worth Rs 1.75 lakh crore, be swapped with the shares in Tata Group’s listed company. However, the Tata Group has rejected the proposal before a bench of the Supreme Court, headed by CJI SA Bobde.
At the moment, the court is hearing final arguments on the cross-appeals filed by Tata Sons and Cyrus Investments with regards to the appellate tribunal NCLAT’s order.
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Last year, NCLAT had restored Cyrus Mistry, 52, as the executive chairman of Tata Sons. He was unceremoniously ousted in 2016 after a bitter boardroom battle. The bitter clash between Tatas and the Mistrys has been going on for four years, but both parties are looking to break their decades-old partnership now.
Tata’s counsel, Harish Salve, told the court that this kind of relief cannot be granted to SP Group. “It is nonsense,” he added.
Salve, on behalf of the Tata Group, also said that accepting such an offer could affect other listed firms of the salt-to-software conglomerate. He argued that SP Group will again become a minority shareholder in other listed companies of Tata Group.
On Thursday, after Harish Salve concluded his arguments on behalf of Tata Group, senior advocate CA Sundaram appeared for Cyrus Investments and started his submissions to the court.
Referring to legal provisions, Sundaram said, “The whole conduct by which Tata Sons was made a private limited company showed that minority shareholder (SP group) was being sidelined.”
On the feud between the Tata Sons and Mistry, Sundaram said the main issue was that the final decision on any call taken by group companies like TCS or Tata Motors is taken by Tata Sons. He also mentioned that Tata Sons is just an investment company which does not have any business of its own, adding that its directors still take the calls for downstream group firms.
“If these companies want to take a decision, then Tata Sons has a role to play in these decisions,” Sundaram said. He went on to say that Tata Sons is “effectively not a board-managed company”.
The hearing is expected to resume on Monday but the share-swap proposal seems to have hit a roadblock over mismatched valuations. While SP Group claimed that its stake in Tata Sons is worth Rs 1.75 lakh crore, Tata Sons maintains that the value of SP Group’s holdings is not more than Rs 80,000 crore.
