Tatas counters in SC claims of mismanagement, says SP Group valuation rose

New Delhi, December 9

The Tatas on Wednesday countered in the Supreme Court, the accusation of mismanagement of Tata Sons, and said even according to the claim of Shapoorji Pallonji (SP) group, valuation of their 18.37 per cent stake in the company rose from 58,000 crore in 2016 to Rs 1.75 lakh crore in 2020.

The Tata firms told the top court that unless the losses were so enormous and there was a lack of probity which left no other option but to remove the majority shareholders of the company, the NCLAT could not have reached the conclusion including that of restoring Cyrus Mistry as executive chairman.

A bench of Chief Justice SA Bobde and Justices AS Bopanna and V Ramasubramanian was told by senior advocate Harish Salve, appearing for the Tatas that in the cross-appeal which they have filed in the top court, SP Group has claimed that their value of shares as Rs 1.5 lakh crore.

He said according to an application filed by them (Mistry side), in which they have sought 18 per cent in all downstream Tata companies, their value of share was Rs 1.75 lakh crore.

“So, if we go by their claims, it is a strange management which has mismanaged the company but still took their valuation from Rs 58,000 crore in 2016 to Rs 1.75 lakh crore in 2020,” Salve said.

The bench is hearing cross-appeals filed by Tata Sons and Cyrus Investments against appellate tribunal NCLAT’s order which had restored Cyrus Mistry as the executive chairman of the over $100 billion salt-to-software Tata conglomerate.

Salve referred to allegations of undue favour to businessman C Sivasankaran, who was granted contracts by Tata Teleservices, and said all transactions were purely commercial and there was no lack of probity in any of them.

He said Pallonji Mistry was a businessman of eminence and he was with Tata Group till 2004 and there was no issue with any of the decision taken then.

Similarly, Cyrus Mistry joined in 2006 and he did not have any disagreement till 2012, Salve said.

The bench told Salve that his argument was that the tribunal (NCLAT) did not look at the probity aspect and therefore it could not have concluded that it was just and equitable to wind up?

Salve replied ‘yes’ and said the judgement of tribunal did not justify itself and tells the basis on which the conclusion was arrived at.

He said things were going well and the companies are making money but still allegations of mismanagement were being made.

Mistry had contended in the NCLAT that he was removed because of his efforts to remedy past acts of mismanagement.

The hearing remained inconclusive and would continue on Thursday.

On Tuesday, Tatas said the valuation of 18.37 per cent shares owned by the SP Group in Tata Sons is between Rs 70,000 crore and Rs 80,000 crore.

The SP Group earlier submitted in the Apex Court a plan for separation with the Tatas and said that its 18.37 per cent stake in Tata Sons, the holding company of Tata group firms, was worth Rs 1.75 lakh crore.

The Tatas have said the event which triggered the present proceedings was primarily on October 24, 2016, when Cyrus Mistry was removed as the executive chairman, months before his term was to end in March 2017.

The Apex Court had on January 10 granted relief to Tata group by staying the National Company Law Appellate Tribunal (NCLAT) order of December 18 last year by which Mistry was restored as the executive chairman of the conglomerate.

Mistry had succeeded Ratan Tata as chairman of Tata Sons in 2012 but was ousted four years later.

The court had also observed there were “lacunae” in the orders passed by the NCALT.

On May 29, it had issued notice to TSPL and others on a cross-appeal filed by Cyrus Investments Private Limited.

The top court on September 22 restrained SP Group and Cyrus Mistry as also his investment firm from pledging or transferring their shares of Tata Sons Pvt Ltd (TSPL).

SP Group, which owns 18.37 per cent in Tata Sons, has said TSPL moved the top court to block its plan to pledge shares for raising funds and that reeked of vindictiveness and oppression of minority shareholder rights.

On September 5, Tata Sons moved the top court seeking to restrain the Mistry group from raising capital against their shares. It sought to prevent SP Group from creating any direct or indirect pledge of shares.

TSPL had earlier told the top court that it was not a ‘two-group company’ and there was no ‘quasi-partnership’ between it and Cyrus Investments Private Limited.

TSPL had made averments in an affidavit filed in the apex court while responding to the cross-appeal filed by Cyrus Investments seeking removal of alleged anomalies in the NCLAT order for getting representation on the TSPL’s board in proportion to the stakes held by his family.

Mistry had filed an affidavit to the Apex Court saying the Tata Group had an adjusted net loss of Rs 13,000 crore in 2019 — the worst losses in three decades.

In his reply to the Tatas’ petition challenging his reinstatement by the NCLAT last December, Mistry also demanded that group chairman emeritus Ratan Tata should reimburse all the expenses to Tata Sons since his departure in December 2012 in keeping with best global governance standards.

Mistry is seeking representation in the company in proportion to the 18.37 per cent stake held by his family, the appeal has said.

Reinstating Mistry as the chairman, the NCLAT had also termed the action of the Registrar of Companies to allow conversion of Tata Sons into a private limited company illegal. PTI

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