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Failure of some projects is not oppression of minority shareholder, Tata Sons tells SC

Failure of some projects is not oppression of minority shareholder, Tata Sons tells SC 2

NEW DELHI: Tata Sons told the Supreme Court that the company was run “amazingly” and that the failure of some projects during a strong trajectory of growth from 1991 to 2012 under Ratan Tata doesn’t amount to oppression of a minority shareholder.

Arguing against the National Company Law Appellate Tribunal‘s decision to reinstate ousted executive chairman Cyrus Mistry, Tata Sons lawyer Harish N Salve said on Tuesday that the ruling virtually handed over management of Tata Sons to a minority shareholder.

Salve also said the 18.4% stake held by the Mistry family of the Shapoorji Pallonji Group in Tata Sons has a valuation of Rs 70,000 crore to Rs 80,000 crore. The SP Group, which has sought separation from the holding company of the Tata Group, said in September that it values its stake at Rs 1.78 lakh crore.

The Supreme Court has stayed the NCLAT order, pending a final adjudication on appeals and cross-appeals filed by the Tatas and the SP Group.

Salve will resume his arguments on Wednesday. The apex court is holding a final hearing on the complicated corporate governance issues involved in the case following the ouster of Mistry as executive chairman of Tata Sons in October 2016.

Dissatisfaction or resentment over being voted out in a board meeting, as Mistry was, will also not amount to oppression of a minority shareholder, Salve contended before a three-judge bench led by Chief Justice of India SA Bobde. What would amount to oppression was mismanagement in company affairs, he said.

“There has been no allegation of mismanagement in the company affairs. There’s only been a litany of charges against downstream companies” such as Tata Steel and Tata Motors, he said.

Referring to decisions taken with regard to the Nano car and the acquisition of Corus, Salve said questions can be asked in hindsight and they can be said to be differing points of view, but not mismanagement.

Apart from Mistry’s reinstatement, the Tatas are questioning the tribunal’s finding that Tata Sons could not have converted itself into a private company.

Tatas Sons was always a private limited company and always had an article restricting the transfer of shares, Salve said, explaining the structure of the company and its governance. This ensured that control of Tata Sons was always with the majority shareholders – Tata Trusts with a 68% stake, Salve argued.

Tata Trusts and Tata Sons have always worked in cohesion and there has never been a need to invoke their veto power. Not a single resolution brought by Mistry was vetoed, Salve said. “Yet, he calls them stooges, puppets,” he said.

Mistry’s appointment as executive chairman was till March 2017 and after he was voted out, a person without shares in the company was appointed chairman, Salve said, alluding to N Chandrasekaran.

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