“The valuation of their holding rose from Rs 60 crore in 1965 to Rs 58,000 crore in 2016. Yet they say Ratan Tata ran the company so badly that it was fit to be wound up in 2016,” Harish Salve, counsel for Tata Sons, said during the course of the hearing in Supreme Court.
“Prejudical, oppressive and mismanagement have been all rumbled up together...This allegation is non-sensical,” Salve contended.
Tata Sons on Wednesday asked how the value of the 18.4% stake of Shapoorji Pallonji group in the holding firm went up from Rs 60 crore in 1965 to Rs 58,000 crore in 2016 if the company had been mismanaged by Ratan Tata as alleged by the SP group.
Further, the group has itself now claimed that its stake is worth Rs 1.75 lakh crore. “The valuation of their holding rose from Rs 60 crore in 1965 to Rs 58,000 crore in 2016. Yet they say Ratan Tata ran the company so badly that it was fit to be wound up in 2016,” Harish Salve, counsel for Tata Sons, said during the course of the hearing in Supreme Court.
Salve told a bench led by Chief Justice SA Bobde that the SP group in its cross-appeals had “claimed valuation of Rs 1.5 lakh crore. They have now asked that they be given 18% in all downstream Tata companies, and as per the latest application, the valuation is now at Rs 1.75 lakh crore. So if we go by their claims, it is a strange management which has mismanaged the company but still taken its (SP Group) valuation from Rs 1 lakh crore in 2017 to Rs 1.75 lakh crore in 2020”.
“Prejudical, oppressive and mismanagement have been all rumbled up together…This allegation is non-sensical,” Salve contended.
Unless Tata Sons incurred enormous losses and management lacked probity to such an extent that there was no other way except to boot out Tata Trust which owns about 66% stake in Tata Sons, the tribunal (NCLAT) could not have arrived at the conclusion that Tata Sons, under the leadership of Ratan Tata suffered from mismanagement, he argued.
On the contrary, the senior counsel contended that “things are going well and the companies are making money. And he is making allegation of mismanagement”.
According to Tata group, the NCLAT just picked up the points from the SP group’s written submissions and passed an order without even giving a finding what was wrong with the NCLT order.
Salve argued that reappointing Cyrus Mistry as the executive chairman, someone representing a company with only 18.4% stake in Tata Sons, against the wishes of majority stakeholders is akin to booting out the majority from the company.
The CJI during the hearing enquired “who had said that Tata Sons should be wound up “Party in their arguments need not say that the company should be wound up. Party only needs to say that there is oppression and mismanagement. The tribunal can then look into the complaint and if it feels that it is just and equitable to wind up the company but not expedient to do so in the shareholders’ interest, then directions can be passed by the tribunal. Is there any need to actually plead for winding up,” he asked.
The hearings will continue on Thursday, when the Tata group is expected to conclude and the SP group is expected to begin its arguments.