Tata Sons ‘wrongly suggested’ SP Group can’t complain about misuse of AoA: Mistry counsel

By: |
December 15, 2020 8:21 AM

Senior counsel CA Sundaram told a Bench led by Chief Justice SA Bobde that Tata Sons “wrongly suggested” that the SP Group cannot be now heard complaining of its misuse.

The Shapoorji Pallonji Group on Monday opposed Tata Sons’ stand in the Supreme Court that since it had voted in favour of amendments in the holding firm’s Articles of Association (AoA), it cannot now complain about its misuse. Senior counsel CA Sundaram told a Bench led by Chief Justice SA Bobde that Tata Sons “wrongly suggested” that the SP Group cannot be now heard complaining of its misuse.

Citing Articles of Association of Tata Sons to show the supremacy of the Board, Sundaram said: “Article 121A was introduced to ensure that certain matters had to necessarily have the board’s approval. The SP group also voted in favour of Article 121 due to the relationship of trust and confidence they had in Tata Sons. The SP group could not have conceived that the Article would be used against it.”

During the hearing, the CJI told Sundaram that he must bear in mind that “this is a private company”. Our experience with such companies is that they have heads of families controlling, giving directions etc. Birlas, Tata all have such structures. Your SP group might also have it. What is wrong in the head of family wanting information or wanting to control decisions?” it asked.

Sundaram replied, “This company owns many listed companies running to 65 lakh crore with public shareholders, so there should be some kind of independence in decision-making. If they wanted to keep it as a family affair, they should have remained so instead of making it public. A public charitable trust cannot legally run such companies. That is why it needs it to be board-run. They cannot use the Articles to claim that they have absolute right over affairs of the company.”

Sundaram argued that Article 121A was introduced by an amendment on April 9, 2014, to ensure that certain matters were necessarily brought before the Board of Tata Sons. The rationale for these amendments was that directors nominated by the Tata Trusts would apply their mind to the matters brought before the Board of Tata Sons and make an informed decision, he said. The hearing will continue on Tuesday.

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