Senior counsel Harish Salve told a bench led by Chief Justice SA Bobde that Article 75, which allows Tata Sons to “compulsorily purchase” shares of any shareholder, “provides for such buyout and also lays down the procedure ... it has to be at fair value”.
Tata Sons on Thursday told the Supreme Court it is willing to buy the 18.4% stake of Shapoorji Pallonji Group at a fair market price as per Article 75 of its Articles of Association. The Supreme Court concluded the hearing and reserved its judgments on the cross-appeals.
Senior counsel Harish Salve told a bench led by Chief Justice SA Bobde that Article 75, which allows Tata Sons to “compulsorily purchase” shares of any shareholder, “provides for such buyout and also lays down the procedure … it has to be at fair value”.
“That is the best remedy,” Salve said. As reported earlier, Tata Sons has not agreed to the valuation of
Rs 1.75 lakh crore pegged by SP Group of its stake in the holding firm. It has said at best the value of the stake would be Rs 50,000-80,000 crore. Tata Sons has also not accepted SP Group’s proposal for a non-cash settlement for its 18.4% stake whereby a division of all the assets of the holding firm is made on a pro rata basis and SP Group gets a direct stake in all the listed companies of Tata Group.
The apex court concluded the hearing in the case and reserved its judgment on the cross-appeals filed by both the groups against the National Company Law Appellate Tribunal (NCLAT) order that had reinstated Cyrus Mistry as executive chairman of Tata Sons and ruled that there was oppression of minority shareholders in Tata Sons.
During the hearing, the CJI asked if Mistry was the managing director. Salve replied that there was no contract as such and it was by operation of law that he becomes the MD. Once he was removed as the executive chairman, he ceased to be the MD.
Senior counsel Shyam Divan, appearing for the SP Group firms, reiterated that the conduct of the Tata Sons board in ousting Mistry was in violation of the principle of corporate governance and in breach of the Articles of Association. “The actions were against foundational principles of decency. They were burdensome, prejudicial and oppressive,” he said.