Shapoorji Pallonji (SP) Group was keen to sell up to 7 per cent of their shareholding in Tata Sons in 2002 by following the appropriate transfer procedure as prescribed in the Articles of Association of the holding company, Sudipta Sarkar, senior counsel representing some Trustees of Tata Trusts said at the National Company Law Tribunal hearing on Monday. Sarkar alleged that the SP group has suppressed this fact and now in hindsight challenging the very process under which they wanted to sell the shares. To substantiate his point, Sarkar presented a copy of the letter dated 30 April 2002 with the subject: sale of shares. The letter addressed to Ishaat Hussain, who was then Tata Sons' finance director, pegs the value of investments by the SP group's firms to be Rs 742,000 with a face value of Rs 1000 each. Mistry family's investment firms - Cyrus Investments Pvt Ltd and Sterling Investments Pvt Ltd, which have been at loggerheads with Tata Sons since Cyrus Mistry's ouster as the holding company’s chairman in October 2016. The family firms that control a combined 18.4 per cent in Tata Sons, have been opposing latter's proposed plan to convert itself into a private company from a public limited one. Legal experts said argument of Tata Trusts' counsel doesn't have any legal merit in the current context. "The earlier attempt to sell the share cannot by itself be relevant to the present controversy. It appears that more than anything else, the argument is rhetorical in nature," said Ramesh K Vaidyanathan, founder and managing partner of the firm, Advaya Legal. On the hearing on 10 January, Mistry's counsel had pleaded that Article 75 of Tata Sons' articles of association, which gave the powers to the Tata Trusts to get Mistry removed and his investment firms transfer their entire share-holding, be scrapped. The SP Group, alleged Sarkar, have been exercising their rights in a disruptive manner which is not in the best interest of the company.
Therefore, it would be in the best interest of Tata Sons to consider buying out the former's shareholding. He requested the Court to keep the interest of Tata Sons in mind and public interest by highlighting the public charitable role of Tata Trusts (which include total disbursement of over Rs 150 billion of public charity). The court, he demanded, should consider an exit option to a “disgruntled shareholder,” especially when no case of oppression has been made out.
Sarkar argued that that there is no question of the NCLT entertaining a case of mismanagement and oppression since the circumstances are not just and equitable as it is always open for the minority shareholder to sell their shareholding for a value. The Tata Trusts' counsel emphasised that the SP Group was "merely an investor," without any special rights and any representation, or proportionate representation and were fully aware that the articles were private in nature. Sarkar argued that there is no change in the position which is adverse to the SP Group. The proposed conversion to a private company is merely reverting to what the Company was when the SP Group entered the company, he said.