Relief for Cyrus Mistry; SC agrees to hear plea on Pallonji Group’s representation on Tata Sons board
The plea seeks representation on Tata Group's board proportionate to 18.4 percent holding of Pallonji Group
In a relief to Cyrus Mistry, the Supreme Court has agreed to hear his plea of proportionate representation for Pallonji Group on Tata Sons board.
— CNBC-TV18 (@CNBCTV18Live) May 29, 2020
The plea seeks representation on Tata Group's board proportionate to 18.4 percent holding of Pallonji Group.
Besides, it also seeks removal of affirmative vote in hands of select Tata Sons' directors.
The Supreme Court on Thursday agreed to hear a plea by Cyrus Mistry seeking proportionate representation on the Tata Sons Board for the Pallonji Group, which as per the plea has proved to be a “Guardian of the Tata Group for over six decades”, according to CNBC-TV18.
Cyrus Mistry has argued that the Pallonji Group is the single largest, non-Tata shareholder with over 18.37 percent equity in Tata Sons and should receive proportionate representation on the board.
The latest move by the Cyrus Mistry camp comes as a challenge to the NCLAT judgment. NCLAT failed to protect the rights of Pallonji Group, from any future prejudicial conduct, by not amending or striking down Article of Associations that were allegedly “misused” to hurt the interests of the Pallonji Group. The appeal argues that NCLAT should have allowed Pallonji Group protection against any such prejudicial maneuvering, by allowing proportionate representation on the Tata Sons Board.
The plea also seeks for striking down of affirmative vote in hands of select Tata Sons Directors, allowing them to over ride the entire Tata Sons’ Board. Alternatively, the Mistry plea seeks for similar powers of an affirmative vote to also be allowed to directors of Pallonji Group.
Mistry plea argues that the relationship between Tatas and the Pallonji Group should be looked at as a quasi-partnership arrangement, owing to extensive history and engagement between the two sides. The plea claims that the Pallonji Group is the “guardian of Tata Group” recounting several instances of the Pallonji Group extending financial assistance to Tata Sons.
The Plea argues that engagement between the two groups goes back to the 1920s, and is marked with a deep understanding and personal relationships across decades.
For now, the counsels of both sides agreed that it was felt by both sides that the matters should be heard and decided at the earliest. They argued before the top court that the pendency of such cases over leadership creates uncertainty for large corporate groups such as Tata Sons.
The SC has allowed both sides four weeks’ time to complete pleadings. The SC has not confirmed any specific date of hearing and noted that future hearings will be subject to how the COVID situation develops.
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