Anushka Mansharamani
C.A. Sundaram, representing the Shapoorji Pallonji firms, continued his arguments from the previous hearing firstly stating the difference in shareholding.
According to them, it is Rs. 1.5 lakh crore, while according to the Tata Sons, it is 80k crore.
He pointed out that in the counter-affidavit filed by Ratan Tata, he has explicitly admitted that Tata Sons is not a family company whereas, it is a board-managed company and therefore, the company shall be considered as a company managed by Tata Trusts.
He contended how Article 121 A was used by Tata Trusts in their favour to undermine the board.
NCLAT, on the other hand, had said that Article 121 A cannot be used by Tata Trusts to demand pre-consultation, and using this argument, C.A. Sundaram stated that Tata Sons should be a board-managed company.
CJI Bobde asked C.A. Sundaram to explain how the board’s independence is affected by the pre-consultation.
To which he stated that pre-consultation is not advisory but, it is solely to convey the decision of the concerned majority holder.
CJI Bobde then drew a comparison with politics however, C.A. Sundaram disregards the same by stating “Politics is different from the corporate world.”
He further made a point that the director’s primary duty is towards the board, and the shareholders have to only elect the directors, therefore, it is upon the discretion of the board to manage the company and not vice-versa.
CJI Bobde also stated that if mismanagement takes place and money is lost, the majority also loses money.
To which C.A. Sundaram replied that mismanagement is not an excuse and that they are being stopped from taking decisions.
He emphasised the conversion of the company from public to private and how it was done by a stroke of a pen by the Registrar of Companies.
He stated that after the 2013 act came into force, the conversion from a public company to a private company should be done after applying to NCLT for re-conversion to a private company.
He lastly stated that this should have been done so by Tata Sons as it was a deemed public company and should follow the procedure for reconversion.
The matter is listed to be heard on 16th December 2020.
