Tata Vs. Mistry: Mistry’s counsel says Tata Sons’ conversion to a private company was prejudicial to Shapoorji Pallonji

Anushka Mansharamani

Cyrus Mistry and Ratan Tata are both promoters of the Tata group. They have a difference of opinion on how the Group is to be managed which has resulted in the present situation.

The Supreme Court of India resumed the hearing in the infamous Tata Vs. Mistry case.

While continuing his arguments on the characteristics of the Article of Association of Tata Sons, Harish Salve explained the provisions under the Articles that relate to the appointment of the board of directors.

Salve points out that Cyrus Mistry should keep the nominee directors informed, so there is a smooth functioning.

He stated that the Articles should not be challenged as it was unanimously approved earlier, and allegations of Mr. Ratan Tata interfering in conducting litigation against Docomo is false as Mr. Ratan Tata has nothing to hide.

C.A. Sundaram, representing the Shapoorji Pallonji firms, Cyrus Investments and Sterling Investments stated that the business was being run in a prejudicial manner.

He stated that Tata sons being an investment company – the decisions regarding the direction of the group companies should be taken by the board.

He pointed out the relationship between Tata Sons and the SP group and stated that “The test as per section 242 is whether the affairs of the company is being run in a manner which is prejudicial to members or public interest or interests of company itself.”

He concludes that the conversion from a public company to a private company was to prejudice Shapoorji Pallonji firms and not to necessarily oppress.

He further cited case laws supporting his point on oppression and prejudice and further stated that the whole conduct of converting the company was done when Cyrus Mistry was going to table a Corporate governance document by which the two nominees would not be able to take the final decisions on everything.

CJI S.A. Bobde asked C.A. Sundaram to conclude how the NCLAT passed the order of winding up the company under the just and equitable clause in the next hearing scheduled on 14th December 2020 as he claimed that the justifiable loss of confidence took place in management and quasi-partnership – these are the grounds for winding up on just and inequitable grounds.

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