Tata Sons Ltd. today stressed on the delay by Mistry firms in taking an oppression and mismanagement action as arguments continued in the matter at the National Company Law Tribunal.
The shortest delay by petitioners in taking action against Tata Sons is eight years, and for some allegations, 45-55 years have passed, Senior Counsel AM Singhvi argued on behalf of Tata Sons. More serious petitions under Article 14 of the Constitution are dismissed when there is a five or an eight-month delay, he said.
Today marked the sixth day of arguments by Tata Sons in the Tata-Mistry battle at the Mumbai NCLT which began hearing the petition in November after the appellate tribunal granted the Mistry firms waiver from the 10 percent shareholding requirement to pursue oppression and mismanagement charges against Tata Sons.
C Sivasankaran, alleged by Mistry firms to be a close confidant of Ratan Tata, took centre stage in the arguments today. Siva purportedly garnered benefits of over Rs 1,000 crore from Tata entities, counsel for the Mistry firms, Aryama Sundaram, had told the NCLT earlier. Singhvi today defended instances of favouritism raised by the petitioners.
Here are some of Singhvi’s arguments from today:
- An instance of mismanagement raised by Mistry firms was when Sivasankaran’s company was offered shares of Tata Teleservices (TTSL) at Rs 17 a share in comparison to Rs 26 a share that was offered to foreign investor Temasek just three months later. But it was Shapoorji Group that got a better deal of Rs 15 a share and at more favourable terms just two months before Siva’s investment, Singhvi pointed out. He argued that upon the entry of Docomo as an investor in TTSL, the Shapoorji Group also made profits from secondary sale to Docomo. He also stated that the price of Rs 17 a share was well within the price band for TTSL share acquisition.
- Mistry’s counsel had also raised issues regarding an undertaking that was provided to Standard Chartered Bank (SCB) to secure a loan granted to Siva’s company for acquiring TTSL shares. Singhvi argued that this undertaking was in the interest of Tata Sons and would ensure that pledged TTSL shares of Siva’s entity could only be acquired by Tata Sons and not any other third party. This undertaking was withdrawn in 2009 – almost seven years ago – and substituted by Siva with his own collateral.
- Affairs of Tata Motors were in question next. The Nano project – which Singhvi admitted was a decision gone wrong – was at the heart of a commercial decision and cannot amount to oppression even if it adversely affects price of shares. Unwise, careless and inefficient decisions of directors cannot lie under oppression and mismanagement, he argued. He also showed documents that rebutted the allegation that Ratan Tata was opposed to shutting down the project and it was Mistry who wanted to evaluate improving the Nano project and minimize losses without its termination.
- Mistry companies categorised Tata Steel’s investment in the British company Corus Group PLC as “overpriced” and “bleeding”. Singhvi defended this investment by stating that the it was done within the price range determined by Tata’s board in a British government supervised auction. The premium paid on the shares was due to the fact that Tata Steel was bidding along side a Brazilian company and went through 9 rounds of bidding.
After Singhvi concluded his arguments on behalf of Tata Sons, Mohan Parasaran, senior advocate at the Supreme Court of India started his arguments on behalf of the Tata Trusts. He argued in favour of conversion of Tata Sons from public to a private limited company and will continue his arguments on Monday.