Thread by @barandbench

TATA v MISTRY

Hearing to continue today before Supreme Court against NCLAT order of December 2020 reinstating Cyrus Mistry as Executive Chairperson of Tata Sons.

Senior Counsel Harish Salve is expected to resume his arguments.

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TATA v MISTRY

Bench assembles. Hearing begins.

Harish Salve continuing with his arguments.

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TATA v MISTRY

Salve tracing history of English jurisprudence on the aspect of "just and equitable" grounds which would warrant interference by court with the affairs of company.

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TATA v MISTRY

CJI SA Bobde on legitimate expectations

"My brother judge recounts how a judge who was on Bench for 9 years wrote to the Chief Justice for appointment as Chief Justice on the ground of legitimate expectations."

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TATA v MISTRY

They have not really justified this decision - on what basis are they saying there is justification for winding up: Salve.

TATA v MISTRY

Where Articles of Association do not fully reflect the relationship between shareholders, then the burden lies on the concerned shareholder to prove that there was special relationship with the company beyond the Articles: Salve on English position.

TATA v MISTRY

Salve relies on Saul Harrison judgment of Court of Appeal on the scope of breach of "legitimate expectations' of members of company.

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TATA v MISTRY

Unless the losses where so enormous and there was such lack of probity so that there was no other way except to boot them (majority) out, NCLAT could not have reached the conclusion it did: Salve

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TATA v MISTRY

In the cross appeal they have filed, they have claimed valuation of 1.5 lakh crores.

They have now asked that they be given 18 percent in all downstream Tata companies and as per their latest application the valuation is 1.75 lakh crores: Salve.

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TATA v MISTRY

So if we go by their claims, it is a strange management which has mismanaged the company but still taken its valuation from 1 lakh crore in 2017 to 1.75 lakh crore (in 2020): Salve

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TATA v MISTRY

Salve now tracing background of issuance of shares of Tata Teleservices to Temasek, C Sivasankaran to contend there was no lack of probity in any of those transactions.

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TATA v MISTRY

Salve also says giving penthouse to Sivasankaran at discounted rent is also not lack of probity saying Mistry's brother was also given the same: Salve

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TATA v MISTRY

Salve explains how Sivasankaran handled negotiations with Malaysian company when Tatas wanted to sell stake in Tata Teleservices and prices went up.

Those are all in open. Where is the lack of probity in it, asks Salve.

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TATA v MISTRY

Pallonji Mistry is a business man of eminence. He was with Tata till 2004. No dissonance ever.

Cyrus Mistry joined in 2006 and did not have any dissonance till 2014: Salve

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TATA v MISTRY

But who has said that Tata Sons should be wound up?

Party in their comparing need not say that company should be wound up. Party only needs to say that there is oppression and mismanagement: CJI Bobde queries.

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TATA v MISTRY

Tribunal can then look into the complaint and if it feels that it is just and equitable to wind up company but not expedient to do so in shareholders interest, then directions can be passed by tribunal. Is there any need to actually plead for winding up: CJI Bobde

TATA v MISTRY

Bench rises for lunch.

Salve will respond to CJI Bobde queries in the post lunch session which will start at 2 pm.

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TATA v MISTRY

Bench assembles, hearing resumes.

Salve continuing with his arguments.

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TATA v MISTRY

On a different note CJI Bobde says worst thing to have happened to court is decline in quality of drafting writ petitions. It is cut paste and copy, CPC, says CJI Bobde.

Salve laughs.

TATA v MISTRY

The person complaining must show that the conduct of management lacks probity and affects his legal and proprietery rights as a shareholder: Salve

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TATA v MISTRY

In discussing whether or not a complaint under section 241 should plead for winding up, CJI Bobde and Salve are now discussing about decline in quality of pleadings generally.

TATA v MISTRY

Is there provision for these tribunals to take evidence: CJI Bobde.

Ariana Sundaram says there is provision. Salve says while it is there in law, the tribunal largely runs on affidavits.

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TATA v MISTRY

The valuation of their holding rose from 69 crores in 1965 to 58,000 crores in 2016. Yet they say Ratan Tata ran the company so badly, that it was fit to wind it up in 2016: Salve

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TATA v MISTRY

Things are going well companies are making money. And he is making allegation of mismanagement: Salve

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TATA v MISTRY

We have been private company which limits transfer of shares and number of members to 50.

After 2013 Act, by definition we became a private company: Salve

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TATA v MISTRY

Cyrus Mistry was initially inducted as Deputy Executive Chairman to work under Ratan Tata before he took over from Mr. Tata. It was the first time someone outside Tata Trusts was taking over as chairperson of Tata Sons: Salve

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TATA v MISTRY

Ratan Tata therefore said that articles might need some changes.

Earlier, all matters brought before board need affirmative vote. After the changes, certain specified matters needed affirmative vote: Salve

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TATA v MISTRY

I have never come across a case in which amendment to Articles ipso facto became 'oppression' under company law: CJI SA Bobde.

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TATA v MISTRY

Earlier a person from Tata Sons used to be appointed to boards of Tata companies. What Mistry did was to appoint his persons to those companies with the result that there was disconnect between Tata Sons and operating companies, the only link being Mistry: Salve

TATA v MISTRY

With the NCLAT order, the majority is out and the minority is running the company: Salve.

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TATA v MISTRY

Salve taking the court through the articles of the company.

Salve: The number of members is limited to 50. There is prohibition on inviting public to subscribe.

CJI: Was it there earlier?

Salve: It was always there.

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TATA v MISTRY

Bench rises for the day. Hearing to continue tomorrow.

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