Sunday, March 28, 2021
Tatas may move court on right to buy back shares | Economic Times
Tata Sons is understood to be mulling plans to file an injunction to protect its future right of any pre-emptive purchase of its shares, if these were to be pledged by the SP Group. Top officials close to the development said this is a top concern of the Tata Group holding company's legal team, which is currently evaluating the impact of Friday's Supreme Court order. The salt-to-software conglomerate may seek an injunction from a city civil court, sessions court, or the high court, depending on the nature of the relief sought.The Supreme Court on Friday quashed an order by the National Company Law Appellate Tribunal (NCLAT) that had reinstated former Tata Sons chairman Cyrus Mistry. Further, NCLAT's finding regarding oppression of minority shareholders and mismanagement claims were also set aside. The order also dismissed all interim applications, including one by the SP Group seeking separation of its ownership interests in Tata Sons. Another, filed by the Tatas, seeking to restrain the SP Group from pledging or transferring Tata Sons shares was also dismissed.“Any aggrieved party is entitled to consider its options and may take legal recourse in case it feels that by encumbering/pledging the shares, its future rights of pre-emptive purchase would be compromised or defeated, directly or indirectly,” said Abhishek Singhvi, senior counsel for Tatas.81741395“This matter being dismissed as part of all interim applications by the Supreme Court will require a fresh legal recourse. We are looking at all options and will finalise a plan accordingly,” said a top Tata Group official requesting anonymity.Differences over Valuation of Mistry StakeOfficials close to the group said any dispute on pledging of shares would be decided as per company law.Legal experts close to Tata Sons asserted that the dispute over pledging of shares and valuations of the SP Group's 18.4% stake are legal matters separate from the issues arising from the appeal against the NCLAT order, and these will be closely looked at later.“We don't see the legal strength in such plans. A lower court can't sit in judgement over a SC order. There are no restrictions of any kind by the Supreme Court now and the SP Group can proceed as we wish,” said a person close to the matter from the SP Group.Tata Sons and the SP Group did not comment on the development.Last year, the Tata Group had moved the Supreme Court to block the SP Group's plans to pledge a portion of its 18.4% stake in Tata Sons, which it has been holding for the past seven decades, in order to raise Rs 11,000 crore. Tata Sons estimates SP Group's 18.4% stake at Rs 80,000 crore while the SP Group pegged it at Rs 1.75 lakh cr.“The valuation of shares of the SP Group depends on the value of the stake of Tata Sons in listed equities, unlisted equities, immovable assets etc and also perhaps the funds raised by the SP Group on the security pledge of these shares. Therefore, at this stage, and in this Court, we cannot adjudicate on the fair compensation. We will leave it to the parties to take the Article 75 route or any other legally available route in this regard,” the Supreme Court said in its order.“If the Tatas wish to seek injunctive relief to restrain the Mistrys from selling or pledging their shares in Tata Sons, a civil court would have jurisdiction. If Mistrys’ wish is to obtain a valuation this could also be ordered by a civil court. Orders passed by a civil court are subject to appeals,” said Anand Desai, managing partner of law firm DSK Legal.He says Article 75 confers power on the company, Tata Sons, by special resolution to issue a sale notice to a shareholder to transfer his shares. “This Article doesn’t contemplate a forced sale or purchase by a shareholder. While the Supreme Court has answered several questions of law, the shareholding pattern continues. Both sides may wish to take a pragmatic approach to settle this matter.”A lawyer close to the SP Group said the Supreme Court has protected the economic interest of the group. “We are free to pledge or transfer the shares as all restrictions imposed on us have also been dismissed,” he said.According to Saket Shukla, co-founding partner of law firm Phoenix Legal, the Supreme Court decision has answered all questions of law in favour of the Tatas and does not seem to impose any specific restriction on the SP Group from pledging its shares. In these circumstances, the Tatas are likely to approach the appropriate court if they want to seek any relief against the Mistrys pledging their shares.“This will be another interesting battle and if the court injuncts the Mistrys from pledging their shares then it would need to be seen how the injunction impacts Tata Sons' powers to require a transfer of such shares under Article 75,” adds Shukla.
Tags
# Economic News
Recommended Articles
- Economic News
Airlines hoping for more Boeing jets could be waiting awhileJan 25, 2024
Airlines hoping for more Boeing jets could be waiting awhile https://ift.tt/G629RhP Federal Aviation Administration has put a limit the plane maker's ...
- Economic News
There is a vertical growth in the capital market and money flow will become bigger as we go forward: Raamdeo AgrawalJan 25, 2024
There is a vertical growth in the capital market and money flow will become bigger as we go forward: Raamdeo Agrawal https://ift.tt/AD2q4vg Oswal Grou...
- Economic News
Ajay Singh, Sky One and Busy Bee file firm bids for Go FirstJan 24, 2024
Ajay Singh, Sky One and Busy Bee file firm bids for Go First https://ift.tt/QWNES70 promoter Ajay Singh, Sky One, and Busy Bee have submitted the bank...
- Economic News
Indices gain 1% on short covering, traders see choppy days aheadJan 24, 2024
Indices gain 1% on short covering, traders see choppy days ahead https://ift.tt/KXAwqrm Nifty rose 215.15 points, or 1.01%, to close at 21,453. The Se...
Labels:
Economic News
Subscribe to:
Post Comments (Atom)
Featured Post
-
A simple comparison image of Bing vs. Google Search. The image is divided into two sections: on the left, Bing's logo with a blue back...
-
A professional and modern illustration of job seekers searching for jobs on their laptops and smartphones. The scene includes a large job se...
-
AMAZON COMPANY - Amazon is the world wide famous American electronic commerce company which headquarters in Seattle, Washington. Amazon...
No comments:
Post a Comment