Tata vs Mistry: Saga Continues; Rejoinder filed in the Supreme Court

Tata Sons on Thursday filed a rejoinder in the Supreme Court of India stating that ousted Chairman Cyrus Mistry’s claims of his “good performance” are misconceived. The rejoinder also claimed that the Tata group had no relationship of any personal character involving trust and confidence with the Shapoorji Pallonji Group. This group is the single largest non-Tata minority shareholder with 18.37% equity in Tata Sons and is the company of Mr. Mistry. The 162 pages rejoinder to a cross-appeal filed by Mr. Mistry as a reply against an appeal in the Supreme Court to the National Company Law Appellate Tribunal (NCLAT) judgment of in December 2019 which reinstated Mr. Mistry as the chairman of Tata Sons. However, according to Mr. Mistry, the NCLAT verdict does not secure the interests of his company, i.e. SP from the potential prejudicial and biased conduct in the future from the Tata Group.

In the appeal, Mr. Mistry has described the relationship between the Tata Group and the SP Group as one based and running on the principle of quasi-partnership. He further stated that SP Group has been close with the group and has acted as a guardian of the group for over the last sixty years. On this contention, Tata Sons in its rejoinder, stated that there had never been any such quasi-partnership between the groups and such is a complete after-thought by Mr. Mistry’s company. The group further described it as not being any two-group company consisting of Tata Group on the one hand and SP Group on the other. It reiterated that the group is not amorphous where there is any blend or merge. ‘This bucketing together of Tata Trusts, companies and individuals effaces the identity of the individual shareholders who are members in their own right and capacity and not part of any group’, the rejoinder stated. 

The tale of Tata 

In the rejoinder, the group denied there being any stake of the SP group in the management of Tata Sons and its operating group. It further denied the allegation by Mr. Mistry that Tata Sons is an ‘alter ego’ of its majority shareholders, Tata Trusts. Mr. Mistry had contended that Tata Sons should act neutrally and not take a stand  in a dispute between two shareholders.

The rejoinder filed by Tata Sons also gave arguments based on concrete numbers before and after the Mistry period in the group. The group stated that during Mistry’s tenure, the market performance of the Tata group’s operating companies, excluding Tata Consultancy Services and Tata Motors, was below Sensex returns. However, the market cap (before Mistry’s tenure) of the operating companies  had risen approximately 60 times amounting to about ₹5-lakh crore by 2012 from less than around ₹8,000 crores in 1991. ‘This is also more than three times the Sensex return in the same time period’, the petition filed on behalf of Tata Sons Chairman Emeritus Ratan Tata, said.