On Tuesday, The Shapoorji Pallonji Group notified the Supreme Court that it would depart the Tata Group, ending a 70 years old relationship. Tata group is a subsidiary of the Tata Group.
The Shapoorji Pallonji Group, which owns a nearly 18.5% stake in holding firm Tata Sons through two investment companies, said In a statement, A detachment was essential due to the consequence that “ongoing litigation could have on the economy and the livelihoods.”
The declaration was made after few hours of Tata Group notifying the supreme court that it was open to buying out the 18% stake owned by the Mistry Family’s penniless Shapoorji Pallonji Group, according to Business Standard, if the latter needed to raise money to pay off debts. Tata Group, nonetheless, did not mention an evaluation timeline for the same.
In a statement, The SP Group said it was important that an earlier resolution be attained to reach a fair and impartial outcome indicating the value of the underlying tangible and intangible properties. “The Tata-SP relationship stayed strong for more than 70 years, was created on mutual trust, friendship and good faith.” “It is very difficult today for the Mistry family to say that separation of interests would best serve both the groups.”
The declaration is a conclusion of a long legal battle between the two groups, the battle which commenced in 2016 after Cyrus Mistry was removed as Chairperson of Tata Sons. Tata Son’s decision to restrain the Mistry family from raising capital against the shares it holds in the corporation has hooked the two groups in a legal conflict at the Supreme Court.
In order to meet the crisis arising from the global pandemic, the Mistry family was in the middle of raising funds against the protection of their personal assets said the Mistry Group. “This step was taken to conserve the livelihoods of its 60,000 employees and over 100,000 migrant labors,” it added. “The Tata Sons action to halt this necessary fundraise, without any notice for the collateral aftermaths is the latest demonstration of their vindictive mind-set.”
The company said, “the unjust actions in the last few years and the latest nasty move by Tata Sons that affect the livelihoods of the wider SP Group community leads to the unaccountable result that the mutual co-existence of both groups at Tata Sons would be infeasible.”
As the largest minority shareholder, the SP Group had played the role of “guardianship with an objective to safeguard the best interests of the Tata group, ” the statement added
The SP Group had always utilized its voting rights as a shareholder for the best interest of the Tata Group.” “The record says, that before the year 2000, when the Tata Trusts, being Public Charitable Trusts, couldn’t exercise their voting rights, the same being held by a Public Trustee, the SP Group voted to protect the best interests of the Tata Group.”
The roots of the dispute
in 2012, Cyrus Mistry, who is from the Shapoorji Pallonji family, took over as the sixth chairperson of Tata Sons from Ratan Tata. Nevertheless, the two reportedly fell out over key investment opinions. In December 2016, two months after being sacked as chairperson, Cyrus Mistry signed down from all Tata Group companies. Mistry accused Ratan Tata of directing “an illegal coup” while the Tatas claimed Mistry had misled the 2011 selection committee set up to appoint Tata’s successor.
Mistry and his family-run investment firm Cyrus Investments approached the company tribunal in the same month, as minority shareholders, against Tata Sons and 20 people, including Ratan Tata. The shareholders of Tata Sons voted to remove Mistry from the post of director, on February 6, 2017. This came a month after Chandrasekaran was appointed to succeed Mistry.