Blocking of fund-raise plan: Mistry family sends notice to Tata Sons, board members; seeks damages
The legal notice, sent on September 15 through the SP Group lawyers Desai & Diwanji on behalf of Sterling Investment Corporation and Cyrus Investments, has given them three days to respond.
MUMBAI: The Shapoorji Pallonji Group, which has been on bitter legal battle with the Tatas since October 2016, has sent legal notices seeking damages from Tata Sons and its board members for "illegally blocking" the Mistry family's bid to raise funds by pledging Tata Group shares.
The SP Group, which owns 18.37 per cent of Tata Sons valued at over Rs 1 lakh crore, has sought damages from Tata Sons board members, both individually as well as collectively, for their complicity in illegally blocking the Mistry family from raising funds against the security of Tata Sons shares that they own.
The legal notice, sent on September 15 through the SP Group lawyers Desai & Diwanji on behalf of Sterling Investment Corporation and Cyrus Investments, has given them three days to respond failing which legal action seeking damages would be initiated.
The notice says their action blocking pledging of Tata Son shares is not only a flagrant abuse of the process of law but is also misconceived and misleading".
"With your action you have rendered yourself liable for damages, apart from being responsible for aiding, abetting and fomenting vexatious litigation without basis, and thereby putting at risk the lives and employment of tens of thousands of workers in dire times of the pandemic-induced socioeconomic stress," the legal notice stated.
The notice further said, "Their malafide actions were aimed to financially stifle our clients and their operations, and with your false claims you have sought to create panic among lenders and financial institutions and cause colossal damage to our clients".
"We have nothing to comment up on," a Tata Sons spokesperson told PTI.
The noticees are the Tata Sons board, and chairman N Chandrasekaran, and board members Farida Khambhata, Venu Srinivasan, Ajay Piramal, Ralf Speth, Bhaskar Bhat, Harish Manwani, and Saurabh Agrawal, along with company secretary Suprakash Mukhopadhyay.
On September 3, the Tatas had moved an urgent petition in the Supreme Court seeking to block the SP Group from pledging the shares they own in Tata Sons to raise Rs 3,750 crore from Brookfield.
The Tatas action came just a day after the Mistrys inked a fund-raising deal with the Canadian fund house.
Again on September 5, the Tatas submitted an urgent curative petition on the same.
Following this, on September 7 the Mistrys moved the apex court with a counter-petition.
The legal notice also seeks an explanation from board members, particularly the independent directors, whether the oppressive action that has caused prejudice to a minority shareholder, was with their concurrence or not.
The SP Group in their counter affidavit to Tatas' application to block pledging of shares informed the apex court that there was no restriction in the Tata Sons articles of association that prohibits share-pledging and that the lending documents entered into by the SP Group had a specific covenant that lenders would comply with the articles of association in the event of pledged shares were to be invoked and that the Tatas intentionally misled the Supreme Court by suppressing this vital information.
The Mistry firms said the Tatas' application to block funding, one day after a definitive document was signed with Brookfield, showed the vindictive, prejudicial and oppressive nature of the action by Tata Sons.
The agreement with Brookfield was part of the SP Group's Rs 11,000-crore fund-raising plan for the year as its flagship EPC and realty verticals were facing liquidity issues due to the pandemic.
The SP Group was planning to raise Rs 11,000 crore from various funds and had signed a deal with a marquee Canadian investor for Rs 3,750 crore in the first tranche against a portion of their 18.37 per cent stake in Tata Sons.
In their submission to the SC, the Mistry family had said by blocking their share-pledge plan for fund raising reeked of vindictiveness and oppression of minority shareholders rights.
The Tatas had told the SC that the Mistry camp had since January 10, 2020 pledged almost 82 per cent of their 18.34 per cent holding in Tata Sons first for Rs 825 crore with Axis Trustees which was then increased to Rs 3,957 crore by April but did without disclosing this to the SC or to Tata Sons.