SP Group questions Tata board move to block Mistry family from raising funds

Rajesh Kurup Mumbai | Updated on September 21, 2020

Intensifying the ongoing battle, the Shapoorji Pallonji Group has questioned Tata Sons’ board members’ decision to block the Mistry family from raising funds against the shares they hold in the firm.

Claim for damages

In a notice to Tata Sons’ directors, SP Group has given three days’ time to respond, failing which it will seek appropriate remedies, including a claim for damages.

It has sought an explanation from the board members, particularly independent directors, on whether the “oppressive action that causes prejudice” to a minority shareholder was with their concurrence. The notice was sent individually and collectively to all directors.

It notice was sent on behalf of two Mistry family firms – Sterling Investment Corporation and Cyrus Investments – through which the family has moved Supreme Court in the ongoing Tata-Mistry case.

“At the outset, our clients state that the said application is not only a flagrant abuse of the process of law, but is also misconceived and misleading as material information with respect to the encumbrance has been deliberately concealed in the said application…,” the notice said, referring to Tata’s September 5 petition before the Supreme Court.

It also said that independent directors should be aware that they have statutory obligations under the Companies Act, 2013, and have to conduct in a non-partisan manner.

“This sequence of events is evidently aimed at only one objective – to put in jeopardy our client’s financial closing to handle the extreme illiquidity conditions being met in these pandemic times. Your deliberate mala-fide actions are aimed to financially stifle our clients and their operations,” it added.

Earlier, on September 5, Tata Sons had moved the apex court, seeking to restrain Mistry family from raising capital against the shares it held in the firm. The SP Group, which owns 18.37 per cent stake in Tata Sons, had termed this move as “vindictive” and “intended to inflict irreparable damage on the SP Group”.

Fund-raise plans

The SP Group was in the process of raising ₹11,000 crore, and had also signed agreements to raise ₹3,750 crore from Canadian asset manager Brookfield.

Earlier, on September 11, an SP Group spokesperson said that Tata’s move to block fund-raising plans was against the Articles of Association (AoA), which only regulate the transfer of shares, and there is no provisions in the AOA to restrict pledging or encumbrance of shares.

Published on September 17, 2020

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