SP Group told to maintain ‘status quo’ on Tata Sons share pledge

Our Legal Correspondent New Delhi | Updated on September 22, 2020

Portrait of Pallonji Shapoorji Mistry

Tata Group offers to buy the shares; Supreme Court sets final hearing for October 28

The Supreme Court on Tuesday asked the Mistry family-owned Shapoorji Pallonji Group to maintain status quo regarding pledging of their shares in Tata Sons to raise capital.

A Bench led by Chief Justice of India Sharad A. Bobde ordered that no “further action” should be taken with regard to shares which have already been pledged.

The court fixed the case for hearing after four weeks on October 28. The Bench said the case would be listed for final hearing then.

The SP Group owns 18.37 per cent stakes in Tata Sons salt-to-software empire. Pallonji group heir, Cyrus Mistry, was ousted as chairman of Tata Sons in 2016. The dispute following, a National Company Law Appellate Tribunal decision, is pending in the apex court.

Senior advocate Aryama Sundaram, representing SP Group’s interests, said his client cannot be prevented from pledging its shares.

Also read: Supreme Court to hear Tata Sons’ plea seeking to restrain Mistry family from raising funds on Tuesday

“Pledging is a limited transfer... Not an unrestricted transfer, but a restricted transfer,” Chief Justice Bobde orally remarked during the hearing.

During the hearing, before the court ordered status quo, senior advocate Harish Salve, for Tata Sons, said his client may be open to buying the SP Group shares at a fair market value.

Salve indicated this would be preferable to the shares going into the hands of some unfavourable entities. But the senior lawyer said the SP Group was continuing to pledge their shares in Tata Sons.

“If they need the money, I (Tata) will buy the shares from them... What is the problem?” Salve submitted in court.

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

But Mr. Salve indicated that the situation may be “beyond repair” if the SP Group goes on pledging its shares in the four weeks before the final hearing on October 28.

“Mr. Sundaram, hope you are not going to do anything (in the four weeks),” Chief Justice Bobde asked.

Finally, the court decided to order the status quo.

Published on September 22, 2020

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