Armed with the Supreme Court order, the Tata Group is in no mood to concede any ground to the Mistry family on the valuation of the latter’s stake in Tata Sons.
According to sources close to the Tata Group, the issue of the stake sale is more critical for the Mistry family due to the financial stress on Shapoorji Pallonji group.
“The Tata Group is in no hurry to make the first move towards reconciliation. The Supreme Court has upheld Article 75 of the Articles of Association which gives all the leverage to the Tatas,” the source said, adding that there is unlikely to be any significant change in the Tata Group’s stand on the valuation of shares held by the Mistry family.
18% stake in Tata Sons
The Mistry family holds about 18 per cent in Tata Sons through the Shapoorji Pallonji group. The Mistry side has pegged the value of its stake at around ₹1.75-lakh crore. But Tata Sons believes the value is in the range of ₹70,000-80,000 crore.
From Tatas’ point of view, Article 75 of the Articles of Association could become the key to resolving the stake-sale dispute. But the Mistry family sees this as an instrument in the hands of Tatas to push them into a corner. Essentially, this Article gives Tatas the first right of refusal on the shares held by the Mistry family. The Tatas can also ask the Mistry family to sell their shares to them under this rule. This is why Mistry had appealed for the scrapping of this Article in the Supreme Court. However, the Court held that the Article in its present form was unanimously carried through in the presence of and with the consent of Cyrus Mistry.
“A person who willingly became a shareholder and thereby subscribed to the Articles of Association and who was a willing and consenting party to the amendments carried out to those Articles cannot later on turn around and challenge those Articles. The same would tantamount to requesting the Court to rewrite a contract to which he became a party with eyes wide open,” the Supreme Court said.