MUMBAI: The Shapoorji Pallonji (SP) Group filed for a review on Saturday of the Supreme Court verdict in its minority shareholder oppression case against Tata Sons. The move came on the last day to file such an appeal. A review plea can be filed within 30 days of a verdict, and the SC ruling in this SP-Tata Sons case was pronounced on March 26.
The petition challenges certain alleged errors in the judgment, which had set aside the order of the National Company Law Appellate Tribunal (NCLAT) that had reinstated SP scion Cyrus Mistry as the chairman of Tata Sons.
SP holds 18.4% in Tata Sons, the holding company of the $100-billion Tata conglomerate, and Mistry was removed from the chairman’s post in October 2016 in a boardroom coup. The petition is not a review of the entire judgment but some aspects of fact and law that are patent errors, said people familiar with the matter.
The SC judgment had also diluted certain provisions of the Companies Act, specifically section 166 which requires all directors to exercise independent judgment and discharge fiduciary duties in the interest of the company and not only in the interest of their nominators, the people said. Tata Sons is controlled by Tata Trusts and the public charitable organisation nominates a third of the directors on the board of the company.
The nominee directors enjoy affirmative voting rights on certain matters specified in the Articles of Association (AoA) of Tata Sons, including any matter affecting the shareholding of the Trusts.
The SC had observed that Trusts nominee directors are “not like any other directors who get appointed in a general meeting of the company” and that they “hold a fiduciary relationship with the Trusts and fiduciary duty towards the nameless, faceless beneficiaries of those Trusts”.
This SC observation, said corporate lawyers, suggested that the role and duties of directors of a charitable trust are different from those of other non-charitable trust members. SP had contended that such affirmative voting rights enjoyed by Tata Trusts nominee directors breached the duties of directors under companies Act.