SP group has been struggling to service its debt after its mainstay businesses--real estate and infrastructure--took a because of the pandemic. It has missed a deadline to repay dues to group company Sterling and Wilson Solar Ltd
MUMBAI: In a blow to the Shapoorji Pallonji group, the Supreme Court on Tuesday ordered a status quo on creating pledges or encumbrances on shares of Tata Sons. Shapoorji Pallonji group had been pledging shares held by it in Tata Sons to raise funds.
The hearing has been adjourned for four weeks, and the matter will be next heard on 28 October.
On 5 September, Tata Sons had moved an "urgent" application before the Supreme Court to restrain promoters of Shapoorji Pallonji Group from raising capital by pledging their shares in Tata Sons. It had argued that any pledge will amount to transfer of shares and under the company’s Articles of Association (AoA), the board of Tata Sons has the first right to buy the shares at fair market value.
The SP group through its two investment firms - Cyrus Investments and Sterling Investments - hold 18.4% stake in Tata Sons.
As per the plea, Cyrus Investments has pledged its entire 9.19% of shareholding in Tata Sons. Of this 7.5% was pledged with Axis Trustee for ₹825 crore in January and February this year. In April, the charge was modified to secure a loan of ₹3,958 crore. An additional 1.83% stake was pledged with IDBI Trusteeship for securing a loan worth ₹1,117 crore.
SP group has been struggling to service its debt after its mainstay businesses--real estate and infrastructure--took a because of the pandemic.
It has missed a deadline to repay dues to group company Sterling and Wilson Solar Ltd. The promoters have repaid only ₹103 crore of the ₹1,000 crore it owed to the company, the deadline for which ends this month.
Senior Advocate CA Sundram, appearing for Cyrus Mistry’s firm, argued that Tata Sons' actions of stopping him from pledging of shares is causing havoc. “I am being blocked in everything," said Mistry’s lawyer. He added, “We have got 6,500 employees and thousands of migrant labourers to look after."