Tata board denies SP Group’s allegations1 min read . Updated: 18 Sep 2020, 10:57 PM IST
- SP Group slapped a damages notice against Tata Sons for blocking Mistry family’s fund raise against Tata shares
- Earlier, Tata Sons had moved an ‘urgent’ application before the Supreme Court to restrain the SP Group promoters from raising capital by pledging their shares in Tata Sons
Mumbai: The board of Tata Sons Ltd on Friday denied allegations by the Shapoorji Pallonji (SP) Group that it deliberately kept an ‘urgent application’ to the Supreme Court on hold.
The SP Group on 15 September slapped a notice for damages against the board members of Tata Sons, for blocking Mistry family’s fund raising against the shares of Tata Sons.
The SP Group through its two investment firms, Cyrus Investments and Sterling Investments, has an 18.4% shareholding in Tata Sons. It has been pledging these shares with lenders and investors to raise funds. The SP Group has been facing hardship in servicing its debt and direly need funds in the pandemic, as its mainstay is real estate and infrastructure.
On 5 September, Tata Sons had moved an ‘urgent’ application before the Supreme Court to restrain the SP Group promoters from raising capital by pledging their shares in Tata Sons. Tata Sons argued that any pledge will amount to transfer of shares and that under the company’s Articles of Association (AoA), the board of Tata Sons has the first right to buy the shares.
The SP Group, in its reply on 7 September, said that the AoA prevents transfer of shares and not creation of encumbrance. It said that the move by Tata Sons was aimed at causing “irreparable damage" to SP Group at the time of the covid-19 pandemic.
“The malafide motive of Tatas move was further evident by the fact that Tatas kept their application on hold, purportedly for curing defects, despite moving a plea for urgency before the Supreme Court," the SP Group said in a legal notice sent to the Tata Sons board.
“The sequence of events is evidently aimed at only one objective, to put in jeopardy our client’s (SP Group’s) financial closing to handle the extreme illiquidity conditions being met in these pandemic times," it said.
Tata Sons in its reply on Friday said “the allegation that the listing of the application was somehow deliberately delayed is false and unfortunate and has been made without adequate enquiry in the court registry". It said Tata Sons’ urgent application raises real concerns that SP Group will take steps to “frustrate the legal processes". Mint has reviewed a copy of the reply.