The Supreme Court on Tuesday asked the Mistry family-owned Shapoorji Pallonji (SP) Group to maintain the status quo of pledging 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 the shares that had been pledged.
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“By consent of the parties, list the main appeals and connected appeals along with the instant interlocutory application on October 28 for final disposal. In the meantime, the parties shall maintain status quo regarding transfer and pledging of shares and further action in regard to the transfer and pledging of shares already made”, the court order read.
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The SP Group owns 18.37% stakes in Tata Sons’, the 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 the SP Group, said his client could not be prevented from pledging its shares.
‘A limited transfer’
Chief Justice Bobde orally remarked, “Pledging is a limited transfer... Not an unrestricted transfer, but a restricted transfer”.
Before the court ordered status quo, senior advocate Harish Salve, for Tata Sons, said his client may be open to buying the SP Group’s shares at a fair market value. He indicated this would be preferable to the shares going into the hands of some unfavourable entities. 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?”, he said.
But Mr. Salve indicated that the situation may be “beyond repair” if the SP Group went 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 said.
Finally, the court decided to order status quo.