tata-mistry case: SC should have looked at bigger issues beyond Tata-Mistry conflict: Anil Singhvi – The Economic Times

Clipped from: https://economictimes.indiatimes.com/markets/expert-view/sc-should-have-looked-at-bigger-issue-beyond-tata-mistry-conflict-anil-singhvi/articleshow/81705271.cmsSECTIONSSC should have looked at bigger issues beyond Tata-Mistry conflict: Anil SinghviET NowLast Updated: Mar 26, 2021, 03:22 PM ISTSynopsis

SC restricting itself to only Tata-Mistry issues is unfortunate, says the Ican Investment Advisors chairman.

After such an all-out war, how do you expect Tata and Mistry to peacefully sit and decide on the valuation, asks Anil Singhvi, Chairman, Ican Investment Advisors.

With the Supreme Court ruling in favour of the Tata Camp overturning the order of the NCLAT of December 2019 and shooting down claims by Cyrus Mistry of oppression and mismanagement and left the window wide open as far as valuations go and the future course of action. Will the Tata camp even be interested in providing an exit to Cyrus Mistry camp? They have a minority shareholder and they can carry on with business as usual?
Well there are two points. I would have loved it if the Supreme Court lifted itself and looked at corporate governance and larger issues governing the whole corporate world in India but they restricted themselves to only Tata-Mistry issues, which according to me is unfortunate.

The issue was not just removal of Cyrus Mistry. There may have been many reasons for removing Cyrus Mistry. Technicalities are a part but the point is very simple, the family owned a 18% stake. Interest of minority shareholders has to be held up. Otherwise anyone who is holding 51% stake can a “my way or high way” approach. Corporate India should not be ruled that way. So every time when auch matters come to the Supreme Court, the apex court must lift itself up to decide on the larger issue of the law because the Supreme Court’s final verdict becomes the law of the land.

I feel sad that the Supreme Court chose to limit itself to removal of Cyrus Mistry. How would the Supreme Court know what happened in the boardroom? Whether decorum was there, whether ethics was maintained? The point is that the Supreme Court should have looked into whether there was minority oppression. If a minority shareholder as large as Tata Sons owns 18%, they cannot sell the shares and they cannot pledge the shares. When it comes to the valuations, The Supreme Court again told them to sit down and decide. If they could do that, they would not have knocked the doors of the Supreme Court. After such an all-out war, how do you expect Tata and Mistry to peacefully sit and decide on the valuation? Again the matter will come back to Supreme Court.

The whole process has taken a lot of time. Five years are gone and another five years will go like this. The Supreme Court has often said that justice delayed is also justice denied. I do not think there can be any amicable solution or settlement here. The 18% stakeholder needs the money and the question is at what valuation? I do not think this was an issue of reinstatement of Cyrus Mistry. Cyrus himself said that he does not want to be reinstated as Executive Chairman. But the Supreme Court also said that his removal was good and best and it was necessary for Tata Sons. He himself said he does not want to come back but rather he is looking for a solution to sell 18% and till such time it is done, how is his right going to be protected by Tata Sons?

In that sense, this judgement does not resolve the issues for which they were knocking at the doors of the Supreme Court. Many things have remained unanswered, which is unfortunate.

From the market perspective, nobody likes fights, especially these kinds of fights where there is always an overhang. Do you think that this is a one-sided battle that is clearly not going to make a difference to employees, to future investors and the existing investors?
My issue is very simple. The Supreme Court decision should put to rest any controversy, any confusion and it should give a way forward. Has this judgement given any way forward? People go to the Supreme Court after exhausting every other remedial measure from both sides. Has the Supreme Court given us a clear path in which both sides can amicably settle this and reach some conclusions?
Nothing is settled forever. Suppose a similar kind of situation arises, what should be the law of the land? The law has to be more than an event and say going forward what will be the remedial measure. Cases will be dime a dozen because there are a lot of warring factors. We are a very promoter-driven economy and these cases will keep coming to the courts to decide one way or the other.

The Supreme Court should not have seen this as a petty fight between Tata and Mistry and settled this for all. How can the valuation not be the prerogative of the Supreme Court? Time and again, the Supreme Court has intervened in the matter and set up committees to arrive at some decisions. Supreme Court could have done this, saying that they are not sitting on judgment of the valuation but here are the three people who will decide on this valuation. That should have been the resolution to the problem.

Again, it will come. The review petition has to be filed before the same bench. Suppose this judgement was to be delivered on April 22 and Justice Bobde was to retire on April 23. So wouldn’t a review petition be filed just because a judge has retired? I do not agree on this. In the AGR case, the review petition was filed after Justice Mishra’s retirement. So a review petition can always be filed even if Justice Bobde retires.

I feel a lot of things were at stake here. I am not talking about money. We will always have a situation where warring factors will come. Today it is only Tata and Mistry. Tomorrow it could be many private companies. Private equity has invested significant money in Indian companies. What lesson will they get from this? They will learn that the majority shareholders or promoters can do what they wish to do and if they say you cannot sell the shares or pledge the shares, you cannot do it. Do you think private equity investment will come to India?

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