Supreme Court asks Shapoorji Pallonji group to maintain status quo on Tata Sons shares till October 28

The Supreme Court on Tuesday restrained Shapoorji Pallonji group and Cyrus Mistry from pledging or transferring Tata Sons shares owned by them.

A bench presided over by Chief Justice S A Bobde ordered them not to take any further action on the shares they have already pledged for raising money, as the court fixed October 28 as the date for final hearing the appeals related to Tata-Mistry tussle.

After a brief submission by senior advocate Harish Salve, for Tata group and senior counsel C A Sundaram for the opposite side, the court directed the Shapoorji Pallonji Group to maintain status quo regarding pledging of their shares held in Tata Sons and not take any further action concerning transfer of pledgings already made.

"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 said in its order.

Salve alleged mischief was being conducted by the group. He asked the court to stop sale of shares. In four weeks, the situation may be beyond the repairs, if it was not stopped.

Sundaram, for his part, said Tata Sons' actions caused havoc and throttled him. He claimed the group had 60,000 employees and one lakh workers to feed.

The move by Tata Sons came after Pallonji Group's agreement with Canada based Brookfield to raise Rs 3,750 crore by pledging Tata Sons shares.

Tata Sons relied upon Articles of Association (AoA) to claim that it restricted Pallonji Group from transferring shares, without allowing Tata Sons right of first refusal.

The Shapoorji Pallonji Group, through its two investment firms, Cyrus Investments and Sterling Investments, held around 18% in Tata Sons.

The group opposed Tata Sons plea, on the ground that pledging of shares was not the same as transferring ownership of shares.

On January 10, the top court had stayed the NCLAT order restoring Mistry as executive chairman of the Tata Group, observing that there were "lacunae" in the orders passed by the tribunal.

NCLAT had on December 18 ordered reinstatement of Mistry as the head of Tata Sons, the holding company of USD 110 billion salt-to-software conglomerate, saying his 2016 sacking was wrong.