TATA CONSULTANCY SERVICES LIMITED v. CYRUS INVESTMENTS PVT. LTD. AND ORS.

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A asked is whether such a removal tantamount to a conduct oppressive or prejudicial to some members. Even in cases where the Tribunal finds that the removal of a Director was not in accordance with law or was not justified on facts, the Tribunal cannot grant a relief under Section 242 unless the removal was oppressive or prejudicial. B 16.29 There may be cases where the removal of a Director might have been carried out perfectly in accordance with law and yet may be part of a larger design to oppress or prejudice the interests of some members. It is only in such cases that the Tribunal can grant a relief under Section 242. The Company Tribunal is not a labour Court or an administrative Tribunal to focus entirely on the manner of removal of a C person from Directorship. Therefore, the accolades received by CPM from the Nomination and Remuneration Committee or the Board of Directors on 29.6.2016, cannot advance his case. 16.30 A contention was raised that CPM’s removal was a pre- meditated act, carried out at the behest of Tata Trusts and RNT and that D the removal was not only contrary to Article 118, but also contrary to Article 105(a) read with the second proviso to Section 179(1) and Article 122(b). 16.31 As we have pointed out above, the validity of and justification for the removal of a person can never be the primary focus of a Tribunal E under Section 242 unless the same is in furtherance of a conduct oppressive or prejudicial to some of the members. In fact the post of Executive Chairman is not statutorily recognised or regulated, though the post of a Director is. At the cost of repetition it should be pointed out that CPM was removed only from the post of (or designation as) F Executive Chairman and not from the post of Director till the Company Petition was filed. But CPM himself invited trouble, by declaring an all out war, which led to his removal from Directorship. 16.32 It is true that as per the evidence available on record he was requested before the Board meeting, to step down from the post of G Executive Chairman. That does not tantamount to the act being pre- meditated. The induction of new members on 8.8.2016 into the Board and the Board securing a legal opinion prior to the Board meeting, cannot make the act a pre-meditated one. There is a thin line of demarcation between a well-conceived plan and a pre-meditated one and the line can many times be blurred. H

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16.33 Article 118 around which arguments were advanced reads A as follows: “118. APPOINTMENT OF CHAIRMAN For the purpose of selecting a new Chairman of the Board of Directors and so long as the Tata Trusts own and hold in the aggregate at least 40% of the paid up Ordinary Share Capital B of the Company for the time being, a Selection Committee shall be constituted in accordance with the provisions of this Article to recommend the appointment of a person as the Chairman of the Board of Directors and the Board may appoint the person so recommended as the Chairman of the Board of C Directors, subject to Article 121 which requires the affirmative vote of all Directors appointed pursuant to Article 104B. The same process shall be followed for the removal of the incumbent Chairman. The Selection Committee shall comprise – (a) Three (3) persons nominated jointly by the Sir Dorabji Tata Trust and the Sir Ratan Tata Trust who may or may not be Directors of the Company, (b) one (1) person nominated by and from amongst the Board of Directors of the Company and (c) one (1) independent outside person selected by the Board for this purpose. The Chairman of the Committee will be selected by the Sir Dorabji Tata Trust and the Sir Ratan Tata Trust from amongst the nominees nominated by the Trusts. The quorum for a meeting of the Selection Committee shall be the presence of a majority of members nominated jointly by the Sir Dorabji Tata Trust and the Sir Ratan Tata Trust. Explanation: The words “nominated jointly’ used in this Article shall mean that the Sir Dorabji Tata Trust and the Sir Ratan Tata Trust shall together decide the nominees. In the case of any difference, the decision of the majority of the Trustees in the aggregate of the Sir Dorabji Tata Trust and the Sir Ratan Tata Trust shall prevail.” 16.34 The sentence in Article 118 reading “the same process shall be followed for the removal of incumbent Chairman” actually H

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A goes along with the last limb of the portion immediately preceding this line. It deals with the appointment of a person as Chairman, pursuant to the recommendation of a Selection Committee, subject to Article 121 which requires the affirmative vote of the Directors appointed in terms of Article 104B. B 16.35 It is absurd to interpret Article 118 to mean that Selection Committee is to be constituted for the removal of an incumbent Chairman. The necessity for taking recourse to the affirmative voting right under Article 121 is what is meant by the expression “the same process” appearing in the second part of Article 118. C 16.36 The argument pitched upon Article 105(a) is also completely unfounded. Article 105(a) deals with the power of the Board to appoint a Managing Director, Joint/Deputy Managing Director or Whole Time Director. The provision relating to Executive Chairman is not to be found in Article 105(a) but in Article 105(b) which reads as follows:

D “The Board shall have the power to designate the Chairman of the Board as the Executive Chairman and pay him such remuneration as, in their opinion, they deem fit”. Therefore, the argument on the basis of Article 105(a) is ill- founded. E 16.37 The contention that the removal was in violation of the second proviso to Section 179(1) read with Article 122(b) is also ill- conceived. The second proviso to Section 179(1) prohibits the Board from exercising any power that could be exercised by the company only in a General Meeting. Article 122(a) is only a reiteration of the principle behind the second proviso to Section 179(1). Article 122(b) says that the Board may exercise all such powers as are not required to be exercised by the company in General Meeting. The designation of a person as Executive Chairman, is not one of the functions to be performed in a general meeting, either under the Act or under the Articles of association. 16.38 It is also contended that no advance notice of his removal was given to CPM and no agenda item was placed in advance in terms of Article 121B, which reads as follows: “121B. Any Director of the Company will be entitled to give at least fifteen days notice to the Company or to the Board that any matter or resolution be placed for deliberation by H

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A in a park. The Court found the decision taken by the Mahapalika to be in clear breach of Sections 91 and 119 of the U.P. Municipal Corporation Act, 1959. Therefore, the said decision has no application. 16.42 In any event the removal of a person from the post of Executive Chairman cannot be termed as oppressive or prejudicial. The B original cause of action for the complainant companies to approach NCLT was the removal of CPM from the post of Executive Chairman. Though the complainant companies padded up their actual grievance with various historical facts to make a deceptive appearance, the causa proxima for the complaint was the removal of CPM from the office of Executive Chairman. His removal from Directorship happened subsequent to the C filing of the original complaint and that too for valid and justifiable reasons and hence NCLAT could not have laboured so much on the removal of CPM, for granting relief under Sections 241 and 242. Invocation of just and equitable clause

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administration defined in the statute, which provide some guarantee of commercial probity and efficiency. If shareholders find that these conditions or some of them are deliberately and consistently violated and set aside by the action of a member and official of the company who wields an overwhelming voting power, and if the result of that is that, for the extrication of their rights as shareholders, they are deprived of the ordinary facilities which compliance with the Companies Acts would provide them with, then there does arise, in my opinion, a situation in which it may be just and equitable for the Court to wind up the company.” 16.45 If the above tests are applied, the case on hand will not fall anywhere near the just and equitable standard, for the simple reason that it was the very same complaining minority whose representative was not merely given a berth on the Board but was also projected as the successor to the Office of Chairman. 16.46 In Ebrahimi v. Westbourne Galleries Ltd.8, decided by D House of Lords, one of the Directors who was voted out of office by the other two Directors (father-son duo) petitioned for an order under Section 210 of the English Companies Act, 1948. The very relief sought by the ousted director was for a direction to the other two persons to purchase his shares in the Company or to sell their shares to him on such terms as the Court should think fit. Alternatively, he prayed for winding up. The Court of the first instance held that a case for winding up had been made out, as the majority was guilty of abuse of power and a breach of good faith which the partners owed to each other not to exclude one of them from all participation in the business. The court of Appeal reversed it by applying the tests of (i) bonafide exercise of power in the interest of the company; and (ii) whether a reasonable man could think that the removal was in the interest of the Company. While reversing the decision of the Court of Appeal, the House of Lords held, that “the formula ‘bonafide interest of the company’ should not become little more than an alibi for a refusal to consider the merits of the case.” Holding G that, “equity always does enable the Court to subject the exercise of legal rights to equitable considerations namely considerations that is of a personal character”, the House of Lords added some caution in the following words:- 8 [1972] 2 WLR 1289 H

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A “The superimposition of equitable considerations requires something more, which typically may include one, or probably more, of the following elements: (i) an association formed or continued on the basis of a personal relationship, involving mutual confidence – this element will often be found where a pre-existing partnership has been converted into a limited company; (ii) an agreement, or understanding, that all, or some (for there may be “sleeping” members), of the shareholders shall participate in the conduct of the business; (iii) restriction upon the transfer of the members’ interest in the company – so that if confidence is lost, or one member is removed from management, he cannot take out his stake and go elsewhere.” 16.47 But it must be remembered that the origin of just and equitable clause is to be traced to the Law of Partnership which has developed, according to the House of Lords, “the conceptions of probity, good faith and mutual confidence”. Having said that, Ebrahimi pointed out that the reference to quasi partnerships or “in-substance partnerships” is also confusing for the reason that though the parties may have been partners in their ‘Purvashrama’, they had become co-members of a company accepting new obligations in law. Therefore, “a company, however small, however domestic, is a company and not a E partnership or even a quasi partnership”. 16.48 That, “for superimposing an equitable fetter on the exercise of the rights conferred by the Articles of Association, there must be something in the history of the company or the relationship between the shareholders”, is fairly well settled9. F 16.49 In Lau v. Chu10, the House of Lords indicated, “that a just and equitable winding up may be ordered where the company’s members have fallen out in two related but distinct situations, which may or may not overlap”. The first of these is labelled as, “functional dead lock”, where the inability of members to cooperate in the management of the G company’s affairs leads to an inability of the company to function at Board or shareholder level. The House of Lords pointed out that functional dead lock of a paralysing kind was first clearly recognised as

9 Re Saul D. Harrison and Sons Plc. 1994 BCC 475 10 H [2020] 1 WLR 4656

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a ground for just and equitable winding up In Re Sailing Ship Kentmere A Co.11. The second of these is where a company is a corporate quasi partnership and an irretrievable breakdown in trust and confidence between the participating members has taken place. In the first type of these cases, where there is a complete functional dead lock, winding up may be ordered regardless whether the company is a quasi partnership or not. But in the second type of cases, a breakdown of trust and confidence is enough even if there is not a complete functional dead lock. 16.50 Therefore, for invoking the just and equitable standard, the underlying principle is that the Court should be satisfied either that the partners cannot carry on together or that one of them cannot certainly carry on with the other12. 16.51 In the case in hand there was never and there could never have been a relationship in the nature of quasi partnership between the Tata Group and S.P. Group. S.P. Group boarded the train half-way through the journey of Tata Sons. Functional dead lock is not even pleaded nor proved. 16.52 Coming to the Indian cases, this court held in Rajahmundry Electric Supply Corpn. Ltd. v. Nageshwara Rao 13 that for the invocation of just and equitable clause, there must be a justifiable lack of confidence on the conduct of the directors, as held. A mere lack of confidence between the majority shareholders and minority shareholders would not be sufficient, as pointed out in S.P. Jain v. Kalinga Tubes Ltd. 14 16.53 It was contended repeatedly that lack of probity in the conduct of the directors is a sufficient cause to invoke just and equitable clause. Drawing our attention to the landmark decision in Needle F Industries (India) Ltd. and Ors. v. Needle Industries Newey (India) Ltd. and ors.15, it was contended that even the profitability of the company has no bearing if just and equitable standard is fulfilled and that the test is not whether an act is lawful or not but whether it is oppressive or not.

(1955) 2 SCR 1066

14 AIR 1965 SC 1535 15 (1981) 3 SCC 333 H

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A 16.54 But all these arguments lose sight of the nature of the company that Tata Sons is. As we have indicated elsewhere, Tata Sons is a principal investment holding Company, of which the majority shareholding is with philanthropic Trusts. The majority shareholders are not individuals or corporate entities having deep pockets into which the dividends find their way if the Company does well and declares dividends. B The dividends that the Trusts get are to find their way eventually to the fulfilment of charitable purposes. Therefore, NCLAT should have raised the most fundamental question whether it would be equitable to wind up the Company and thereby starve to death those charitable Trusts, especially on the basis of un-charitable allegations of oppressive and prejudicial conduct. Therefore, the finding of NCLAT that the facts otherwise justify the winding up of the Company under the just and equitable clause, is completely flawed.

17Copy pinpoint17. Question of Law No.2 17.1 The second question of law arising for consideration is as to whether the reliefs granted and directions issued by NCLAT including the reinstatement of CPM into the Board of Tata Sons and other Tata Companies are in consonance with (i) the pleadings made, (ii) the reliefs sought and (iii) the powers available under Sub-Section (2) of Section 242. E 17.2 As we have indicated in Para 3.4 above, the complainant companies originally sought a set of 21 reliefs listed in para 153 (A) to (U). Subsequently, the complainant companies sought the addition of two more prayers, through an application for amendment filed on 10.2.2017. The additional reliefs sought to be included were for: (i) F reinstatement of a representative of the complainant companies on the Board of Tata Sons and (ii) Amendment of the Articles of Association so as to provide for proportional representation on the Board. 17.3 Thereafter the complainant companies sought a few more prayers through an application for amendment dated 31.10.2017. However, by a Memo dated 12.01.2018 the complainant companies gave G up certain prayers, sought a modification of some other prayers and recorded that they were not pressing certain reliefs. At the cost of repetition, we have to present in a tabular form, the reliefs originally sought and the metamorphosis that they underwent through applications for amendment or Memo. It is as follows: H

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Reliefs as originally sought Reliefs that are added, given A in t he main Compa ny up or restricted through Peititon Additional affidavit dated 31- 10-2017, Application for amendment dated 31-10- 2017 and Memo dat ed 12.1.2018 B (A) Supersede the existing Under Affidavit (31-10-2017) Board of Directors of Respondent conversion of Tata Sons from being No. 1 and ap p oint an a Public Limited Company into a administrator to look after the Private Limited Company is bad day-to-day affairs of Respondent No. 1 with such powers as may Unde r Ap plic ation (31-1 0- C be ne ces sary to tak e suc h 2017) decisions and actions, in the (M-1): Set aside the resolution facts and circumstances of the passed by the shareholders of present case, till such time as a respondent No.1 on September new Board of Directo rs of 21, 2017 insofar as it seeks to Respondent No. 1 is constituted; am end the Articles of D (B) I n the altern ative to Associations and Memorandum prayer (A) above, appoint a retired of Association of Respondent Supreme Court Judge as the No.1 f or conve rsion of non-executive Chairman of the Respondent No.1 into a private Board of Directors of Respondent company. No. 1 and appoint such number (M-2): Strike off/Delete Article of new independent directors of E 75 as the same is a tool in the pro fes sional com pe tence, hand s of the ma jor ity reputation and standing to the share holder s to opp re ss the Board of Directors of Respondent minority; and; No. 1 such that these newly appointed directors constitute (M-3): Pending the final hearing the m ajority of the Board of disposal of the Company Petition, Directors of Respondent No. 1; the effect and operation of the F resolution dated September 21, (C) restrain the so-called 2017 be stayed. “Inter im Ch air ma n” i.e Respondent No. 2 from attending (F-1): Direct Respondent No.1 any meeting of the Board of and/or Respondent No. 2 to 10 Directors of Respondent No. 1, and 1 2 to 2 2 to re ins tate a or sub-committee thereof and/or representative of the Petitioners G inter fer ing in the af fairs of on the Board of Respondent No.1 Respondent No. 1; (G-1): Direct that the Articles of (D) restrain Respondent No. Association of Respondent No.1 14 from interfering in the affairs be amend ed to p rovid e fo r of Respondent No. 1; proportionate representation of H

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A (E) direct Respondent No. 1 shareholders on the Board of not to issue any securities which Directors of Respondent No.1 results in dilution of the present paid-up equity capital held by the Under Memo (12-01-2018) Petitioners in Respondent No. 1; Praye r M , which so ught the striking of Articles 86, 104(B), 118, (F) direct Respondent No. 1 121 and 121A, and striking of a B and/or Respondent Nos. 2 to 10 portion of Article 124, is restricted and 12 to 22 not to remove as under: Respondent No. 11 as a director from the Board of Respondent i. The ne cessity of an No.1; aff irm ative v ote o f the (G) restrain Respondent No. majority o f d ir ectors 1 and/or Respondent Nos. 2 to 10 nominated by the Trusts, C which are m ajor ity of and 12 to 22 from making any chang e s to the Artic les of shareholders, be deleted; Association of Respondent No. 1 ii. The Petitioners be entitled unless such changes have been to p ro portionate made w ith the le av e of this representation on Board of Hon’ble Tribunal; Directors of Respondent D No.1; (H) order and investigation into the role of the Trustees of iii. The Petitioners be entitled the Tata Trusts in the operations to rep resentation on all of Respondent No. 1 and/or Tata committees formed by the Group companies as also in the Board of D irectors of function ing o f the Boa rd of Respondent No.1; and E Directors of Respondent No. 1 and /or Tata Group companies, iv The Articles of Association and prohibit the Trustees from be amended accordingly. inter fer ing in the af fairs of Prayers A, B and C were not Respondent No. 1 and/or Tata pressed. Group companies; Praye rs F, Q and R, being F (I ) appoint an independent infructuous were not pressed auditor to conduct a forensic audit and independent investigation into transactions and dealings of Respondent No. 1 with particular regard to: (i) all transactions between G Mr. C. Sivasankaran and his business entities on the one hand, and the Respondent No. 1 and various Tata Group companies under the control of Respondent No. 1 or of H which Respondent No. 1 is the

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promoter on the other hand, to A determine and crystallize the breach of trust, violation of fiduciary duties and failure to discharge the duty of care, and fix accountability therefor; and B (ii) all transactions involving Mr. M ehli Mis try a nd his ass ociated entities with Respondent No. 1 and/or Tata Group companies whereby any unjust enrichment has been generated in favour of any these parties; and submit a report to this Hon’ble Tribunal such that this Hon’ble Tribunal can pass such further orders as may be necessary so as to recover from concerned persons the loss that has been caused inter alia to the Petitioners and such finding s of the aud it and inves tig ation s hou ld b e referred by the Hon’ble Tribunal E to the Ser io us Fr au d Inves tig ation Offi ce of the Ministry of Corporate Affairs, Government of India; (J) App oint an insp ector (und er app licab le la w) to investigate into the breach of the SEBI ( Prohi bition of I nsider Trading) Regulations, 2015, with particular regard to the breach by Resp ond e nt No . 2 and Resp ond e nt N o. 14 , of the obligation not to procure, demand or acquire unp ub lished price sensitive information and submit a report to this Hon’ble Tribunal such that this Hon’ble Tribunal can pass such further orders as may be necessary and/or refer the H

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A findings of such investigation to the Serious Fraud Investigation Office of the Ministry of Corporate Affairs, Government of India. (K) direct Respondent No.2 to pay Respondent No. 1 the amount B of unjust enrichment that has accrued to Respondent No. 2 on account of surrender of the sub- tenancy of the Bakhtawar flat, along with interest at such rate as this Hon’ble Tribunal may deem fit, from the date on which the C Respondent No. 2 was unjustly enriched; (L) appoint a forensic auditor to re-investigate the transactions executed by AirAsia India with entities in India and Singapore to D ascertain whether any proceeds have been diverted to any secret bank account of Mr. Venkatraman and to submit a report to this Hon’ble Tribunal; such that this Hon’ble Tribunal can pass such furth er or d er s as m ay b e E necessary so as to recover from Mr. Venkatraman the loss that has been caused inter alia to the Petitioners; and such findings of the audit should be referred by the Hon’ble Tribunal to the Serious Fraud Investigation Office of the F Ministry of Corporate Affairs, Government of India; (M) strik e of Artic les numbered 86, 104(B), 118, 121 and 121A in their entirety and in so far as Article 124 of the Articles of G Association of Respondent No. 1 is concerned, the following portion of the s aid Arti cle, which is offend ing and / or re pu g nant, sho uld b e del eted: “… Any committee empowered to decide on matters which otherwise the H

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Board is authorised to decide shall A have as its member at least one director appointment pursuant to Articl e 1 04 B. The Prov isions relating to quorum and the manner in which matters will be decided contained I Articles 115 and 121 B respectively shall apply mutatis mutandis to the proceedings of the committee. “ from the Articles of Association of Respondent No. 1; and substitute these articles with such articles as the nature and circumstances of this case may require; (N) direct the Respondents (excluding Respondent Nos. 4, 10 &11) to bring back into Respondent No. 1 , the fund s u sed by Respondent No. 1 for acquiring shares of Tata Motors; (O) restrain Respondent No. 1 from initiating any new line of business or acquiring any new bus ine ss in e xis ti ng lines of business without leave of this Hon’ble Tribunal and that too only after the matter is discussed and decided upon by the Board of Directors of Respondent No. 1 without applying Article 121 of the Articles of Association; (P) restrain the trustees of the Trusts from interfering in the affairs of Respondent No. 1 and in the various companies that form part of the Tata Group; (Q) res tr ain the ex isting Selection Committee from acting any further and/or discharging any functions and a new Selection Committee be appointed. (R) direct that no candidate selec te d by the Selectio n Committee constituted pursuant H

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A to Article 118 of the Articles of Association of Respondent No. 1 to be appointed without leave of this Hon’ble Tribunal; (S) direct Respondent No. 1 not to demand and/or procure any B unp ub lished p r ic e sensitive infor m ation fr om any lis ted operating companies within the Tata Group; (T) g rant inte rim an d ad - interim reliefs in terms of Prayers C (A) to (S) above; and (U) pass such further orders that this Hon’ble Tribunal may, in the i nte res t of ju stice, d eem necessary for bringing an end to the acts o f opp r essio n and mismanagement in the running of D Respondent No. 1.

17.4 Therefore, after all the confusion created by affidavits, application for amendment and the memo mentioned above, the reliefs that remained to be considered by NCLT were as follows:

E (1) restrain Respondent No. 14 (N.A. Soonawala) from interfering in the affairs of Respondent No. 1; (Relief clause D) (2) direct Respondent No. 1 (Tata Sons) not to issue any securities which will result in dilution of the paid- F up equity capital; (Relief clause E) (3) restrain the Respondents from making any changes to the Articles of Association of Respondent No. 1 without the leave of the Tribunal; (Relief clause G) (4) order an investigation into the role of the Trustees G of the Tata Trusts in the operations of Respondent No. 1, the Tata Group companies as also in the functioning of the Board of Directors of Respondent No. 1 and Tata Group companies, and prohibit the Trustees from interfering in the affairs of Respondent No. 1 and Tata Group companies; (Relief clause H) H

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(5) appoint an independent auditor to conduct a forensic A audit and independent investigation into transactions and dealings of Respondent No. 1 with particular regard to: (i) Mr. C. Sivasankaran and his business entities; and B (ii) Mr. Mehli Mistry and his associated entities; and submit a report to this Hon’ble Tribunal and investigation should be referred by the Hon’ble Tribunal to the Serious Fraud Investigation Office C of the Ministry of Corporate Affairs, Government of India; (Relief clause I) (6) Appoint an inspector (under applicable law) to investigate into the breach of the SEBI (Prohibition of Insider Trading) Regulations, 2015. (Relief clause D J) (7) direct Respondent No.2 to pay Respondent No. 1 the amount of unjust enrichment that has accrued to Respondent No. 2 on account of surrender of the sub-tenancy of the Bakhtawar flat; (Relief clause E K) (8) appoint a forensic auditor to re-investigate the transactions executed by Air Asia India with entities in India and Singapore; (Relief clause L) F (9) Read down and amend Articles 86, 104B, 118, 121 and 121A as well as Article 124 so that: i. The necessity of an affirmative vote of the majority of directors nominated by the Trusts, which are majority of shareholders, be deleted; G

ii. The Petitioners be entitled to proportionate representation on Board of Directors of Respondent No.1;

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A iii. The Petitioners be entitled to representation on all committees formed by the Board of Directors of Respondent No.1; ((Relief clause M restricted through memo dated 12-01- 2018) B (10) Set aside the resolution passed on 31-09-2017 for amendment of the Articles and declare the conversion of Tata Sons into a private company as illegal (Additional Relief sought to be included as clause M-1 through Application for amendment) C (11) To delete Article 75 (Additional Relief sought to be included as clause M-2 through Application for amendment) (12) To reinstate a representative of the petitioners on the D Board (Additional Relief sought to be included as clause F-1 through Application for amendment) 17.5 Out of the aforesaid reliefs that came to stay till the end, NCLAT granted only certain reliefs, which in simple terms, were as follows:- E (i) Setting aside the removal of CPM and directing his reinstatement both as Executive Chairman of Tata Sons and as Director of other Tata Companies for the rest of the tenure. (ii) Restraining RNT and the nominees of Tata F Trust from taking any advance decision. (iii) Restraining Tata Sons from exercising its power under Article 75 against the complainant companies and other minority members, except in exceptional circumstances and in the interest G of the Company and that too after recording reasons and informing the affected parties. (iv) Setting aside the decision of the Registrar of Companies recognising Tata Sons conversion into a Private Company. H

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17.6 Thus NCLAT granted to the complainant companies (and A indirectly to CPM) four reliefs namely: (i) reinstatement of CPM; (ii) declaring Tata Sons as a Public Limited Company; B (iii) restraining the nominee Directors and RNT from taking any decision in advance and (iv) restraining the invocation of Article 75 except in exceptional circumstances. We shall now see whether NCLAT could have granted any of these reliefs. Reinstatement of CPM 17.7 Removal and reinstatement are two different things. We have dealt with the issue of removal of CPM, while answering question of law No.1, in the context of whether it was part of a scheme of oppressive and prejudicial conduct. Now we shall deal with the issue of reinstatement in the context of the contours of section 242(2) and the nature of the orders that could be passed. 17.8 As we have seen already, the original motive of the complainant companies, was to restrain Tata Sons from removing CPM E as Director. Subsequently, there was a climb down and the complainant companies sought what they termed as “reinstatement” of a representative of the complainant companies. Thereafter, it was modulated into a cry for proportionate representation on the Board. 17.9 In this background it was repeatedly argued both before the F NCLAT and before this Court that the objective of the litigation was not to have CPM reinstated, but only to set things right in the State of Denmark (of which CPM himself was the Premier for 4 years). But interestingly, NCLAT understood what the complainant companies and CPM actually wanted, though they attempted to camouflage their G intentions with legal niceties. Therefore, despite there being no prayer for reinstatement of CPM either as a Director or as an Executive Chairman of Tata Sons, NCLAT directed the restoration of CPM as Executive Chairman of Tata Sons and as Director of Tata Companies for the rest of the tenure. H

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A 17.10 While granting much more than what the complainant companies and CPM themselves thought as legally feasible, NCLAT failed to notice one important thing. The appointment of CPM as Executive Deputy Chairman of Tata Sons, was to be for a period of 5 years from 01.04.2012 to 31.03.2017, subject to the approval of the shareholders. In the Meeting of the shareholders held on 01.08.2012, the appointment of B CPM as Executive Deputy Chairman was approved and the General Body left it to the Board to re-designate CPM as Chairman. Accordingly, the Board re-designated CPM as Executive Chairman, with effect from 29.12.2012, by a resolution passed on 18.12.2012. 17.11 The judgment of the NCLAT was passed on 18.12.2019, by which time, a period of nearly 7 years had passed from the date of CPM’s appointment as Executive Chairman. Therefore, we fail to understand : (i) as to how NCLAT could have granted a relief not apparently sought for (though wished for); and (ii) what NCLAT meant by reinstatement “for the rest of the tenure”. That the question of reinstatement will not arise after the tenure of office had run its course, is a settled position. In this regard, we may refer to the decisions in Raj Kumar Dey vs. Tarapada Dey16 and Mohd. Gazi vs. State of Madhya Pradesh17. While so, it is incomprehensible that the NCLAT directed reinstatement, and that too, of a Director of a company, after the expiry of his term of office. Needless to say that such a remedy would not have been granted even by a labour court/service Tribunal in matters coming within their jurisdiction. 17.12 In fact NCLAT has gone to the extent of reinstating CPM not only on the Board of Tata Sons, but also on the Board of Tata group companies, without they being parties, without there being any complaint against those companies under section 241 and without there being any prayer against them. These companies have followed the procedure prescribed by Statute and the Articles and they have validly passed resolutions for his removal. For instance, TCS granted an opportunity to CPM and held a general meeting in which 93.11% of the shareholders, including public institutions who hold 57.46% of shares supported the resolution. In any case CPM’s tenure itself was to come to an end on 16.06.2017 but NCLAT passed the impugned order reinstating him “for the rest of the tenure”. In respect of other companies which had convened 16 (1987) 4 SCC 398 17 H (2000) 4 SCC 342

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the EGM for considering the resolution for his removal, CPM submitted A resignations. But now by virtue of the impugned order, CPM will have to be reinstated even on the Board of companies from which he has resigned. This is why even the complainant companies have found it extremely difficult to support the order. 17.13 As an aside, we should record here, the words of gratitude B (if any) expressed by CPM himself in the meeting of the Board of Tata Sons on 18.12.2012, immediately after the resolution appointing him as Executive Chairman was carried through unanimously. This is what CPM said in the Board Meeting dated 18.12.2012:- “Mr. Mistry responded by saying that – “the past one year C has been a great learning experience under the direct guidance of Mr. Ratan Tata. The TATA Group is founded on strict values. We will face all the ups and down, whatever may lie in our path. We are ready to face all the challenges that will come our way. The Board recognises the stellar contribution of Mr. Ratan Tata and wishes, to designate him D Chairman Emeritus. We shall continue to seek his guidance on significant matters.” 17.14 It is interesting to note that at the time of his appointment in December 2012, what CPM saw and acknowledged, was a “great learning experience he had under the direct guidance of RNT”, but at the time of departure in October 2016, what he saw was only a conduct for over 10 years, that was oppressive and prejudicial to the interests of the company and of the minority. NCLAT failed to take note of this, while granting reliefs neither sought for nor feasible in law. 17.15 NCLAT appears to have granted the relief of reinstatement gratis without any foundation in pleadings, without any prayer and without any basis in law. By doing so, the NCLAT has forced upon the appellant an Executive Chairman, who now is unable to support his own reinstatement. 17.16 The NCLAT has found the dismissal to be illegal and not a G nullity. In law, a dismissal even if found to be wrongful and malafide is an effective dismissal and may give rise to a claim in damages. In Dr. S.B. Dutt vs. University of Delhi18 this Court held: -

18 1959 SCR 1236 H

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A “The award held that the appellant had been dismissed wrongfully and malafide. Now, it is not consequential to such a finding that the dismissal was of no effect, for a wrongful and malafide dismissal is nonetheless an effective dismissal though it may give rise to a claim in damages. The award, no doubt, also said that the dismissal of the appellant was ultravires but as will be seen later, it did not thereby hold the act of dismissal to be a nullity and, therefore, of no effect.” 17.17 It is significant that Sections 241 and 242 of the Companies Act, 2013 do not specifically confer the power of reinstatement, nor we would add that there is any scope for holding that such a power to reinstate can be implied or inferred from any of the powers specifically conferred. 17.18 The following words at the end of sub-section (1) of 242 “the Tribunal may, with a view to bringing to an end the matters complained of, make such order as it thinks fit” cannot be interpreted as conferring on the Tribunal any implied power of directing reinstatement of a director or other officer of the company who has been removed from such office. These words can only be interpreted to mean as conferring the power to make such order as the Tribunal thinks fit, where the power to make such an order is not specifically conferred but is found necessary to remove any doubts and give effect to an order for which the power is specifically conferred. For instance, sub-section (2) of Section 242 confers the power to make an order directing several actions. The words by which sub-section (1) of Section 242 ends, supra can be held to mean the power to make such orders to bring an end, matters for which directions are given under sub-section (2) of Section 242.

F 17.19 The architecture of Sections 241 and 242 does not permit the Tribunal to read into the Sections, a power to make an order (for reinstatement) which is barred by law vide Section 14 of the Specific Relief Act, 1963 with or without the amendment in 2018. Tribunal cannot make an order enforcing a contract which is dependent on personal qualifications such as those mentioned in Section 149(6) of the Companies G Act, 2013. Moreover, it has been held in the case of Vaish Degree College (supra) that the general rule is that a contract of personal services is not specifically enforceable unless a person who is removed from service is (a) a public servant who has been dismissed from service in contravention of provisions of Article 311 of the Constitution of India; H (b) dismissed under Industrial Law seeking reinstatement by Labour or

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Industrial Tribunal; and (c) terminated in breach of a mandatory obligation imposed by statute by a statutory body. The Court observed:- “17. On a consideration of the authorities mentioned above, it is, therefore, clear that a contract of personal service cannot ordinarily be specifically enforced and a court normally would not give a declaration that the contract subsists and the employee, even after having been removed from service can be deemed to be in service against the will and consent of the employer. This rule, however, is subject to three well recognised exceptions — (i) where a public servant is sought to be removed from service in contravention of the provisions of Article 311 of the Constitution of India; (ii) where a worker is sought to be reinstated on being dismissed under the Industrial Law; and (iii) where a statutory body acts in breach or violation of the mandatory provisions of the statute.” 17.20 The position in law that a contract of personal services cannot be enforced by Court is a long standing principle of law and cannot be displaced by the existence of any implied power, though none is shown in the present case. This is described as the Principle of Legality19:- “As statutes are not enacted in a vacuum, it is assumed that long standing principles of constitutional law and administrative law are not displaced by use of merely general words. This is styled as the principle of legality. In the words of SIR JOHN ROMILLY: “The general words of the Act are not to be so construed as to alter the previous policy of the law, unless no sense or meaning can be applied to those words consistently with the intention of preserving the previous policy untouched.” Since every new law involves some change the above statement of LORD ROMILLY must be applied with caution and should be normally confined to cases where ‘the abrogation of a long standing rule of law is in question’. There are many presumptions which an interpreter is entitled to raise which are not readily displaced merely by use of general words, e.g., an intention to bind the Crown or an intention to exclude the supervisory jurisdiction of superior courts will not be inferred merely by use of general words. It is an application of the same principle that unless there be clearest provision to the contrary, Parliament is presumed not 19 Principles of Statutory Interpretation 14 th Edition by Justice G.P. Singh at Page 541 H

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A to legislate contrary to rule of law which enforces ‘minimum standard of fairness both substantive and procedural’. Thus a statutory power though conferred in wide terms has certain implied limitations; provisions excluding challenge to an order have no application when the order is a nullity and a provision excluding an appeal against an order of a criminal court does B not bar an appeal against an order which the court had no power to make. For the same reason, unless the statute expressly or by necessary implication provides otherwise an administrative decision does not take effect before it is communicated to the person concerned.”

C 17.21 It is interesting to note that one of the grounds of challenge to the order of NCLAT, raised by SP group in their appeal C.A.No. 1802 of 2020 is that the Tribunal ought not to have granted the relief of reinstatement. In paragraph 4 of the Memorandum of Grounds of Civil Appeal C.A. No. 1802 of 2020, the complainant companies (SP group) have given a tabulation of the reliefs granted by the Tribunal and the D reliefs that the Tribunal ought to have given instead. Para 4 of the memo of grounds of appeal along with a portion of the Table there under reads as follows: “4. Having correctly arrived at these findings, it is submitted that the Ld. NCLAT ought to have granted the reliefs sought. For ease of reference, the reliefs granted by the Ld. NCLAT E under the various heads of oppression as against certain key reliefs sought by the Appellants, which the Ld. NCLAT has not granted and which the appellants are aggrieved by, are summarized in the tabular form below:-

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17.22 Thus the relief of reinstatement granted by the Tribunal, A was too big a pill even for the complainant companies (and perhaps CPM) to swallow. Relief relating to Article 75 17.23 The larger questions revolving around the attack to Article 75, particularly the question whether the very presence of such an article B could be construed as oppressive and prejudicial to some members, will be dealt with in the next chapter concerning question of law No.3. But we shall consider here, the limited question whether the Tribunal could have granted a relief, that has the effect of sending Article 75 into comatose. C 17.24 Actually, the relief in respect of Article 75, technically speaking, could not have been granted by NCLAT. The reason is that in the Company Petition as it was originally filed, there was no prayer challenging Article 75. It was only through an application for amendment dated 31.10.2017 that the complainant companies sought to incorporate D a prayer as Clause M-2 for striking off/ deleting Article 75 on the ground that it is a tool in the hands of majority shareholders to oppress the minority. In the said application for amendment filed on 31.10.2017, the complainant companies sought to include five additional prayers, three of them as Clauses M-1, M-2 and M-3, one of them as Clause F-1 and the last as Clause G-1. The prayer for striking off/deleting Article 75 E was sought to be included in Clause M-2 of Para 153 of the main petition. 17.25 But what happened thereafter is quite interesting. Through a Memo dated 12.1.2018, the complainant companies sought to “not press” the prayers in Clauses (A), (B), (C), (F), (Q) and (R). In addition they sought to restrict the prayer in Clause M, as we have indicated in the table above. There was no indication in the Memo filed on 12.1.2018 as to whether the prayers included as M-1, M-2 and M-3 inserted under the application for Amendment dated 31.10.2017 are to be retained, despite their prayer for restricting the claim made in Clause M. 17.26 It is true that the rigors of CPC and the Evidence Act are not be applicable to Tribunals/Quasi-Judicial Authorities. These rigours do not even apply to Courts dealing with constitutional matters (refer the Explanation under Section 141 CPC). 17.27 Such a concession was incorporated in all Statutes by which quasi judicial Tribunals are created, solely with a view to avoid delay in H

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A the dispensation of justice. But instead of eliminating delay, it has eliminated discipline in pleadings and procedure. 17.28 If it is a Civil Court, the Memo dated 12.1.2018 will be taken to have superseded whatever had been done till then. In such a case, there would have been complete lack of clarity whether the prayer included in Clause M-2 survived despite the Memo restricting prayer made in the Clause-M. 17.29 Even if we take it that the memo dated 12-01-2018 restricted the prayer in clause M alone and not clause M-2, NCLAT could not have muted Article 75 by holding that it cannot be invoked except in exceptional circumstances. This is for the reason that after all, Article 75 just provides for an exit option to the unwilling partner. Even traditionally, the law in England and in India is to pave the way for a safe and honourable exit, when 2 persons in commercial relationship cannot co-exist.

D 17.30 In this context, it will be useful to take note of the nature of the directions that could be issued by a Tribunal, in matters of this nature, as indicated in Clauses (a) to (m) of Sub-section (2) of Section 242. Sub-section (2) of Section 242 has been extracted by us elsewhere and it shows that what is listed in Clauses (a), (b), (c), (e), (f) and (g) of Sub- section (2) of Section 242 are just the same as or similar to Clauses (a) E to (f) of Section 402 of the 1956 Act. Clauses (d), (h), (i), (j), (k) and (l) of Sub-section (2) of Section 242 are new additions under the 2013 Act. 17.31 Fundamentally, the object for the achievement of which, the Tribunal is entitled to pass an Order under Section 242(1) of the 2013 Act, remains just the same, as in the 1956 Act. The words “the F Tribunal may, with a view to bringing to an end the matters complained of, make such order as it thinks fit”, found in the last limb of Sub-section (2) of Section 397 of the 1956 Act, is also repeated in the last limb of Sub-section (1) of Section 242 of the 2013 Act. These words also found a place in the last limb of Sub-section (4) of Section G 153C of the 1913 Act. 17.32 Even Section 210 of the English Companies Act of 1948 used the very same words namely “the Court may, with a view to bringing to an end the matters complained of, make such order as it thinks fit”. Though the English Law made a paradigm shift from ‘oppressive conduct’ to ‘unfairly prejudicial conduct’ under the Companies H

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Act, 1985, the object to be kept in mind by the Court while passing an A order under Section 461 of the English Companies Act, 1985 continued to be almost similar. Section 461(1) enabled the Court to make “such order as it thinks fit for giving relief in respect of the matters complained of”. Section 996 of the English Companies Act, 2006 retained the very same wordings. B 17.33 Therefore, despite the law relating to oppression and mismanagement undergoing several changes, the object that a Tribunal should keep in mind while passing an order in an application complaining of oppression and mismanagement, has remained the same for decades. This object is that the Tribunal, by its order, should bring to an end the matters complained of. C

17.34 In other words the purpose of an order both under the English Law and under the Indian Law, irrespective of whether the regime is one of “oppressive conduct” or “unfairly prejudicial conduct” or a mere “prejudicial conduct”, is to bring to an end the matters complained of by providing a solution. The object cannot be to provide a remedy worse than the disease. The object should be to put an end to the matters complained of and not to put an end to the company itself, forsaking the interests of other stakeholders. It is relevant to point out that once upon a time, the provisions for relief against oppression and mismanagement were construed as weapons in the armoury of the shareholders, which when brandished in terrorem, were more potent than when actually used to strike with. While such a position is certainly not desirable, they cannot today be taken to the other extreme where the tail can wag the dog. 17.35 The Tribunal should always keep in mind the purpose for which remedies are made available under these provisions, before granting relief or issuing directions. It is on the touchstone of the objective behind these provisions that the correctness of the four reliefs granted by the Tribunal should be tested. If so done, it will be clear that NCLAT could not have granted the reliefs of (i) reinstatement of CPM (ii) restriction on the right to invoke Article 75 (iii) restraining RNT and the Nominee Directors from taking decisions in advance and (iv) setting aside the conversion of Tata Sons into a private company.

18Copy pinpoint18. Question 3 18.1 The third question of law to be considered is as to whether NCLAT could have, in law, muted the power of the company under H

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A Article 75 of the Articles of Association, to demand any member to transfer his shares, by injuncting the company from exercising the rights under the Article, even while refusing to set aside the Article. 18.2 Article 75 of the Articles of Association reads as follows:- “ 75. Company’s Power of Transfer B The Company may at any time by Special Resolution resolve that any holder of Ordinary shares do transfer his Ordinary shares. Such member would thereupon be deemed to have served the Company with a sale-notice in respect of his Ordinary shares in accordance with Article 58 hereof, and C all the ancillary and consequential provisions of these Articles shall apply with respect to the completion of the sale of the said shares. Notice in writing of such resolution shall be given to the member affected thereby. For the purpose of this Article any person entitled to transfer an Ordinary share under Article D 69 hereof shall be deemed the holder of such share.” 18.3 At the outset it should be pointed out that the complainant companies did not make a grievance out of Article 75 on the ground that it had been misused in the past and that such misuse tantamount to conduct oppressive or prejudicial to the interests of some of the members. E The sine qua non for invoking Section 241 is that the affairs of the Company should have been conducted or are being conducted in a manner oppressive or prejudicial to some of the members. No single instance even of invocation of Article 75, leave alone misuse, is averred in the main company petition or in the application for amendment. Therefore, NCLAT could not have and should not have made Article 75 F completely ineffective by passing an order of restraint. 18.4 As a matter of fact, NCLAT has agreed, on first principles, that it has no jurisdiction to declare any of the Articles of Association illegal. After having set a benchmark correctly, NCLAT neutralised Article 75 merely on the basis of likelihood of misuse. Section 241(1)(a) provides for a remedy, only in respect of past and present conduct or past and present continuous conduct. NCLAT has stretched Section 241(1)(a) to cover the likelihood of a future bad conduct, which is impermissible in law. 18.5 That Articles of Association of a company constitute a contract among shareholders, is the bedrock of Company Law. In fact, Article 75

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was not an invention of the recent origin in Tata Sons. It has been there A for nearly a century in one form or the other. As we have pointed out elsewhere, the Company was incorporated in the year 1917 and S.P. Group acquired shares nearly after 50 years in the year 1965. Even at that time Article 75 was in existence in a different form. After 1965, Article 75 underwent several rounds of amendments, to which the S.P. B Group, CPM’s father and CPM were parties. CPM himself was a party to an amendment made to Article 75 on 13.09.2000. The Article in its present form was made only on 13.09.2000 and the amendment was unanimously carried through in the presence of and with the consent of CPM. 18.6 A person who willingly became a shareholder and thereby C subscribed to the Articles of Association and who was a willing and consenting party to the amendments carried out to those Articles, cannot later on turn around and challenge those Articles. The same would tantamount to requesting the Court to rewrite a contract to which he became a party with eyes wide open. D 18.7 It is not as though CPM or his father who was also a Director for nearly 25 years, were not aware of or blind to the existence of Article

75. In fact, in the application for amendment filed by the complainant companies on 31.10.2017, seeking to incorporate a challenge to Article 75, the complainant companies stated as follows:- E “…In as much as no occasion had arisen in exercise of the said Article, the petitioners i.e., Respondent Nos. 1 and 2 had taken a conscious decision not to challenge the same. Respondent Nos. 1 and 2 now foresee a real and immediate threat of this Article being misused” F The above pleading on the part of the complainant companies was sufficient to throw the challenge to Article 75 out, as it did not correlate to an actual conduct but the possibility of a future conduct. Section 241 is not intended to discipline a Management in respect of a possible future conduct. G 18.8 It is no doubt true that the Tribunal has the power under Section 242 to set aside any amendment to the Articles that takes away recognised proprietary rights of shareholders. But this is on the premise that the bringing up of amendment itself was a conduct that was oppressive or prejudicial. H

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A 18.9 It was contended that Article 75 was repugnant to Sections 235 and 236 of the Companies Act, 2013. We do not know how these provisions would apply. Section 235 deals with a scheme or contract involving transfer of shares in a Company called the transferor company, to another called the transferee company. Similarly, Section 236 deals B with a case where an acquirer acquired or a person acting in concert with such acquirer becomes the registered holder of 90% of the equity share capital of the Company, by virtue of amalgamation, share exchange, conversion of securities etc. These provisions have no relevance to the case on hand. C 18.10 Even the contention revolving around Section 58(2) is wholly unsustainable, as Section 58(2) deals with securities or other interests of any member of a Public Company. 18.11 Therefore, the order of NCLAT tinkering with the power D available under Article 75 of the Articles of Association is wholly unsustainable. It is needless to point out that if the relief granted by NCLAT itself is contrary to law, the prayer of the S.P. Group in their Appeal C.A. No.1802 of 2020 asking for more, is nothing but a request for aggravating the illegality. E

19Copy pinpoint19. Question 4 19.1 The fourth question of law to be considered is whether the characterisation by the Tribunal, of the affirmative voting rights available under Article 121 to the Directors nominated by the Trusts in terms of F Article 104B, as oppressive and prejudicial, is justified especially after the challenge to these Articles have been given up expressly and whether the Tribunal could have granted a direction to RNT and the Nominee directors virtually nullifying the effect of these Articles.

G 19.2 In the Company Petition as it was originally filed, the complainant companies sought a prayer in Paragraph 153(M) to strike down Articles 86, 104B, 118, 121 and 121A in entirety and to strike off one portion of Article 124. These Articles (other than Article 118, which is extracted elsewhere) read as follows:- H

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“86. Quorum at General Meetings A No quorum at a general meeting of the holders of the Ordinary Shares of the Company shall be constituted unless the members who are personally present are not less than five in number including at least one authorised representative jointly B nominated by the Sir Dorabji Tata Trust and the Sir Ratan Tata Trust so long as the Tata Trusts hold in aggregate at least 40% of the paid-up Ordinary share capital, for the time being, of the Company. Explanation: the words “jointly nominated” used in this C Article shall mean that the Sir Dorabji Tata Trust and the Sir Ratan Tata Trust shall together nominate the authorized representative. In the case of any difference, the decision of the majority of the Trustees in the aggregate of the Sir Dorabji Tata Trust and the Sir Ratan Tata Trust shall prevail.” D

104. General Provisions A. Number of Directors ............ E B. Nomination of Directors So long as the Tata Trusts own and hold in the aggregate at least 40% of the paid up Ordinary share capital, for the time being, of the company, the Sir Dorabji Tata Trust and Sir F Ratan Tata Trust, acting jointly, shall have the right to nominate one third of the prevailing number of Directors on the Board and in like manner to remove any such person so appointed and in place of the person so removed, appoint another person as Director. G The Directors so nominated by the Sir Dorabji Tata Trust and Sir Ratan Tata Trust shall be appointed as Directors of the Company.

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A Explanation: the words ‘acting jointly’ used in this Article shall mean that the Sir Dorabji Tata Trust and Sir Ratan Tata Trust shall together nominate such Directos. In the case of any difference, the decision of the majority of the Trustees in the aggregate of the Sir Dorabji Tata Trust and Sir Ratan B Tata Trust shall prevail.

121. Matters How Decided. Matters before any meeting of the Board which are required to be decided by a majority of the directors shall require *the C affirmative vote of a majority of the Directors appointed pursuant to Article 104B present at the meeting and in the case of an equality of vote’s the Chairman shall have a casting vote.” **121A. The following matters shall be resolved upon by the D Board of Directors: (a) a five-year strategic plan that should include an assessment of the proposed strategic path of the Company, business and investment opportunities, proposed business and investment initiatives and a comparative analysis of similarly situated holding companies, and any alterations to such strategic Plan. (b) an annual business plan structured to form part of the strategic plan, that should include proposed investments, incurring of debts, debt to equity ratio, debt service coverage ratio, projected cash flow of the Company and any alterations to such annual business plan” (c) The incurring or renewal of any debt or other borrowing by the Company, which debt or borrowing causes the cumulative outstanding debt of the Company, to exceed twice its net worth or which debt/borrowing is incurred/renewed at a time when the cumulative outstanding debt of the Company has already exceeded twice its net worth, if not already approved as part of the annual business plan;

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(d) any proposed investment by the Company in securities, A shares, stocks, bonds, debentures, financial instruments, of any sort or immovable property of a value exceeding Rs. 100 Crores if not already approved as part of the annual business plan; B (e) Any increase in the authorized, subscribed, issued or paid up capital of the Company and any issue or allotment of shares by the Company (whether on a rights basis or otherwise) ; (f) Any sale or pledge, mortgage or other encumbrance or C creation of any right or interest by the Company of or over its shareholding in any Tata Company or of or over any part thereof, if not already approved as part of the annual business plan; (g) any matter affecting the shareholding of the Tata Trusts D in the company or the rights conferred upon the Tata Trusts by the Articles of the Company or the shareholding of the Company in any Tata Company if not already approved as part of the annual business plan; E (h) Exercise of the voting rights of the Company at the general meetings of any Tata Company, including the appointment of a representative of the Company under Section 113(1)(a) of the Companies Act, 2013 in respect of a general meeting of any Tata Company and, in any matter concerning the raising of capital, incurring of debt and divesting or acquisition of any undertaking or business of such Tata Company, instructions to such representative on how to exercise the Company’s voting rights. Explanation: the term “Tata Company” used in this article shall, as the context requires, mean each or any of the 4 following companies”

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A Tata Consultancy Services ltd., Tata Steel Limited, Tata Motors Limited, Tata Capital Ltd., Tata Chemicals Ltd., Tata Power Company Ltd., Tata Global Beverages Ltd., The Indian Hotels Company Ltd., Trent Limited, Tata Teleservices (Maharashtra) Limited, Tata Industries Limited, Tata Teleservices Limited, Tata B Communications Limited, Titan Company Limited and Infiniti Retail Limited and any other Company in which the Company (or its subsidiaries) holds twenty percent or more of the paid up share capital and whose name is notified in writing to the Company by the Directors nominated under Article 104B”. C 19.3 But through a Memo dated 12.01.2018, the complainant companies restricted the relief prayed in Paragraph 153(M) to the extent as follows:- (i) the necessity of affirmative voting of the majority of the Directors nominated by the Trusts, which are majority of D shareholders be deleted; (ii) the petitioners be entitled to proportionate representation on the Board of Directors of Respondent No.1; (iii) the petitioners be entitled to a representation on all committees formed by the Board of Directors of Respondent No.1; E and (iv) the Articles of Association be amended accordingly. 19.4 Therefore, what was actually sought by the complainant companies was the deletion of the Article that necessitated the affirmative voting right of the majority of the Directors nominated by the two Trusts. There was no prayer for restraining RNT and the nominee Directors of the Trusts from taking any decision in advance. 19.5 In fact, even the complainant companies are not happy about the relief so granted by NCLAT. In the Table given in Paragraph 4 of their Memorandum of Appeal in C.A.No.1802 of 2020, the complainant companies themselves seek a modification of the relief so granted. This Table found below Paragraph 4 of the Memorandum of Grounds of appeal in C.A.No.1802 of 2020 reads as follows:-

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A 19.6 But for the fact that the complainant companies have also come up with an appeal, we would have simply set aside the order of restraint passed by NCLAT against RNT and nominee Directors, on the ground that there was no such prayer. Now that S.P. Group has come up with an appeal seeking an amplification or modulation of the relief so granted, we shall deal with the challenge to the affirmative voting rights. B Affirmative voting rights 19.7 Under Article 104B, Sir Dorabjee Tata Trust and Sir Ratan Tata Trust, acting jointly, shall have a right to nominate 1/3rd of the prevailing number of Directors on the Board, so long as the Trusts own and hold, in the aggregate, at least 40% of the paid up share capital. Article 121 provides that the matters which require to be decided by a majority of the Directors, shall require the affirmative vote of the majority of Directors appointed under Article 104B. 19.8 Article 121A contains the list of matters to be resolved by the Board of Directors. One of the items included therein is “any matter affecting the share holding of the Tata Trusts in the Company…” 19.9 As seen from the Table under Paragraph 4 of the Memorandum of appeal filed by the S.P. Group in C.A.No.1802 of 2020, they are not seeking, even now, the scrapping of the affirmative voting rights. Interestingly, S.P. Group, through their Memo dated 12.01.2018 wanted the deletion of the Article providing for affirmative voting right. But as per the Table under Paragraph 4 of the Memo of their appeal in C.A.No.1802 of 2020, the complainant companies have now reconciled themselves to the unavoidability of affirmative voting rights but all that they want is that the applicability of affirmative voting right should be restricted to the matters covered by Article 121A. In addition, the complainant companies want a similar affirmative right to be conferred on the nominee Directors of the S.P. Group. 19.10 The swing that the S.P. Group has taken in their position relating to affirmative voting rights is quite funny. To begin with, they sought a prayer for striking off Article 121 in its entirety. Later they restricted their relief, by the Memo dated 12.01.2018, to the deletion of “the necessity of affirmative voting rights”. But now they are fine with the existence of affirmative voting rights for the majority in respect of matters covered by Article 121A, but want a similar right in favour of the nominee directors of the S.P. Group. H

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19.11 The frequent change of position that S.P. Group has taken A and the relief that they now seek, raises a doubt whether it is actually a fight on principles. If affirmative voting rights are bad in principle, we do not know how they may become good, if conferred on S.P. Group also. 19.12 Drawing our attention to Sections 135, 149, 151, 161 166 and 177 of the Companies Act, 2013, it was argued on behalf of SP B group that there is a sea change in the law, after the advent of the 2013 Act and that today a paradigm shift has taken place from ‘corporate majority/democracy’ to ‘corporate governance’ and that every action of the Board has to pass the test of fairness. It is further contended that Directors have a fiduciary responsibility with the highest level of duty and that the same cannot be outsourced. According to the SP group, the C Directors, once appointed, owe their allegiance only to the company and not to their nominators. 19.13 At first blush, these arguments, almost bordering on romantic idealism, appear very attractive. But on a deeper scrutiny, they are bound to get grounded. If we have a look at the history of evolution of corporate enterprises, it can be seen that there are 3 time periods through which development of corporate entities have passed. In the first period, large corporate houses were established by individuals with their own funds and those individuals and their families controlled both ownership and management of these enterprises. In the second time period, when professionalism became the ‘Taraka mantra’, families which promoted enterprises, retained ownership, but appointed professional managers to run the show. Thus ownership got divested from management. In the third time period, social participation increased by leaps and bounds through public issues and listing. This increased the social accountability and social responsibility of corporate entities. Every time a historical shift/change took place, the legal regime had to undergo a change, albeit at snail’s pace. 19.14 As a matter of fact, the Companies Act, 1956 suffered 24 amendments. Major amendments were made first in 1988 and then in 2002, respectively on the basis of the recommendations of the Sachar G Committee and the Report of the Eradi Committee. On August 4, 2004, the Ministry of Company Affairs, published a Concept Paper on Company Law on its website, after which, the Government constituted an Expert Committee under the Chairmanship of Dr. J.J. Irani20. The mandate of 20 Incidentally J.J. Irani was the Chairman of Tata Sons for sometime. H

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A the Committee was to make recommendations on certain issues, one of which was “protecting the interests of stakeholders and investors, including small investors”. This committee’s report crystallised into Companies Bill, 2009, which later became Companies Bill, 2011 and then Companies Act, 2013. B 19.14 It is true that the 2013 Act brought a lot of drastic changes. Some of the salient features of the 2013 Act are: (i) Every company is required to have at least one Director who has stayed in India for a total period of not less than 182 days in the previous calendar year. C (ii) Every listed Public Company is required to have at least one-third of the total number of Directors as independent Directors. (iii) Some Public Companies are required to have at least two independent Directors. D (iv) Every independent Director should give a declaration at the first Board meeting that he meets the criteria of independence. (v) Certain types of Public Companies are required to appoint at least one woman Director. E (vi) Every listed company may appoint a small shareholders’ Director, to be elected by the small shareholders. (vii) The report of the Board of Directors should include a Director’s Responsibility Statement, covering certain aspects F relating to accounting standards, accounting policies and maintenance of accounting records. (viii) Directors of a company are obliged to perform certain duties, such as duty to act in good faith, duty to exercise reasonable care, skill diligence and independent Judgment etc. G (ix) A detailed Code of conduct for independent Directors is stipulated in Schedule IV. This includes guidelines for professional conduct, roles and functions and duties. (x) The resignation or removal of independent Directors should be in accordance with the procedure prescribed. H

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(xi) Independent Directors are required to hold at least one meeting in a year without the attendance of non-independent Directors and members of management and they are entitled in this meeting to review the performance of non-independent Directors and the Board as a whole. They can even review the performance of the Chairperson of the Company and assess the quality, quantity and timeliness of flow of information between the management and the Board. (xii) The Board of Directors of certain companies are required to have certain Committees such as (1) Audit Committee; (2) Nomination and Remuneration Committee and (3) Stakeholders Relationship Committee. C

(xiii) A separate section on Corporate Governance is to be included in the Annual Reports of certain companies, with a detailed compliance Report on Corporate Governance. (xiv) After the advent of the Companies Act, 2013, SEBI D Regulations were also amended, inserting Clause 49 in the Listing Agreement, to enforce compliance with Corporate Governance standards. 19.15 But it must be remembered that the shift under the Companies Act, 2013 is focused on listed and unlisted public companies. E The requirement under Section 149(4) to have at least one-third of the total number of Directors as independent Directors applies only to every listed public company. The requirement under Section 151 to have one Director elected by small shareholders is also applicable only to listed companies. The requirement to constitute an Audit Committee in terms of Section 177(1), a Nomination and Remuneration Committee and the F Stakeholders Relationship Committee in terms of Section 178(1) are also only on listed public companies. 19.16 Insofar as Tata Sons is concerned, the Articles of Association of the Company continue to contain the prescribed restrictions which make it a private company within the definition of the expression under G Section 2(68). Therefore, the provisions discussed above do not apply to Tata Sons. Yet Tata Sons has a Board packed with many people who are ranked outsiders. If the idea was to run Tata Sons purely as a family business, RNT need not have stepped down from the Chairmanship. Today nobody wants to step down from any office, except if afflicted by H

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A brain stroke or sun stroke. As we have seen from the pleadings, the Tata Group was founded by Jamsetji Nusserwanji Tata (1839-1904). It was first established as a private trading firm in 1868 and was later incorporated as a private company on 8.11.1917 under Section 2(13) of the Companies Act, 1913. Later two Trusts were created, one in the year 1919 under the name Sir Ratan Tata Trust and another in 1952 B under the name Sir Dorabji Tata Trust. It was only in 1965 that S.P. Group acquired 48 preference shares and 40 equity shares, from a member of Tata Sons named Mrs. Rodabeh Sawhney. Shri Pallonji Mistry, the father of CPM was inducted as a Non-Executive Director on 25.06.1980, though the Articles of Association did not confer any right of Directorship upon the S.P Group. He stepped down from this position in December, 2004. Thereafter, CPM was appointed as Non-Executive Director on 10.08.2006. Ever since the establishment of the Tata Group in 1868, there have only been six persons who became the Chairmen of the Group. While five of them namely Jamshedji Tata, Sir Dorab Tata, Nowroji Saklatwala, JRD Tata and Ratan Tata belonged to the same family, the sixth person namely CPM was inducted as Executive Chairman by Resolution dated 18.12.2012 with effect from 29.12.2012. Before the said appointment, CPM was identified by a Selection Committee which comprised of the nominees of the two Tata Trusts. This Selection Committee identified CPM as a successor to RNT as E Chairman and appointed him first as Executive Deputy Chairman for a period of five years form 1.04.2012 till 31.03.2017, subject to the approval of the General Body. The General meeting of the shareholders, held on 1.8.2012 approved the appointment of CPM as Executive Deputy Chairman and also left it to the Board to re-designate him as Chairman. This is how the Board, in its meeting dated 18.12.2012 re-designated F CPM as Executive Chairman. 19.17 If the argument relating to corporate governance is carefully scrutinized in the context of the fact: (i) that a large industrial house whose origin and creation was familial, was willing to handover the mantle of heading the entire empire to a person like CPM (a rank outsider to the family); and (ii) that the identification of CPM as the successor to RNT was done by the very same nominees of the two Tata Trusts (who is now accused of interference), then it will be clear that Tata Group was guided by the principle of Corporate Governance (even without a statutory compulsion) and not by tight-fisted control of the management of the affairs of the Group.

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19.18 The provisions of sections 135, 149, 151, 166 and 177 around which the argument relating to corporate governance is fantasised, cannot advance the case of the SP group. Section 135 deals with corporate social responsibility, which in any case is more pronounced in this company due to the fact that charitable trusts hold majority of the shares. Section 149 deals with the requirement to have Directors, section 151 provides for appointment of a Director elected by small shareholders, section 166 enumerates the duties of directors and section 177 and 178 speak of some committees. Some of these provisions such as sections 151, 177 and 178 apply only to listed public companies. Yet, Tata Sons have complied with sections 177 and 178 by constituting necessary committees. 19.19 It was contended that a Director of a Company is to act in good faith in order to promote the objects of the Company for the benefit of all the stakeholders and that he is in a fiduciary capacity vis-a-vis the company. The affirmative voting rights, according to S.P.Group, disabled the nominee Directors from acting independently in the best interests of the company and its stakeholders and that once appointed, the loyalty of the nominee Directors should be to the Company and not solely to the Trusts which nominated him. It was further contended that under Articles 121, 121A and 122, Tata Sons was to be a Board managed Company and that the protective rights conferred under Article 121 were intended to take care of the interests of the Tata Trust, in case they became a minority. E

19.20 According to the S.P. Group, the pre-consultation/pre- clearance requirement disabled the Directors from effectively discharging their fiduciary duties under Section 166, violated the Secretarial Standards required to be adhered to under Section 118(10) and rendered nugatory, the scheme of Section 149 which requires 1/3rd of the members of the F Board to be independent Directors. 19.21 But all the above contentions are completely devoid of any substance, for they tend to overlook one basic fact namely that Tata Sons is not a company engaged either in any manufacturing activity or in any trading activity. As per the pleadings, on which there is no dispute, G Tata Sons is a Principal Investment Holding Company and is a promoter of Tata Companies. Tata Sons holds a controlling interest in all the operating companies of the Tata Group. Other than being the Principal Investment Holding Company, Tata Sons, by itself is not engaged in any direct business activity. H

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A 19.22 As we have indicated in the beginning, around 66% of the equity share capital of Tata Sons is held by philanthropic Trusts, including Sir Dorabji Tata Trust and Sir Rata Tata Trust. It is claimed that these charitable Trusts support education, health, livelihood generation and Art & Culture. B 19.23 If we take these two important factors into consideration namely: (i) that Tata Sons is only a Principal Investment Holding Company; and (ii) that the majority shareholders of Tata Sons are only philanthropic charitable Trusts, it will be clear that the Directors nominated by the Trusts are not like any other Directors who get appointed in a General Meeting of the Company in terms of Section 152(2) of the Act. In fact it is a paradox to claim that by virtue of Sub-sections (2) and (3) of Section 166, every Director of a Company is duty bound to act in good faith in order to promote the objects of the company for the benefits of its members and in the best interests of all the stakeholders as well as environment and a duty to exercise independent judgment, and yet mandate the appointment of independent Directors under Section 149(4). If all Directors are required under Section 166(3) to exercise independent Judgment, we do not know why there is a separate provision in Section 149(4) for every listed Public Company to have at least 1/3rd of the total number of Directors as independent Directors. We do not also know whether the prescription in Section 149(4) is a tacit acknowledgment that all the Directors appointed in a General meeting under Section 152(2) may not be independent in practice, though they may be required to be so in theory. 19.24 A person nominated by a charitable Trust, to be a Director in a company in which the Trust holds shares, also holds a fiduciary relationship with the Trust and fiduciary duty towards the nameless, faceless beneficiaries of those Trusts. As we have pointed out elsewhere, the history of evolution of the corporate world shows that it has moved from the (i) familial to (ii) contractual and managerial to (iii) a regime of social accountability and responsibility. This is why Section 166(2) also talks about the duty of a Director to protect environment, in addition to his duties to (i) promote the objects of the company for the benefit of its members as a whole; and (ii) act in the best interests of the company, its employees, the shareholders and the community. It is common knowledge that some of the industries which take good care of its shareholders and employees also run polluting industries. Therefore there is always a H

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conflict, a tug of war between competing interests and statutes cannot A resolve these conflicts effectively. 19.25 Affirmative voting rights for the nominees of institutions which hold majority of shares in companies have always been accepted as a global norm. As a matter of fact the affirmative voting rights conferred by Article 121 of the Articles of Association, confers only a B limited right upon the Directors appointed by the Trusts under Article 104B. Article 121 speaks only about the manner in which matters before any meeting of the Board shall be decided. If it is a General Meeting of Tata Sons, the representatives of the two Trusts will actually have a greater say as the Trusts have 66% of shares in Tata Sons. Therefore, if we apply Section 152(2) strictly, the Trusts which own 66% of the paid C up capital of Tata Sons will be entitled to pack the Board with their own men as Directors. But under Article 104B, only a minimum guarantee is provided to the two Trusts, by ensuring that the Trusts will have at least 1/3rd of the Directors, as nominated by them so long as they hold 40% in the aggregate of the paid up share capital. D 19.26 Section 43 of the Companies Act (which is equivalent of Section 86 of the 1956 Act), recognises two types of share capital of a company limited by shares. They are (i) equity share capital; and (ii) preference share capital. Again equity share capital can be of two kinds namely, (i) those with voting rights; and (ii) those with differential rights as to dividend, voting or otherwise in accordance with such rules as may be prescribed. 19.27 Section 47(1)(b) of the 2013 Act (equivalent to Section 87(1)(b) of the 1956 Act), declares that the rights of a member of a company limited by shares, shall be in proportion to his share in the paid up equity share capital of the company. This right is subject to the provisions of Section 43, Section 50(2) and Section 188(1) of the 2013 Act. The restrictions under Sections 43, 50(2) and 188(1) respectively are, (i) shares with differential voting rights; (ii) disentitlement to voting rights, of a member who has not paid the unpaid share capital; and (iii) the disentitlement of a member to vote on a resolution for the approval of any contract entered into by the company with a related party. 19.28 Under Section 10(1) of the Companies Act, 2013, the Articles of Association bind the company and the members thereof to the same extent as if they respectively had been signed by the company H

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A and by each member. However, this is subject to the provisions of the Act. 19.29 Article 94 of the Articles of Association of Tata Sons is in tune with Section 47(1)(b), as it says that upon a poll, the voting rights of every member, whether present in person or by proxy shall be in B proportion to his share of the paid up capital of the company. Therefore, a shareholder or a group of shareholders who constitute majority, can always seek to be in the driving seat by reserving affirmative voting rights. So long as these special rights are incorporated in the Articles of Association and so long as they are not in contravention of any of the provisions of the Act, the same cannot be attacked on these grounds. C 19.30 Coming to the argument revolving around the duty of a Director, it is necessary that we balance the duty of a Director, under Section 166(2) to act in the best interests of the company, its employees, the shareholders, the community and the protection of environment, with the duties of a Director nominated by an Institution including a public charitable trust. They have fiduciary duty towards 2 companies, one of which is the shareholder which nominated them and the other, is the company to whose Board they are nominated. If this is understood, there will be no confusion about the validity of the affirmative voting rights. What is ordained under Section 166(2) is a combination of private interest and public interest. But what is required of a Director nominated by a charitable Trust is pure, unadulterated public interest. Therefore, there is nothing abhorring about the validity of the affirmative voting rights. 19.31 Relying upon the decision of this Court in Vodafone International Holdings BV vs. Union Of India21, it was contended that a minority investor has what is called “participative rights, which is a sub-sect of protective rights” and that these participative rights enable the minority to overcome the presumption of consolidation of operations or assets by the controlling shareholder. 19.32 But the decision in Vodafone (supra) arose under a G completely different context. It was a tax dispute in relation to capital gains arising from the sale of share capital of a company resident for tax purposes in Cayman Islands, on the basis that it held underlying Indian assets. It was in that context that this Court analysed the independent

21 (2012) 6 SCC 613 H

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legal existence of a subsidiary and held that even if directors are appointed A at the behest of the parent company or removable by the parent company, such directors of the subsidiary company will owe their duty to those companies and are not to be dictated by the parent company if it is not in the interest of the subsidiaries. 19.33 The decisions Re: Neath Rugby Limited22 and Central B Bank of Ecuador and others vs. Conticorp SA and others (Bahamas)23, are relied upon to show that while a nominee director is entitled to take care of the interests of the nominator, he is duty bound to act in the best interests of the company and not fetter his discretion. 19.34 The question as to (i) what is in the interest of the company, C (ii) what is in the best interest of the members of the company as a whole and (iii) what is in the interest of a nominator, all lie in locations whose borders and dividing lines are always blurred. If philosophical rhetoric is kept aside for a moment, it will be clear that success and profit making are at the core of business enterprises. Therefore, the best interest of the majority shareholders need not necessarily be in conflict with the interest of the minority or best interest of the members of the company as a whole, unless there is siphoning of or diversion. Such a question does not arise when the majority shareholders happen to be charitable Trusts engaged in philanthropic activities. It is good to wish that the creation gets liberated from the creator, so long as the creator does not have any control or ability to manipulate. In the corporate world, democracy cannot be seen as an ugly expression, after using the very same democratic process for the appointment of directors. 19.35 Much ado was made about pre-consultation and pre- clearance by the Trustees, even before the Board took a call. But it was actually about nothing. Whenever an institution happens to be a shareholder and a notice of a meeting either of the Board or of the General body is issued, it is but normal for the institution to have an idea about the stand to be taken by them in the forthcoming meeting. G 19.36 Objections were raised about RNT vetting the minutes of the meetings of the Board post facto and his participation as a shadow Director. But as we have pointed out elsewhere, CPM himself sought, 22 (2010) B.C.C. 597 23 (2015) UKPC 11 Judicial Committee of the Privy Council (UK) H

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A while accepting the office of Executive Chairmanship, the continued guidance of RNT. When the Board, of which CPM was a Chairman, nominated RNT as Chairman Emeritus and recorded their desire to look forward to his support and guidance, it is not open to the complainant companies to call RNT a shadow Director. If someone, aggrieved after B his removal from office can engage in shadow-boxing through the companies controlled by him, he cannot accuse the very same person who chose him as successor to be a shadow director. Someone who gained entry through the very same door, cannot condemn it when asked to exit. C 19.37 Therefore, the challenge to the affirmative voting rights and the allegations revolving around pre consultation and pre clearance by the Trusts of all items in the agenda and RNT’s indirect or direct influence or grip over the Board are all liable to be rejected. That leaves us with one more related issue, under this question of law and the same relates to the claim of SP group for proportionate representation on the Board. We shall now go to the same. Claim for proportionate representation 19.38 As we have pointed out elsewhere, the Statute confers upon the members of a company limited by shares, a right to vote in a general meeting. And this right is proportionate to his shareholding as per Section 47(1)(b). Section 152 which contains provisions for the appointment of Directors, does not confer any right of proportionate representation on the Board of any company, be it public or private. F 19.39 The maximum extent, to which the Parliament has gone under the 2013 Act, is to make a provision under Section 151, enabling “a listed company” to have one Director elected by such small shareholders in such manner and on such terms and conditions as may G be prescribed. Though a similar prescription was incorporated in Section 252(1) of the Companies Act, 1956, under Act 53 of 2000, it was not exactly the same. For the purpose of easy appreciation, the proviso to Sub-section (1) of Section 252 of the 1956 Act and Section 151 of the 2013 Act are presented in a tabular column as follows: H

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19.40 The important features to be noticed in the 1956 Act and the 2013 Act are : (i) that Section 252 of the 1956 Act was applicable to every public company but not to a public company which has become such by virtue of Section 43A, indicating thereby that it would not have had any application to Tata Sons; (ii) that in contrast, Section 151 of the 2013 Act applies only to listed companies; (iii) that for the application of the proviso to Section 252(1) of the 1956 Act, the public company should have a paid-up capital of Rs.5 crores or more and 1000 or more small shareholders; (iv) that in contrast the applicability of Section 151 of the 2013 Act does not depend upon either the paid-up capital or the number of small shareholders; and (v) that the definition of the expression “small shareholders” is just the same under both the enactments. G 19.41 It is interesting to note that the smallness conceived by the 1956 Act is virtually minuscule. One would qualify to be a small shareholder only if he holds shares of a nominal value of Rs.20,000/- or less, in a public company having a paid-up capital of Rs.5 crores or more. This proportion works out to 1/2500 or 0.04%. H

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A 19.42 One must be careful to note that both under Section 252(1) of the 1956 Act and under Section 151 of the 2013 Act, the spotlight was only on “small shareholders” and not on “minority shareholders” like the S.P. Group which holds around 18.37%. In fact, admittedly the value of this 18.37% of shareholding of the S.P. Group, as of March- 2016 was around Rs.58,441 crores. It is claimed that the purchase consideration of these shares at the relevant point of time was Rs.69 crores and that during the period from 1991 to 2016, SP group had received aggregate dividends to the tune of Rs.872 crores. We do not know whether this kind of a huge return on investment and the skyrocketing of the appreciation of the value of investment, is also due to oppressive conduct or despite oppressive conduct. 19.43 Whatever it be, the right to claim proportionate representation is not available even to a minority shareholder statutorily, both under the 1956 Act and under the 2013 Act. It is available only to a small shareholder, which S.P. Group is certainly not. D 19.44 The right to claim proportionate representation is not available for the S.P. group even contractually, in terms of the Articles of Association. Neither S.P. Group nor CPM can request the Tribunal to rewrite the contract, by seeking an amendment of the Articles of Association. The Articles of Association, as they exist today, are binding E upon S.P. Group and CPM by virtue of Section 10(1) of the Act. 19.45 Realising the fact that they have no right, statutorily or contractually or otherwise to demand proportionate representation on the Board, S.P. Group has come up with a very novel idea, namely the claim of existence of a quasi-partnership between the Tata group and F SP group. It is contended by S.P. Group that there existed a personal relationship between those in management of the S.P. Group and those in management of Tata Sons for over several decades and that the relationship was one of trust and mutual confidence. According to S.P. Group, they acted as the guardian of the Tata Group when the Tata Trust had no voting rights. Therefore, it is claimed that there is a right G and a legitimate expectation to have a representation on the Board of Tata Sons. 19.46 But we do not think that there ever existed a relationship in the nature of quasi partnership. As we have pointed out elsewhere, the company was incorporated in the year 1917 and S.P. Group became a H