The CJI-led apex court bench, while leaving it to Tata Sons and the Cyrus Mistry camp to invoke the century-old article for any eventual buyout or sellout, said: “Article 75 is nothing but a provision for an exit option (though one may think of it as an expulsion option).”
“After attacking Article 75 before NCLT, the SP Group cannot ask this court to go into the question of fixation of fair value compensation for exercising an exit option,” the SC said.
One of Tata Sons’s senior counsels Abhishek Singhvi said the SC was more than justified in not entering into evaluating the buyout/sellout option. “These things depend on a willing seller or a willing buyer acting consensually,” he said.
“The offer to sell by anyone dehors this case and would depend on consent and Articles but not in any manner disturb this judgment. Since Article 75 remains fully intact, if and when exercised, it would have to be dealt with in accordance with law,” he added.
“Attempts to disturb or reopen this judgment would be over acrobatic legal adventurism,” said Singhvi. “If the SC had gone an extra mile to evaluate the shares and order a buyout, it would have truly put an end to the most valuable corporate battles,” said advocate Cherag Balsara. He added,
“By leaving valuation open to the parties, the SC has opened the floodgates to the prospect of another battle royale in respect of valuation which will be fought at all forums and will also reach the Supreme Court once again.”
The SC said, “Even traditionally, the law in England and in India is to pave the way for a safe and honourable exit, when two persons in commercial relationship cannot co-exist, Article 75 of the Tata Sons’s ‘Articles of Association’ empowers the company to at any time to transfer ‘ordinary shares’ of any shareholders without following the normal procedure of transfer.”
Barely used and with no instance of misuse cited, Article 75 formed a major bone of contention in the Tata-Mistry saga at both stages of the sharply fought legal battle — before NCLT as well as NCLAT.