Divan: Public trustee instead of himself attending the meeting. Appoints a proxy or the trustee of the company to vote in accordance with the directions of public trustee. So even if Ratan Tata or trustee attended the meetings, the required a reliable shareholder.
CJI: is there a difference between shares held by trust and shares held by trustee?
"You would need someone reliable, someone with integrity who can vote on your behalf. And that's how we became that reliable trust. In 2000 the condition was revoked." He continued
Divan on evolution of principles of Corporate Governance. He referred to the Roman Statute. "Between 1964 and 2000, as per the earlier companies act, there was a special regime across India for trust holding shares (Tata Trust in the case). The Central Government appointed an officer called Public trustee. If you wanted to vote on the shares, it was this trustee who would vote. The voting couldn't have been done by Tata trust. But only on his directions this trustee would vote. Imagine you had shares but didn't have the rights to vote. It was in these circumstances that the Tata trust required a reliable party and therefore it sold shares to SPG with whom it had relationship which was very old"
He referred to Kotak Committee remarks on "Raja Model" and "custodian trusteeship model".
"The committee regards the trusteeship model for corporate governance." he argued
He refers to the importance of fiduciary duties of directors. The evolution of company law from corporate majority to corporate democracy is that the provisions of corporate governance wasn't mentioned in the earlier Companies Act.
"A lack of probity is a lack of integrity. According to principles of company law, Oppression involves an element of lack of fair dealings. It is wide enough to take actions of anyone taking part de facto or de jure in the company. Just and equitable standard enable the court to exercise the powers in fair manner. Director of a subsidiary company should act in its favour and not of a holding company. " he argues.
Divan now refers to the minutes of the meeting dated 8th August 2016. "Mr. Subedar, company secretary informed the board that while the meeting was in process, Ratan Tata sent 2 letters while in the position of shareholder requesting other Directors namely Shrinivasan and Piramal to take necessary actions.
Mr. Cyrus Mistry was the Executive Chairman on this date."
Divan now refers to the submissions with regards to Change in Articles of Association.
"The importance of selecting chairperson of Tata Sons is crucial because it affects shareholders and other entities. Mr. Ratan Tata is not the member of the board on 18 Dec 2012. He didn't attend any meeting until 2016 October.
He is not subject to the discipline of sec. 166 (fiduciary duties) of Companies Act.
The bench asked for the assistance of Adv. Fereshthe and Mr. Salve on the issue.
"With regards to NCLAT, my answer is that the application was filed before original tribunal NCLT." Divan argued.
CJI: we intend to make certain observation wrt how these tribunals should follow such matters. Make an explanation tomorrow.