In a new twist to the Tata-Mistry saga, the Registrar of Companies under the corporate affairs ministry on December 23 moved the NCLAT seeking to implead it as a party in the dispute between the two and sought certain modification in the order passed by the tribunal last week.
The Registrar of Companies has sought deletion of the words “illegal” and “with the help of the RoC” used by the NCLAT in its last week order, reinstating Cyrus Mistry as the executive chairman of the $110-billion Tata group.
The tribunal had termed the appointment of N Chandrasekaran, as ‘illegal’ following the October 2016 sacking of Mistry as Tata Sons’ executive chairman. It had also directed the RoC to reverse Tata Sons’ status from a ‘private company’ to a ‘public company’.
According to the officials from the Ministry of Corporate Affairs, the application filed by RoC Mumbai has been admitted by the NCLAT and is expected to be listed on January 2, 2020 for hearing, the first day when the quasi-judicial body opens after winter vacation.
In its urgent application, filed five days after the NCLAT’s judgement, RoC Mumbai has asked the appellate tribunal “to carry out requisite amendments” in Para 186 and 187 (iv) of its judgement “to correctly reflect the conduct of the RoC, Mumbai as not being illegal and being as per the provisions of the Companies Act”.
Besides, it has also urged “to delete the aspersions made regarding any hurried help accorded by the RoC Mumbai to Tata Sons, except what was statutorily required” in para 181 of the order.
“The instant application is being filed for seeking impleadment of the applicant (RoC) in company appeal.., and for further seeking amendments in the judgement dated December 18, 2019 passed there in by this appellate tribunal due to factual and legal errors, which are apparent in the body of the aforementioned judgement,” the petition said.
Passing 172-page-long order on December 18, the National Company Law Appellate Tribunal (NCLAT) had directed for the reinstatement of ousted Cyrus Mistry as Chairman of Tata Sons.
In the order, the appellate tribunal has also quashed the conversion of Tata Sons – the principal holding company and promoter of Tata firms – into a private company from a public firm and had termed it as “illegal”.
The tribunal has said that the action taken by the RoC to allow the firm to become a private company was against the provisions of the Companies Act, 2013 and ‘prejudicial’ and ‘oppressive’ to the minority member (Mistry Camp).
“The Company (Tata Sons) shall be recorded as ‘Public Company’. The RoC will make corrections in its record showing the Company as ‘Public Company’,” the NCLAT had said.
In para 181 of its judgement, the tribunal had said the action of Tata Sons board to hurriedly change the company from ‘Public’ to ‘Private’ without following the procedure under law, with the help of the RoC before filing of the appeal suggests that the nominated members of ‘Tata Trusts’ who have affirmative voting right over majority decision of the board and other members, acted in a manner ‘prejudicial’ to the members, including minority members (Shapoorji Pallonji Group) and others as also ‘prejudicial’ to the company.
While in 186, NCLAT had observed: “The conversion of the company from ‘Public Company’ to ‘Private Company’, as action taken by the Registrar of Companies is against the provisions of Section 14 of the Companies Act, 2013 and ‘prejudicial’ and ‘oppressive’ to the minority members and depositors…”
Contesting the observations, RoC Mumbai asked the NCLAT to “delete the aspersion made regarding any hurried help accorded by RoC Mumbai to Tata Sons except what was statutorily required by RoC Mumbai”.
The RoC also said it has acted in “bonafide manner” in converting the status of Tata Sons as “there was no stay granted by this appellate tribunal on the operation of the judgement dated July 9, 2018 of Mumbai, NCLT at the time when this intimation was filed by Tata Sons Ltd”.
In its petition, the RoC had asked “to carry out the requisite amendment in paragraphs … of the judgement dated December 18, 2019 to correctly reflect the conduct of RoC Mumbai as not being illegal and being as per the provisions of the Companies Act along with the rules”.
Months after Mistry was sacked, Tata Sons had received its shareholders’ nod in September 2017, to convert itself into a private limited company from a public limited company, thereby absolving it of the need to take shareholder consent in taking crucial decisions, which could be passed with just the board’s approval.
Tata Sons Ltd was initially a ‘Private Company’ but after insertion of Section 43A (1A) in the Companies Act, 1956 on the basis of average annual turnover, it assumed the character of a deemed ‘Public Company’ with effect from February 1, 1975, the order said.
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