MCA moves NCLAT seeking modification of order on Tata Sons
23 December 2019
The ministry of corporate affairs (MCA) has moved the National Company Law Appellate Tribunal (NCLAT), seeking an amendment to the part of the tribunal’s decision in it which struck down the Registrar of Companies’ order to convert Tata Sons from a public company to private.
The RoC moved the NCLAT seeking removal of the word "illegal" with respect to conversion of Tata Sons from a public company to private company, which, it pointed out, was done after the RoC’s approval.
It also stated that its decision on conversion of the company’s status following Cyrus Mistry's exit was not done in a hurry and was done after proper scrutiny and due diligence.
According to sources, the RoC Mumbai, which had cleared the conversion from Tata Sons public to private status has also sent the entire report on how it was done following Tata-Mistry fallout leading to Mistry's ouster from board to the ministry in Delhi.
The appellate tribunal has said 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 petition filed by RoC was mentioned on Monday before NCLAT, which has directed it to list the matter on 2 January 2020, for hearing.
In its petition, the RoC had asked "to carry out the requisite amendment in paragraphs of the judgement dated 18 December 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."
It has also asked NCLAT to "delete the aspersion made regarding any hurried help accorded by RoC Mumbai to Tata Sons except what was statutorily required by the RoC Mumbai".
The RoC also said it has acted in a "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 9 July 2018 of Mumbai NCLT at the time when this intimation was filed by Tata Sons Ltd."
Passing an order on 18 December, NCLAT had directed reinstatement of ousted Cyrus Mistry as chairman of Tata Sons. In that 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 "illegal".
"The Company (Tata Sons) shall be recorded as 'Public Company'. The RoC will make corrections in its record showing the company as 'Public Company'," said NCLAT.
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, where there would be no need to take shareholders' consent in taking crucial decisions, which could be passed with 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 1 February 1975, the order said.