Over to SC as NCLAT rejects RoC plea to modify Tata-Mistry case ruling
07 January 2020
The National Company Law Appellate Tribunal (NCLAT) has refused to allow a review petition filed by the Registrar of Companies (RoC) seeking amendments to its 18 December judgement on the Tata-Mistry dispute that made the transition of Tata Sons from a public company to a private one “illegal”.
“No ground is made out to amend the judgment dated 18th December, 2019, in absence of any factual or legal error apparent on the body of the aforesaid judgement," the NCLAT bench said, adding that Tata Sons’ reversal of status to a public company following the NCLAT judgement stands.
The appeals court, in its 18 December judgement, had said the RoC’s decision to convert Tata Sons Ltd from a public company to a private entity was “illegal".
NCLAT in its 172-page judgement, had used the terms “illegal" and “with the help of the RoC", and the RoC in its review petition had sought deletion of these references from the judgement “...to correctly reflect the conduct of RoC, Mumbai, as not being illegal".
RoC, which functions under the corporate affairs ministry, had further sought directions from NCLAT for amendment in certain portions “...to delete the aspersions made regarding any hurried help accorded by the Registrar of Companies, Mumbai, to Tata Sons Ltd, except what was statutorily required to be done".
RoC, in its petition, argued that it had only discharged its statutory duties and did not side with any party.
While majority shareholders of Tata Sons gave their nod to change the status of the company from public to private, soon after Mistry’s ouster as chairman of the group, in September 2017, to ensure that all future decisions could be taken with just the board’s nod, NCLAT observed that the decision bypassed minority shareholders, including Mistry’s family firms — Cyrus Investments Pvt Ltd and Sterling Investments Pvt Ltd, which own 18.4 per cent stake in Tata Sons.
The two-judge bench of the NCLAT headed by Chairman Justice S J Mukhopadhaya in its order said that it had referred the action taken on the part of company and its board of directors and not the Registrar of Companies.
The NCLAT also noted, ‘Tata Sons Limited' by its letter dated July 19, 2018, intimated the Registrar of Companies of its exercise of the option under Section 43A (2A) for reversion back to the status of a private company. Therefore, the Registrar of Companies was statutorily obligated to carry out the necessary changes.
Mukhopadhaya said RoC did not notice or refer another provision sub-Section 4 of 43A in the Act, which requires the approval of the Centre to be taken by such a firm to revert to its private status.
Tata group lawyers, however, said that sub-Section (4) of 43A ceased to have effect two decades ago, in the year 2000. Only sub-Section (2A) of Section 43A remained in effect.
Reports citing an unnamed senior corporate affairs ministry official said the “RoC will move a separate plea in the Supreme Court for adjudication on whether the conversion of Tata Sons from public to private was in accordance with applicable laws or not."
“The appellate tribunal is free to interpret the law. We wanted to clarify our position since remarks were made about a government organisation. We will wait for the SC's order," the official was quoted as saying.
Tata Sons, Chairman Emeritus Ratan Tata, and Tata Consultancy Services (TCS) have also separately moved SC against the NCLAT order.
The apex court will, on Friday, hear petitions filed by the Tata group against the NCLAT order reinstating Cyrus Mistry as the chairman of Tata Sons. Though Mistry has formally clarified that he would not be pressing his claim over the post, the case is expected to have a huge bearing on the fate of the Tata group.
Tata Sons has also sought to quash the NCLAT order against conversion of the group from a public company yo a private one, among other things.