New Delhi: The hearing of Registrar of Companies’ plea, seeking modifications in National Company Law Appellate Tribunal’s (NCLAT) judgement in which Cyrus Mistry was reinstated as the executive chairman of Tata Sons, has been adjourned till Friday.
A two-member bench headed by Chairman Justice S J Mukhopadhaya asked the Ministry of Corporate Affairs to submit details of the definition of private and public companies under the rules of the Companies Act.
The bench has also asked for clarification on the paid up capital requirement for the same.
Meanwhile, the counsel appearing for Tata Sons informed the appellate tribunal that the company has moved the Supreme Court against its order passed on December 18.
However, the petition is yet to be listed, the counsel added.
In its plea, the Registrar of Companies (RoC), which functions under the Ministry of Corporate Affairs, has also sought to be impleaded as a party in the two petitions and deletion of the words “illegal” and “with the help of the RoC” used by the NCLAT in its 172-page-long judgement.
NCLAT, on December 18, directed the USD 110-billion Tata group to reinstate Cyrus Mistry as the executive chairman of Tata Sons.
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’.
In its urgent application, which was mentioned on December 23, just 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.
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 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.
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 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.