MCA Moves NCLAT Seeking Modification Of Its Order Which Allowed Tata Sons To Convert Itself To A Private Company

The Registrar of Companies (RoC) which functions under the Ministry of Corporate Affairs (MCA) has moved the National Company Law Appellate Tribunal (NCLAT) requesting it to amend its order and remove the word “illegal” regarding the conversion of Tata Sons from a public company to a private company.

The RoC’s petition which has been mentioned before the NCLAT will be listed on January 2, 2020 for hearing.

In its petition, RoC has asked “to carry out the requisite amendment in paragraphs of the judgment 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.

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 RoC Mumbai”.

The RoC also stated that it has acted in “bona fide manner” in converting the status of Tata Sons since “there was no stay granted by this appellate tribunal on the operation of the judgment dated July 9, 2018 of Mumbai, NCLT at the time when this intimation was filed by Tata Sons Ltd”.

The RoC has also asked to implead it as party in the matter.

In the order passed on December 18, the NCLAT had directed for the reinstatement of ousted Cyrus Mistry as Chairman of Tata Sons and also quashed the conversion of Tata Sons, which is the principal holding company and promoter of Tata firms, into a private company, from a public company and had termed such a conversion as “illegal”.

The NCLAT order had stated that the action taken by the RoC to allow the company to become a private company was against the provisions of the Companies Act, 2013 and ‘prejudicial’ and ‘oppressive’ to the minority shareholder (the Mistry camp).

“The Company (Tata Sons) shall be recorded as ‘Public Company’. The RoC will make correction in its record showing the Company as ‘Public Company’,” the NCLAT order had stated.

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 to take crucial decisions, which could be passed with merely 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 NCLAT order had stated.