NCLAT upholds its judgment in Tata-Mistry case, dismisses RoC plea

The National Company Law Appellate Tribunal (NCLAT) on Monday dismissed the petition of Registrar of Companies, Mumbai, seeking modifications in the Tata Sons versus Cyrus Mistry judgment, as no mala fide intentions have been made against the government body, its order said.

A senior government official said the government would take action based on the Supreme Court’s (SC’s) order. “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," he said.

The NCLAT ruled, “We find that there is a wrong perception on the Registrar of Companies as no observation has been made against it.”

In its order dated December 18, the NCLAT had said Tata Sons had hurriedly changed its status to private company from public ‘with the help of the Registrar of Companies’, which was termed illegal. It had sought the removal of the words ‘illegal’ and ‘with the help of Registrar of Companies’ in the tribunal’s order pertaining to Tata Sons’ transition from a public to private company.

Tata Sons, Chairman Emeritus Ratan Tata, and Tata Consultancy Services (TCS) have separately moved SC against the NCLAT order.

The two-judge Bench 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. Mukhopadhaya also said the directions given in its order to convert the company from private to public do not cast any aspersions on the Registrar of Companies.

The Registrar of Companies had submitted to the tribunal that Section 43A (2A) while empowers a 'public company' to become a 'private company' on or after commencement of the Companies (Amendment) Act, 2000, by informing the matter to the Registrar.

The NCLAT 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.

However, 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 said the NCLAT judgment threatened the legality and existence of companies incorporated under the Companies Act 2013. “Today’s order again misses the point 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. Tata Sons applied to the Registrar of Companies under this section and it made the change under this section. Yet, this has been (again) ignored by the NCLAT," Tata group's counsel said.

In its December 18 judgment, the NCLAT had said that the Registrar of Companies, in the Certificate, had struck down the word ‘Public’ and shown ‘Tata Sons Limited’ as a ‘Private’ company, even in the absence of any order passed by the Tribunal under Section 14 of the Companies Act, 2013.

In its petition, the Registrar of Companies said there were some factual and legal errors in the judgment, and hence appealed to the appellate tribunal to amend the order so that it correctly reflected the conduct of the Registrar of Companies, Mumbai, as not being illegal and acting in accordance with the provisions of the Companies Act 1956/2013.

The tribunal had said 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.