The National Company Law Appellate Tribunal on Monday rejected an appeal by the Registrar of Companies (RoC) seeking modification of its ruling in the Tata-Mistry case, saying no aspersions were cast on the RoC in terming as illegal the decision to allow conversion of Tata Sons into a private company.
On December 18, the company law appellate tribunal had ordered the reinstatement of Cyrus Mistry as the head of Tata Sons, the holding company of $110 billion salt-to-software conglomerates, saying his 2016 sacking was wrong. It had also held the conversion of Tata Sons from a public company to a private one by the RoC as "illegal".
Subsequently, the RoC, under the Union Corporate Affairs Ministry, had moved a petition seeking deletion of words "illegal" and "with the help of the RoC" on the issue of conversion of Tata Sons into a private company.
Rejecting the prayer for amendment in the Judgment, the two-member National Company Law Appellate Tribunal (NCLAT) bench headed by Chairman Justice S J Mukhopadhaya observed that the judgment did not cast aspersions on the RoC and said this is a "wrong perception" as no observation has been made against the RoC, Mumbai, nor anything alleged against him.
The appellate tribunal observed that "no ground is made out to amend the judgment dated 18 December 2019 in absence of any factual or legal error apparent on the body of the aforesaid Judgment".
In absence of any merit, both the interlocutory applications are dismissed, the NCLAT said.
Reacting to the judgment, a Tata group official said the ruling threatens the legality and existence of companies incorporated under the Companies Act of 2013.
He said no private company can be incorporated if the NCLAT's argument that the RoC cannot check the minimum share capital requirement for a private company in the absence of prescribed norm for it in the Companies Act.
This would mean that all certificates of incorporation granted to hundreds of private companies under the 2013 Act are invalid and illegal, the official argued.
"One of the grievances of the RoC is that the observations made in Paragraphs 181, 186 & 187 of the judgment cast aspersions on the Registrar of Companies who were not a party before this Appellate Tribunal.
"However, we find that there is a wrong perception of the registrar of companies as no observation has been made against the Registrar of Companies, Mumbai, nor anything alleged against him," the appellate tribunal said.
Tata Sons, Chairman Emeritus Ratan Tata and Tata Consultancy Services (TCS) have separately moved the Supreme Court against the NCLAT order.
Tata group official said once a judgment is passed, the NCLAT does not have the power to "review" its judgment or to explain or improve upon it. The NCLAT has limited powers under Section 420 to rectify any apparent mistake in the judgment.
However, NCLAT's order on Monday explains and even adds to its previous judgment of December 18, 2019, in order to defend why it's finding on the issue of conversion was correct.
The NCLAT refers to the provision which is not in effect since the year 2000, he said adding the NCLAT order again refers to sub-section (4) of 43A of the Companies Act, 1956 to say that prior approval of the Central Government was required. 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 ROC under this section and ROC made the change under this section, he said.
In its plea, the RoC, which functions under the Ministry of Corporate Affairs, had sought to be impleaded as a party in the two petitions and deletion of words "illegal" and "with the help of the RoC" used by the NCLAT in its 172-page-long judgment.
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 December 18, judgment, RoC Mumbai had asked the appellate tribunal "to carry out requisite amendments" in Para 186 and 187 (iv) of its judgment "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 had 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.
In the order, the appellate tribunal had 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 had 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).
Meanwhile, Cyrus Mistry on Sunday ruled out pursuing chairmanship of Tata Sons or any other executive positions at group entities but asserted that he is interested in a board seat at the holding company.
Ruling out taking up any position at the group or any group entities, Mistry in a late Sunday evening public statement said that he is "walking the talk" to uphold corporate governance, and this is not a quest for position or power and he "will not be pursuing the executive chairmanship of Tata Sons, or directorship of TCS, Tata Teleservices or Tata Industries".