Tata vs Cyrus Mistry: MCA jumps into battle, files application at NCLAT

Ministry of Corporate Affairs (MCA) has jumped into the ongoing legal battle between Tata group and Cyrus Mistry. The MCA on Monday filed an interlocutory application in National Company Law Appellate Tribunal (NCALT) through Registrar of Companies, Mumbai (RoC). The main plea of the RoC is that NCLAT used word ‘illegal’ many times in its recent order in context of conversion of Tata Sons into private company from public company and issuance of certificate of incorporation by RoC regarding the same.

RoC believes the order passed by NCLAT is against its statutory actions, is unwarranted and against the principle of natural justice, which require that the concerned party be given an opportunity of being heard before passing any order against it. In this case, RoC was not a party.

"Applicant be first impleaded in the matters and thereafter this Hon’ble Appellate Tribunal be pleased to amend the judgment dated 18/12/2019, specifically in paragraphs 181, 186 and 187(iv), to hold the actions of the ROC Mumbai as not illegal and for deletion of the aspersions cast on ROC Mumbai for acting hurriedly and with regard to any help accorded to TSL, except what was statutorily required to be done by ROC Mumbai," the application read.
 
RoC added that it received a letter from Tata Sons in July 2017, requesting for conversion, till that time Sub-section 2A of section 43A of Companies Act 1956, continued to operate and provided that a public company which ‘becomes a private company’ after the 2000 Companies Amendment Act shall inform the RoC. The RoC shall thereafter substitute the words ‘private company’ for the words ‘public company’ and shall also make the necessary changes in certificate of incorporation of the company. Till that time Tata Sons continued to retain features of a private company by continuing to be a section 43A company.

RoC also clarified on the issue of haste mentioned in NCLAT order. It said the matter was thoroughly reviewed and examined by it in light of the NCLT, Mumbai Bench and the judgment in Tata Vs Mistry case and the Supreme Court order in the matter of Darius Rutton Kavasmaneck vs Gharda Chemicals. And consequently, moved ahead with carrying out the necessary corrections in the MCA21 master data and the certificate of incorporation of Tata Sons to show the company as a private company.

"This was done on the understanding that Tata Sons had exercised its statutory right under Section 43A(2A) by informing the RoC that it intends to revert back to its status of a private company," the application added.

On 18th December, NCLAT had passed final order in Tata Vs Mistry case. It ordered re-appointment of Cyrus Mistry in the board of Tata Sons and other companies, NCLAT also termed appointment of N Chandrasekaran as Executive Chairman of Tata Sons illegal and directed Tata Sons to re-instate Cyrus Mistry as Executive Chairman.

As the order on this part was kept suspended for four weeks, Tata Sons can challenge it. In its order NCLAT had also questioned the role of RoC Mumbai, saying the conversion of Tata Sons from deemed public company to private company was “illegal, hurriedly done and with the help of RoC”. NCLAT had said conversion was not done as per Section 14 of Companies Act 2013 which mandates approval from NCLT, but RoC said the conversion had the approval of NCLT as per July 2018 order.  

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NCLAT heard the prayer of RoC Mumbai and issues notices to Tata Sons and Cyrus Mistry Group, Matter is listed for 2nd January, when NCLAT is expected to pass an order. In NCLAT the matter was argued by Director Legal and Prosecution Sanjay Shorey and the matter was filed by RoC Mumbai Manorajan Das under the guidance of Regional Director Manmohan Juneja.

Cyrus Mistry group had objected to conversion of Tata Sons into private company fearing it may go against minority shareholders interest.