The Ministry of Corporate Affairs has asked the National Company Law Appellate Tribunal to rectify the tribunal’s order in the Tata Sons-Cyrus Mistry matter, which called the conversion of Tata Sons into a private limited entity from a public firm ‘illegal’.

Setting aside the Registrar of Companies' decision to allow Tata Sons to become a private limited company, the NCLAT in its December 18 order said that the RoC's action is against the provisions of Section 14 of the Companies Act, 2013 and ‘prejudicial’ and ‘oppressive’ to the minority members and depositors.

The appellate tribunal further directed the RoC to make correction in its record and show Tata Sons Ltd as a public company.

The MCA requested the NCLAT to amend the order to correctly reflect the conduct of RoC Mumbai as not ‘illegal’ but as per the provisions of the Companies Act, 1956/2013.

Also, the MCA sought amendments to delete the aspersions made in the order regarding any hurried help by the ROC Mumbai to Tata Sons, except what was statutorily required.

Moreover, the MCA has asked NCLAT to declare that the ROC approved the conversion of Tata Sons into a private limited company only because there was no stay granted by NCLAT on NCLT Mumbai’s order, which allowed the conversion.

A declaration has also been sought from the NCLAT with respect to stating that the RoC Mumbai acted in a bonafide manner on a due application of mind while approving the conversion of Tata Sons into a private limited company.

Tata Sons received clearance from the RoC Mumbai in August 2018 to change its status to that of a private entity.

Private companies have more relaxed compliance norms as compared to public companies. In the Tata Sons case, the private company tag also offered it specific benefits such as restricting the right of a minority shareholder from freely selling their shares in the market and ‘right of first refusal’ on any such sale.

On December 18, the NCLAT restored Cyrus Mistry as executive chairman of Tata Group and ruled that the appointment of N Chandrasekaran as executive chairman is illegal.

A two-member NCLAT bench headed by Chairperson Justice S J Mukhopadhaya stayed the operation of the order with respect to reinstatement for four weeks to allow the Tatas to appeal.

First Published:Dec 23, 2019 12:29 PM IST