December 23, 2019

MCA moves NCLAT seeking review in the Mistry vs Tata case

[ By Kavita Krishnan ]


The Ministry of Corporate Affairs (MCA) moved the National Company Law Appellate Tribunal (NCLAT) today, seeking an amendment to the part of the tribunal’s decision in it which struck down the Registrar of Companies’ order with regard to conversion of Tata Sons from a public company to a private company.

The MCA has filed an interlocutory application through Registrar of Companies (RoC), Mumbai.

The NCLAT agreed to hear the matter on January 2, 2020.

The main plea of the RoC is that while adjudging the Cyrus Mistry vs Tata Sons case NCLAT used word ‘illegal’ many times in its order, in the context of conversion of Tata Sons into private company from public company and issuance of certificate of incorporation by RoC regarding the same.

According to the MCA, the RoC decision to convert Tata Sons to a private company was in accordance with a previous judgment passed by the National Companies Law Tribunal (NCLT), which heard this case before. The RoC believes that the order passed by NCLAT was unjustifiable and did not meet the principles of natural justice, as the concerned party should have been given an opportunity of being heard before passing any order against it.

The MCA also stated that since the RoC followed due procedure in the Tata Sons case and that its actions were required by law, and that any aspersions that it acted in a “hurried manner” are untrue.

The RoC also clarified on the issue of haste mentioned in NCLAT order and stated that 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.

The application also contended that, the conversion of Tata Sons from public company to a private company 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.

NCLAT had in the order mentioned that the said conversion was not done as per Section 14 of Companies Act, 2013 which mandates approval from NCLT, but according to the RoC, the conversion had the approval of NCLT as per July 2018 order.

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