Tata Sons and its board of directors withheld material facts related to collection of deposits from the public and it is a “de facto and de jure public limited company”, says the counter filed by ousted Chairman Cyrus Mistry in the Supreme Court.
Cyrus Investments, part of the Shapoorji Pallonji Group submitted in Supreme Court, “Tata Sons is a public company and not a dejure private limited company. Material facts related to collection of deposits from the public, withheld”. It argued that Tata Sons assumed the character of a public company and not merely a “deemed” public company since, Tata Sons never acted in accordance with restrictions imposed on a private company in collecting deposits from the public.
“This is a material fact suppressed by Tata Sons and its majority shareholders from the Registrar of Companies (RoC) and indeed the NCLT, NCLAT, that during the operation of the 1956 Act itself, Tata Sons widely accepted public deposits. Therefore, Tata Sons was de facto and de jure a public limited company”, it said.
Tata Sons, quite conveniently, has not dealt with this fact and like in the Tata Sons’ main appeal, has yet falsely contended that it had always retained the characteristics of a private company under Section 2 (68) of the 2013 Act without dealing with the fact that it had already ceased to be a deemed public company, when the 1956 Act was in force, the counter by Cyrus Mistry said.
“Tata Sons seems to be under the mistaken impression that inconvenient truths can be drowned out, in a sea of verbiage”, the submission said.
It also stated that Tata Sons and its Board of Directors withheld material facts from the shareholders in resolution of the proposed conversion, the NCLT, and RoC that it had collected deposits and consciously elected in the filings made with the RoC filed under Rule 10 of the Companies (Acceptance of Deposit), Rules 1975 that it was a public company.
“On the sheer falsity of these assertions, this Hon’ble Court ought not only to declare the purported conversion to be illegal but also censure the board of Tata Sons for its conduct”, Cyrus Investments said.
It is respondents case that Tata Sons ceased to be a hybrid or deemed public company as in 1995, the majority shareholders of Tata Sons renounced their entitlement to subscribe to a rights issue in favour of Tata Group companies (who are not members of Tata Sons), which is destructive of the nature of a private company.
“It is submitted that in view of the facts and circumstances, the present Civil Appeal insofar as it seeks to assail the correctness of the findings in the NCLAT judgement are liable to be dismissed”, the counter reply said.
“The NCLAT judgment speaks for itself on that question. Even if the impugned order passed subsequently is held to be erroneous as contended by Tata Sons, the NCLAT judgement is unexceptionable insofar it holds that Tata Sons was a public company under the Companies Act 1956 and was not a “de-jure private company”, it said.
“This Civil Appeal is therefore a waste of time of this Honble Court and and must be dismissed as in limine as being unnecessary and infructuous”, it said.