MCA moves NCLAT to seek review of Tata Sons vs Mistry order

Cyrus Mistry (GettyImages)

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 to convert Tata Sons from a public company to private.

The NCLAT agreed to hear the matter on January 2.

On December 18, while adjudging the Cyrus Mistry vs Tata Sons case, announced a series of decisions in favour of Mistry, including reinstating him as Chairman of the Tata Sons. It also declared the RoC’s decision to convert Tata Sons from a public company to a private company as “illegal” and suggested the decision may have been taken in a “hurried manner” to help Tata Sons.

The MCA argued that 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.

It further pointed out that the NCLAT did not grant a stay on the NCLT’s 2018 order allowing conversion of Tata Sons to a private company, and also the RoC’s action was bonafide in nature.

It added that in passing an order on the RoC’s decision without seeking its view on the matter, the NCLAT did not meet the principles of natural justice.

The MCA further said 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 erroneous in nature.

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 (Shapoorji Pallonji Group) from freely selling their shares in the market and ‘right to first refusal’ on any such sale.