Tata Sons : NCLAT Rejects Registrar Of Companies' Plea For Modification Of Observations

The National Company Law Appellate Tribunal on Monday turned down the plea moved by Registrar of Companies seeking removal of certain observations in the December 18 judgment which ordered the reinstatement of Cyrus Mistry as Executive Chairman of Tata Sons Ltd.

A Division Bench headed by Justice Mukhopadhyay observed that the judgment cast no aspersions on the RoC.

Moved under sections 420(2) and 424(1) of the Companies Act, read along with Rule 11 of NCLAT Rules, 2016, the application sought amendment in paragraphs 166-187 of the judgment. The remarks of NCLAT were made in the context of its conclusion that the conversion of Tata Sons as a "private company" was illegal.

As per the Registrar, the said paragraphs record observations which are against the actions of the RoC Mumbai, carried out in pursuance of its statutory duties.

The RoC's application states the strictures passed by the Appellate Tribunal are "unwarranted and against the principles of natural justice, which require that the concerned party be given an opportunity of being heard before passing any order against it."

The RoC argued that the observation in paragraph 181 which says that Tata Sons had hurriedly moved to change the nature of the company which was effected with the help of the RoC, casts aspersions on the Registrar.

Citing the same, Registrar stated that:

'We were duty bound to perform or statutory function. We did not help the company.'

While hearing the flea on Friday, the Appellate Tribunal responded to RoC's claims by noting that the amendments are sought for the operative part of the judgment. It said:

'These are our findings, if you have a problem with the operative part of the order you can approach the Supreme Court.'

It further went on to say:

'Tata Sons could not change the nature of the company without your approval. The word 'hurriedly' in the order refers to the company and not to RoC. Our order was not passed with any mala fide intention, and it doesn't cast any aspersions on the RoC.'

'It seems like you're arguing for the company', the Bench remarked.

The RoC submitted that current Companies Act doesn't provide any subscription limit for a company to be determined as private. The said amendment was brought about in line with the objective of 'Ease of Doing Business'.

The Appellate Tribunal, while recording the said submission, highlighted that as per section 66 of the Companies Act, Parliament has delegated responsibility to frame Rules to the Central Government.

 Tata Sons has appealed to the Supreme Court against the NCLAT order favoring Mistry.