The matter will come up for further hearing on Friday.
The National Company Law Appellate Tribunal (NCLAT), which in its December 18 order rendered the Registrar of Companies’ (RoC) decision converting Tata Sons to a private company illegal and reinstated the Tata Group holding company’s public company status, on Thursday asked RoC’s parent ministry MCA to clarify why the Companies Act has been silent on the relevant criterion since 2015 amendments to it.
“If there is no prescription (with regard to the paid-up share capital), how can you define a private company? We were also looking for pros and cons while we were dictating the judgment and we found Rs 1-lakh limit is no more, but at the same time, there is no prescription,” the two-member NCLAT bench, headed by its chairperson Justice S J Mukhopadhaya, said.
The matter will come up for further hearing on Friday. The RoC, Mumbai, through the ministry of corporate affairs (MCA), had moved the NCLAT “seeking certain modifications in its December 18 order in the Tata-Mistry case…to correctly reflect the conduct of the Registrar of Companies, Mumbai as not being ‘illegal’ and being as per the provisions of the Companies Act, 1956/2013” and removal of ‘certain aspersions’ cast by the appellate tribunal order on the conversion.
While the Companies Act, 2013, defined a private company as one which has a minimum paid-up share capital “of one lakh rupees or such higher paid-up share capital”, the amendment to the Act that came into being with effect from May 29, 2015, omitted such threshold. The power to set the limit lies with the central government.
The NCLAT said, “We want to clarify on that. It’s very good that you (RoC) filed the application. (The conversion being) illegal is our finding, not observation. You are not a bad person that I can tell you, but our judgement is not wrong,” the bench said, adding that with proper clarification from the MCA, it might expunge the aspersions.