Business Standard: Mumbai: Wednesday, November
14, 2018.
The Ministry of Corporate Affair's
western region director had raised questions on some of the grounds Registrar
of Companies (RoC) used to declare that the sacking of Cyrus P Mistry as
chairman and director of Tata Sons and Tata Consultancy Services (TCS) violated
Companies Act and RBI rules, according to an RTI reply.
In response to a Right to Information
(RTI) query filed by Shapoorji Pallonji Mistry Group, which is the single
largest shareholder of Tata Sons with 18.4 per cent shareholding, the Ministry
of Corporate Affairs last month furnished two letters - a January 25, 2017
letter of the RoC, Mumbai and a February 17, 2017 letter from the Office of the
Regional Director, Western Region of the ministry.
Responding to the observation of RoC,
Mumbai on the procedural aspects like documents submitted or the signing
authority, in removing Mistry as chairman and director of TCS, the Regional
Director, Western Region, Ministry of Company Affairs the senior reporting
authority, raised doubts on the efficacy of the findings.
According to the RTI response, the
Regional Director (Western Region) asked RoC, Mumbai if a similar standard was
followed or prescribed by RoC in all other cases of removal of directors.
It also asked RoC to furnish a list of
companies where directors were removed under the Companies Act, 2013 and the
details of documents furnished/called for in such cases.
In addition, the Regional Director
questioned RoC on whether as per law, many documents which were not annexed to
the Form DIR 12 filed by TCS pursuant to the removal of Mistry as director,
were mandatorily required to be annexed. If not mandatory, whether RoC can
insist on the same, it asked.
As per law, Form No. DIR-12 is to be
filed with the Registrar within 30 days of the appointment/removal of a
director.
According to the letter furnished in the
RTI reply, RoC cited not sending of representation made by Mistry against his
sacking to all shareholders but instead making it available for inspection at
the company office as a violation of the Companies Act.
Other violations, according to it, were
that the Special Notice for the sacking was not "properly
authenticated". Also that the Article of Association of Tata Sons
prescribed process of removal of the Chairman and that such a removal required
prior approval of RBI as Tata Sons was registered as a non-banking finance
company.
A Mumbai-bench of the National Company
Law Tribunal (NCLT) in July this year dismissed a petition by Mistry who had
alleged oppression of minority shareholders and mismanagement.
NCLT ruled that the board of directors is
competent to dismiss executive chairman, adding that Mistry's conduct does not
augur well for the smooth functioning of the group.
Mistry, who was ousted from the board of
Tata Sons after a four-year stint in October 2016, claimed in his petition to
NCLT in December 2016 that he was illegally removed as chairman of the
software-to-salt conglomerate. He has challenged the NCLT order in the National
Company Law Appellate Tribunal (NCLAT).
The RTI query was filed more than a month
after the NCLT verdict, on August 31, 2018 and the reply was submitted to the
applicant on October 3.
Tatas had vehemently denied any violation
when the contents of the RoC letter revealed in the RTI were reported late last
month.
Tata Sons had said all the requisite
processes under the Companies Act were followed in removing Mistry as the group
chairman and also from the board of TCS.
"The respective board of directors
acted as per the provision of the Companies Act as well as in compliance of the
articles of association of the company. This was subsequently approved by both
the shareholders of Tata Sons and TCS the NCLT has also confirmed that the
process followed for removal of Mistry was valid and accordance with law,"
a Tata Sons spokesman had said. "All requisite processes were followed in
line with the Companies Act in case of Mistry's removal from the board of TCS
as also as the chairman of TCS and Tata Sons.