New Delhi: The National Company Law Appellate Tribunal (NCLAT) on Tuesday reserved its order over a plea of Cyrus Mistry camp seeking a status quo over conversion of Tata Sons into a private company from a public limited firm.
A two-member bench headed by its Chairperson Justice S J Mukhopadhaya said it would pass an interim order over the conversion and decide the case on merits at later stage.
Senior advocate C A Sundaram, representing Mistry, questioned the urgency over conversion of status of Tata Sons, the holding company of Tata group of companies.
"What is the urgency to convert it into a private limited company. Status quo should be maintained, said Sundaram.
"As late as March 31, 2009 Tata Sons was functioning as a public entity. They continued taking deposits," he said during the proceedings.
He further said that they did not bring any article to say that the company should not take public deposits
NCLAT was hearing the plea filed by Mistry challenging the orders of NCLT which had dismissed his plea challenging his removal as chairman of the company.
In September last year, Tata Sons had received shareholders' nod to convert itself into a private limited company from being a public limited company, limiting in effect Cyrus Mistry family's ability to sell their stake to outsiders.
A public limited company allows shareholders to legally sell their stake to anyone but a shareholder of a private limited firm cannot sell the shares to external investors.
The Mistry camp had challenged the July 9 order of the Mumbai bench of the National Company Law Tribunal (NCLT) which dismissed their pleas against his removal as Tata Sons chairman, as also the allegations of rampant misconduct on part of Ratan Tata and the company's Board.
A special bench of the tribunal had held that the Board of Directors at Tata Sons was "competent" to remove the executive chairperson of the company.
NCLT bench members B S V Prakash Kumar and V Nallasenapathy had also said that Mistry was ousted as chairman because the Tata Sons' Board and its majority shareholders had "lost confidence in him".
Under the Companies Act 2013, an order of NCLT can be challenged before the National Company Law Appellate Tribunal (NCLAT). Mistry, who was the sixth chairman of Tata Sons, was ousted from the position in October 2016.
He had taken over as the chairman in 2012 after Ratan Tata announced his retirement.
Two months after his removal, Mistry's family-run firms Cyrus Investments Pvt Ltd and Sterling Investments Corp approached the NCLT as minority shareholders, against Tata Sons, Ratan Tata, and some other board members.
Mistry in his pleas primarily argued that his removal was not in accordance with the Companies Act and that there was rampant mismanagement of affairs across Tata Sons.
He also alleged that Tata Trust chairperson Ratan Tata and trustee N Soonawala interfered with the day-to-day operations of the group companies, they acted as shadow directors, and all of the above caused massive revenue loss for the group.
The Tata Group had denied all charges and said Mistry was removed because the Board had lost confidence in him.
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