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Development News Edition


The abrupt sacking of Cyrus

Mistry as the chairman and director, respectively, of Tata

Sons and its crown jewel TCS violated provisions of the

Companies Act, RBI rules and more importantly, Tatas' own

articles of association, RoC, Mumbai said in an RTI reply.

The right to information (RTI) reply, given by Uday

Khomane, the assistant registrar of companies (RoC), Mumbai on

October 3, is in response to a RTI request filed by the

investment arms of the Shapoorji Pallonji Group on August 31.

The reply said the way Mistry was removed from the

chairmanship of Tats Sons and also as the director of Tata

Consultancy Services (TCS), violated the relevant legal

provisions under the Companies Act, 2013; the Reserve Bank

rules governing NBFCs; and more importantly the rule 118 of

the articles of association (AoA) of Tata Sons, the parent of

the diversified Tata group, which is registered as an NBFC

with the monetary authority.

A Tata Sons spokesman refused to offer detailed

comments on the questions sent by PTI, saying, "We do not wish

to comment on the matter as the matter is sub-judice."

PTI has seen a copy of the RTI reply which is based on

the assessment of the documents furnished by the Tatas in the

aftermath of the boardroom coup on October 24, 2016 dismissing

Mistry as the group chairman.

The report offers an internal view of the RoC, which

interestingly is totally opposite of the view taken by the

National Company Law Tribunal (NCLT), Mumbai earlier this year

while dismissing the petition filed by Mistry challenging his

dismissal from the group.

In a boardroom coup, Mistry was sacked as the chairman

of Tata Sons on October 24, 2016, two months short of four

years in the corner room of the Bombay House, the global

headquarters of the 150-old conglomerate that nets over 65 per

cent of its income from outside the country.

Mistry, whose family is the single largest non-Tata

shareholder with 18.4 per cent stake in Tata Sons, was nudged

to take over the reins of the USD 103-billion group as the

second non-Tata chairman, after Nowroji Saklatwala(1934-38),

in December 2012, after group patriarch Ratan Tata retired.

Mistry was removed as TCS director with 93.11 per cent

votes at the EGM held on December 13, 2016, as per its company

secretaries Parikh & Associates which cited section 169(2) of

the Companies Act 2013 read with section 115 and 100 (2)(a)

for his removal.

But TCS did not send out the complete representation

of Mistry to all shareholders, which violates section 169

(4)(b) of the Companies Act, noted the RoC reply.

The RTI reply is based on the queries posed by SP

Kumar, western regional director, RoC, Mumbai which has found

that Tata Sons violated rule 118 of its articles of its AoA,

when it removed Mistry.

The report, exclusively available with PTI, states

that "article 118 of the AoA of Tata Sons prescribes that its

chairman can be removed in the same process as specified for

his appointment i.e. by the selection committee consisting of

four persons and based on such recommendation of the removal

committee only the board is empowered to remove its chairman".

It goes on to add that Tata Sons "being an NBFC duly

registered with RBI, any management change requires prior

approval of the RBI", which was also not complied with.

The reply also cited several irregularities pertaining

to the December 13, 2016 EGM convened by TCS to remove Mistry

as a director from its board.

TCS had adopted a letter written by the company

secretary and chief operating officer of Tata Sons on November

9, 2016 as a special resolution notice to sack Mistry.

The reply noted that this letter from Tata Sons was

sent to TCS without any proof of a board resolution

authorising the issuance of such a letter. The report also

states that "it appears prima facie that there was no proper

'special notice' received" by TCS.

The RoC also said that the TCS' company secretary

thereafter "on his own" forwarded the purported special notice

from Tata Sons dated November 9, 2016 to Mistry.

"The letter dated November 11, 2016 written by the VP

& CS of TCS is against the provisions of section 169(3) of the

Companies Act of 2013 as the power to send such a letter is

vested with the board of the company," noted the RoC report.

The RoC further noted that "since there was no TCS

board meeting between November 9 and 11, 2016, and in the

absence of any board resolution authorising the actions of the

TCS' company secretary, such a letter and the resulting

actions would be void ab-initio".

Additionally, TCS had also failed to send out the

complete shareholder representation of Mistry to all

shareholders, "in violation of section 169(4)(b) of the

Companies Act", and hence "the consequential resolution of EGM

dated December 13, 2016 for the removal of Mistry would also

be void".

The RoC, Mumbai in a letter dated January 25, 2017 had

written to the regional director of the corporate affairs

ministry highlighting these concerns.

"As the verification of the relevant documents further

finds that the company has violated the provisions of the

Companies Act, and rules there under, I am referring the

matter to the regional director to verify the findings in

terms of rule 11(2) of the Companies (registration offices and

fees) rules of 2014," the letter read.

In the reply, SP Kumar, RoC Mumbai, in a letter dated

February 17, 2017, stated, "RoC having come to the conclusion

that transactions are void [Annexure C point (1) to (4)] has

to express in unequivocal words whether the e-form is to be

rejected or e-form or document as the case may be, as invalid

in the electronic record in terms of rule 10(4) of Companies

(Registration Offices and Fees) Rules, 2014."

However, it is unclear what further action the

ministry took on these observations, it noted.

Mistry and his elder brother Shapoor Mistry, through

their investment companies, are the single largest non-Tata

shareholder in Tata Sons with 18.4 percent stake.

The group's investment companies are currently waging

a legal battle against Tata Sons in the National Company Law

Appellate Tribunal alleging oppression of the minority

shareholders and mismanagement at Tata Sons. The tribunal

began hearing the case Wednesday in New Delhi.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)



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