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In a setback to the Tata Group, the Registrar of Companies (RoC) has stated that the ouster of Cyrus Mistry as Chairman of Tata Sons and as director of Tata Consultancy Services is in violation of many rules, including in the Companies Act.
The ouster violated Tata group’s own Articles of Association (AoA) and Reserve Bank of India rules, among others, the RoC said, in reply to a query filed under the Right to Information Act, 2005 (RTI).
The RTI application was filed by Ruchir Khandalkar, a Shapoorji Pallonji Group employee, on August 31.
“...the AoA of the member company prescribes that the chairman (executive) of the member-company (Tata Sons) can be removed in the same process as specified by his appointment, i.e. by the selection committee consisting of four persons and based on such recommendation of the committee only (sic) the board is empowered to remove its chairman,” the reply dated October 3, said.
It also said this is under Article 118 of the AoA, which is a public document. BusinessLine has reviewed a copy of the letter.
“Member company (Tata Sons) being an NBFC duly registered with RBI, any management change in such NBFC company require (sic) prior approval of RBI, in terms of RBI directions, from time to time, which was not apparently obtained from RBI in this case before changing Mistry from the post of executive chairman and managing director of a member company,” it said, indicating a violation of RBI rules.
On November 11, 2016, TCS had accepted a letter written by the company secretary and chief operating officer of Tata Sons dated November 9, 2016 as a special resolution notice to sack Mistry. It appears that prima facie that there was no special notice received by the company.
On Tuesday, the National Company Law Appellate Tribunal (NCLAT), which had admitted Mistry’s petition, said it would hear the case from December 11-14.
Tata statement
“All requisite processes were followed in line with the Companies Act in case of Mistry’s removal from the board of TCS as well as the chairman (sic) of TCS and Tata Sons,” a Tata Sons spokesperson said in a statement. “The respective board of directors (sic) 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. Neither TCS nor Tata Sons had received any communication from the RoC, Mumbai regarding any non-compliance in this regard. The NCLT has confirmed that the process followed for removal of Mistry was valid and in accordance with law,” the statement added.
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