The nub of the dispute between Tata Sons and the Cyrus Mistry camp hinges on the status of the Tata group’s holding company: is it a public or a private company?

The Tatas argue that the company was a private company when it was formed in 1917 and has always had the characteristics of a private company, even though it became a deemed public limited company after the government introduced Section 43A in the Companies Act of 1956 through an amendment made on February 1, 1975.

This concept was dropped in the Companies Act, 2013, thereby allowing it to revert to its original status.

Strangely, Tata Sons and the RoC appear to have taken different lines of argument while seeking to legitimise the change in Tata Sons’ status. The Tatas are buttressing their case on the basis of a verdict handed down by the Supreme Court in the Darius Rutton Kavasmaeck versus Gharda Chemicals case in October 2014.

In the so-called Gharda case, the apex court held that the amendment to the Companies Act in 2000 did not extinguish or abolish the concept of a deemed public limited company or a hybrid company.

“If Parliament really wanted to put an end to the existence of all the hybrid companies, it should have deleted all references to the hybrid (section 43A) companies in the Act…we are of the opinion that the concept of hybrid companies is not altogether abolished,” Justices J. Chelameshwar and A.K. Sikri had ruled in the Gharda case.

The Registrar of Companies (RoC) has made out a completely different argument before the NCLAT.

The RoC has argued that not all the provisions of Companies Act 2013 were notified after it was passed and, therefore, several provisions of the old Act of 1956 continued to prevail.

It says in its petition that one of these was section 43 (2A) of the old Act which was not repealed until January 30, 2019.

Section 43 (2A) of the old Act says: “Where a public company ….becomes a private company on or after commencement of the Companies (Amendment) Act, 2000, such company shall inform the Registrar that it has become a private company and thereupon the Registrar shall substitute the word ‘private company’ for the word ‘public company’ ... and shall also make the necessary alterations in the certificate of incorporation ... within four weeks from the date of application made by the company.”

This procedure obviated the need to approach the NCLT for its approval.