Tata Trusts has challenged the validity of N Chandrasekaran’s reappointment as chairman of Tata Sons, arguing that the decision made at the September 17 board meeting did not follow the company’s Articles of Association.
The dispute centres on the voting rights of Tata Trusts’ nominee directors and the interpretation of different provisions in Tata Sons’ Articles of Association.
Tata Sons Board Votes for Another Term
The Tata Sons board voted in favour of extending Chandrasekaran’s tenure as chairman for another five years. The proposal received four votes in favour and one against, with Tata Trusts chairman Noel Tata opposing the reappointment.
Venu Srinivasan, the other Tata Trusts nominee on the board, supported the proposal. Harish Manwani, who chaired the meeting, used a casting vote during the proceedings.
Tata Trusts has disputed the validity of this process and said the overall 4:1 vote does not settle the issue because separate approval requirements involving its nominee directors also apply.
Noel Tata Raises Objections
Noel Tata, who is also a Tata Sons director, raised objections to the procedure in letters sent following the meeting.
He argued that the company had used Article 118 when Chandrasekaran was reappointed in 2022, while the 2026 process was conducted under Article 121. Noel said Article 118 specifically deals with the appointment of the chairman.
He also argued that the resolution should be treated as legally ineffective from the beginning because, in his view, the process did not comply with the Articles of Association.
Dispute Over Legal Opinions
Noel said the board had agreed to obtain a legal opinion on key questions surrounding the reappointment. These included whether Article 118 applied, whether the resolution could proceed despite his opposition and whether a casting vote could be used to resolve the disagreement.
Noel presented an opinion from former Chief Justice of India D.Y. Chandrachud. According to Tata Trusts, the opinion supported the position that the required majority of Trust-nominated directors had to approve the appointment.
The board instead relied on an opinion from lawyer Sudipto Sarkar, which was cited in connection with the use of the chairman’s casting vote.
Tata Trusts Says 4:1 Vote Was Not Enough
Tata Trusts said its two nominee directors split their votes, with Noel Tata opposing the reappointment and Venu Srinivasan supporting it.
The Trusts argued that the Articles require affirmative support from a majority of its nominated directors and that this requirement was not satisfied.
It also rejected the suggestion that the disagreement created a board deadlock that could be resolved through a casting vote.
According to Tata Trusts, a casting vote can apply when there is an equality of votes at the board level but cannot replace a separate requirement for support from Trust-nominated directors.
Mistry Case Becomes Part of the Dispute
Tata Trusts has also referred to the earlier legal dispute surrounding the removal of Cyrus Mistry as Tata Sons chairman in 2016.
The Trusts said Articles 104B and 121, which provide certain rights to its nominee directors, were examined during the litigation. Tata Sons had defended those provisions before the Supreme Court as legitimate protections available to Tata Trusts as the majority shareholder.
The Supreme Court later set aside the finding that these provisions were oppressive.
Tata Trusts is now arguing that Tata Sons cannot rely on those protections in earlier litigation while taking a different position on them in the current dispute.
Chandrasekaran’s Tenure and AGM
Chandrasekaran’s current five-year term is scheduled to end in February 2027. He had earlier indicated that he would not seek another term, but the September 17 board decision backed his continuation.
The matter is also connected to Tata Sons’ pending annual general meeting. Chandrasekaran is due to retire by rotation as a director, meaning shareholder approval will be required for his continuation on the board.
The AGM had earlier been adjourned and must be held by December 31.
Listing Debate Also Continues
The disagreement has also brought the question of Tata Sons’ potential listing back into focus.
Tata Trusts has argued that Tata Sons already follows several governance practices associated with listed companies, including having independent directors, audit and nomination committees, related-party transaction rules and provisions covering director retirement.
The issue has gained additional attention after the Reserve Bank of India rejected Tata Sons’ application to surrender its registration as a core investment company.
The dispute over Chandrasekaran’s reappointment is now centred on how Tata Sons’ Articles of Association should be interpreted and whether the September 17 board process satisfied the requirements governing Tata Trusts’ nominee directors.
