File photo: N ChandrasekaranA major battle has broken out at Tata Sons after Tata Trusts on Thursday called the board’s decision to reappoint N Chandrasekaran as chairman for another five-year term “illegal”, setting up a potential legal and governance dispute at the top of the Tata Group. The Trusts said the resolution approving Chandrasekaran’s reappointment was a “legal nullity” because Noel N Tata, chairman of Tata Trusts and one of the Trusts’ nominee directors on the Tata Sons board, voted against it.
The Tata Sons board had on Thursday approved a fresh five-year term for Chandrasekaran, weeks after he told directors that he did not intend to seek reappointment when his current tenure ends on February 20, 2027, according to people familiar with the matter. The board also agreed to move ahead with the listing of Tata Sons, the holding company of the Tata Group, news agency PTI reported.
According to the Trusts, Chandrasekaran communicated his decision to the Tata Sons board on August 12. “Once such a decision has been publicly communicated, it has consequences which cannot be afterwards undone, since the Group’s employees, its lenders and counterparties, the market and the majority shareholder have all proceeded on it,” the Trusts said.
Tata Trusts said it formally accepted Chandrasekaran’s decision the following day and advised Tata Sons to begin the process of setting up a Selection Committee to appoint his successor in accordance with the company’s Articles of Association. The Trusts said its position was reiterated by Noel Tata at Thursday’s board meeting.
Why Tata Trusts says the reappointment is illegalThe Trusts said the resolution to reappoint Chandrasekaran was approved with four directors voting in favour and Noel Tata voting against it. It argued that the Articles of Association of Tata Sons require a majority of the Trusts’ nominee directors to vote in favour of the appointment of a chairman.
According to the Trusts, this requirement applies both to a first appointment and to the reappointment of an existing chairman. “Given that Mr Noel Tata, being one of the Trust nominee directors, voted against the proposal, it was rendered legally void and without any basis,” the Trusts said.
Noel Tata also submitted a legal opinion from Justice Dr DY Chandrachud, former Chief Justice of India, regarding the correctness of the Trusts’ position, according to the statement. The Trusts said the opinion was not taken note of by the Tata Sons board.
