Tata Trusts, the controlling shareholder of Tata Sons with a 66% stake, is considering legal action against the reappointment of N Chandrasekaran as executive chairman of the Tata group holding company for another five-year term starting February 2027. According to a report by Business Standard, the Trusts is evaluating various legal avenues to challenge the board resolution. Senior Supreme Court advocate Abhishek Manu Singhvi’s comments on social media indicated that he may represent Noel Tata in the dispute. The Trusts has continued to maintain that the resolution approving Chandrasekaran’s reappointment was invalid. It has argued that Tata Sons’ Articles of Association (AoA) require decisions to receive affirmative support from a majority of directors nominated by Tata Trusts, rather than being decided only through a simple majority vote.
Tata Trusts raises AoA and governance concerns
The Trusts said the Articles of Association cannot be applied selectively and referred to the earlier Ratan Tata-Cyrus Mistry legal dispute, where the voting rights of Trust-nominated directors under Articles 104B and 121 were examined. “Tata Sons is not at liberty to take this position, because it has already taken the opposite one and won in the Supreme Court. In the proceedings arising out of the removal of Cyrus Mistry, the affirmative voting rights of the Trusts’ nominee directors under Articles 104B and 121 were squarely in issue,’’ the Trusts said. Singhvi said shareholder rights and corporate governance principles were at stake in the dispute. “To stultify shareholder ownership rights would spell doomsday for corporate governance across hundreds of Indian companies. To stymie democratic intra-Trust decision-making by Tata Trusts by putting a sudden and completely unwarranted fetter on even their convening for a meeting is another matter of patent legality,” he said.
Board vote triggers leadership dispute
The Tata Sons board approved Chandrasekaran’s third term on September 17 through a 4:1 vote. Noel Tata, chairman of Tata Trusts and a nominee director, was the only member to oppose the resolution. Chandrasekaran had earlier informed the board that he would not seek another term after his current tenure. The leadership discussion was reportedly delayed after Noel Tata raised concerns over the performance of some group businesses, including Air India and Tata Digital. However, at the subsequent board meeting, directors moved a resolution for Chandrasekaran’s continuation, which he accepted despite Noel Tata’s dissent.
