Tata Trusts escalates dispute over Chandrasekaran's reappointment (Img: IANS)
Mumbai: Tata Trusts on Sunday stepped up its dispute with Tata Sons over the reappointment of N. Chandrasekaran as Chairman, maintaining that the resolution considered at the September 17 board meeting was not validly passed.
The Trusts said there was no deadlock at the meeting and argued that the Chairman’s casting vote could not be used to revive what it described as an invalid resolution.
“The resolution to reappoint Mr N. Chandrasekaran as the Chairman of Tata Sons, considered at the Board meeting on September 17, 2026, was not validly passed and has no legal effect. In the eyes of the law, it is void ab initio,” the statement said.
The statement referred to the Supreme Court judgment in the Tata-Mistry case, saying it had upheld the protective rights of Tata Trusts as the majority shareholder.
According to the Trusts, the Articles of Association (AoA) of Tata Sons do not make board decisions dependent simply on the number of Directors voting in favour. Instead, they require the affirmative support of at least a majority of Directors nominated by Tata Trusts, which holds approximately 66 per cent of the company.
Tata Sons has two Tata Trusts nominees on its board. The Trusts said both would have to support a resolution to satisfy the requirement, but one of the two voted against Chandrasekaran’s reappointment on September 17.
It therefore maintained that the necessary condition under the AoA was not met and the resolution failed. The Trusts also argued that the Chairman’s casting vote applies only in the event of an equality of votes at the overall board level and cannot be used to overcome a lack of support among Tata Trusts’ nominees.
“It is now being suggested that a refusal of support amounts to a deadlock which would paralyse the Company and that the Chairman of the meeting was therefore entitled to resolve the position by a casting vote. There was no paralysis, and there was no deadlock. The Board put a question, and the AoA answered it in the negative. The exercise of a protective right conferred by a company's own constitution is not a deadlock; it is that constitution working as it was written to work,” the statement said.
Tata Trusts further argued that Tata Sons could not now take a position contrary to one it had previously defended before the Supreme Court during the dispute over the removal of Cyrus Mistry.
According to the statement, Tata Sons had then argued that the rights contained in the Articles were a legitimate protection agreed between shareholders and represented an entitlement of the Trusts as the majority shareholder. The Supreme Court accepted the company’s position and set aside the finding that the Articles were oppressive, the Trusts said.
“It is unfortunate that the Chairman of Tata Sons, a Company renowned for setting high standards of corporate governance, is contending reappointment on such an untenable interpretation of the Articles,” the statement said.
The Trusts also rejected the suggestion that listing Tata Sons would necessarily address a corporate governance gap. It said Tata Sons had independently chosen for years to follow standards applicable to a public company.
Amid the intensifying dispute, Tata Trusts has appointed senior advocate Abhishek Manu Singhvi to represent it legally.
“In the ultimate analysis, fundamental rights of shareholder-owners cannot be nullified in the manner in which they have been. To stultify shareholder ownership rights would spell doomsday for corporate governance across hundreds of Indian companies,” Singhvi said.
