Tata Trusts Says AoA Requirement Was Not Met
NEW DELHI (Economy India): The dispute over the leadership of Tata Sons intensified on Sunday after Tata Trusts challenged the validity of the company’s September 17 decision to reappoint N Chandrasekaran as chairman, arguing that the resolution did not meet requirements under the company’s Articles of Association (AoA).
Tata Trusts said the AoA require affirmative support from a majority of directors nominated by the Trusts for certain decisions and that a chairman’s casting vote cannot override this separate requirement.
The development follows a Tata Sons board decision to approve another five-year term for Chandrasekaran. According to reports, the resolution received 4:1 support, with Tata Trusts Chairman Noel Tata voting against the reappointment, while the other Trust-nominated director, Venu Srinivasan, supported it.
Tata Trusts Says AoA Requirement Was Not Met
Tata Trusts said there are currently two Trust-nominated directors on the Tata Sons board and argued that both needed to provide affirmative support for the relevant provision to be satisfied.
Since Noel Tata opposed the resolution and Srinivasan supported it, the Trusts said the required affirmative support was not secured.
The Trusts maintained that the overall board vote did not change this separate requirement under the AoA.
Dispute Over Chairman’s Casting Vote
A central issue in the dispute is whether the chairman of a board meeting could use a casting vote to resolve the disagreement.
Tata Trusts has argued that a casting vote is applicable when there is an equality of votes at the overall board level, but cannot be used to overcome the separate requirement concerning Trust-nominated directors.
The Trusts said there was no board-level deadlock and therefore, in its interpretation, no basis for using a casting vote to validate the resolution.
Tata Trusts Calls Resolution Legally Ineffective
In its statement, Tata Trusts said the September 17 resolution to reappoint Chandrasekaran was “not validly passed and has no legal effect”, describing it as void ab initio.
This is the Trusts’ stated legal position; the dispute concerns the interpretation and application of Tata Sons’ Articles of Association.
Trusts Cite Earlier Cyrus Mistry Case
Tata Trusts has also referred to the earlier legal dispute involving former Tata Sons chairman Cyrus Mistry.
According to the Trusts, Articles 104B and 121, which concern the affirmative voting rights of Trust-nominated directors, were contested during the Mistry litigation. Tata Sons had defended those provisions, and the Supreme Court subsequently set aside the finding that the provisions were oppressive.
Tata Trusts is now arguing that Tata Sons cannot rely on those provisions in earlier litigation while taking a different interpretation of them in the current dispute.
Tata Sons Leadership Dispute Escalates
The disagreement comes at a crucial point for Tata Sons. Chandrasekaran’s current second five-year term is due to end in February 2027, while the board’s September 17 decision sought to extend his tenure for another five years.
The board has also moved ahead with plans relating to the potential listing of Tata Sons following regulatory developments concerning the group’s holding company.
The latest challenge by Tata Trusts adds another layer to the broader debate over governance, shareholder rights and the future leadership structure of Tata Sons.
What Happens Next
The immediate issue is whether the September 17 board resolution can stand in light of the competing interpretations of Tata Sons’ AoA.
Tata Trusts’ position is that the required affirmative support from its nominated directors was absent and that a casting vote cannot cure that deficiency. The validity of that interpretation and the legal status of the resolution could therefore become central to the next phase of the dispute.
With Tata Trusts holding approximately 66 per cent of Tata Sons, the disagreement has significant implications for the governance of the Tata Group’s holding company.
(Economy India)
