Tata Trusts, led by Noel Tata, is gearing up for a significant legal confrontation, challenging the Tata Sons board's decision to reappoint N. Chandrasekaran as chairman. The Trusts are considering judicial intervention to contest the validity of his continued tenure, potentially escalating a boardroom disagreement into a courtroom battle.
The dispute centers on a letter sent by Noel Tata to the Tata Sons board, asserting that the resolution approving Chandrasekaran’s reappointment was "null and void ab initio." The letter, addressed to company secretary Suprakash Mukhopadhyay and marked to all directors, demanded a public correction regarding the board meeting proceedings.
Legal Avenues and Shareholder Rights
Sources indicate that Tata Trusts is exploring options to approach either the National Company Law Tribunal (NCLT) or the Bombay High Court. The primary basis for this challenge is expected to revolve around the rights of majority shareholders and the interpretation of Tata Sons’ Articles of Association (AoA).
The controversy emerged following a recent Tata Sons board meeting where resolutions for both the company's listing and Chandrasekaran's reappointment were passed by a majority vote. Noel Tata, representing the Trusts, explicitly opposed both of these resolutions, leading to a broader disagreement over their legal effect and the voting conditions stipulated in the AoA. Senior counsel Abhishek Manu Singhvi, representing Tata Trusts, has argued that fundamental shareholder rights cannot be overlooked and that the Tata Trusts-Tata Sons relationship necessitates unanimity in certain voting matters.
Financial and Regulatory Implications
Tata Trusts has reportedly passed resolutions to fund the legal expenses associated with this high-stakes dispute, indicating their readiness for a prolonged legal fight. However, not all trustees, such as Vijay Singh and Venu Srinivasan, have signed these resolutions, preferring individual consideration of legal matters.
Adding another layer of complexity, the Reserve Bank of India (RBI) has filed a caveat in the Bombay High Court. This move ensures the RBI will be heard if Tata Trusts seeks any relief against the regulator’s directive concerning Tata Sons’ listing. Senior counsel Harish Salve, supporting the Tata Sons chairman, maintains that the company’s legal position is "legally perfect" and emphasizes Tata Sons' obligation to comply with RBI regulations, including becoming a public company.