Tata Trusts, which holds a 66 per cent stake in Tata Sons, is preparing for possible legal action to challenge the resolution regarding the reappointment of N Chandrasekaran as executive chairman of Tata Sons for an additional five years after his current term ends in February 2027, sources privy to the matter said.
Sources indicated that Tata Trusts is considering multiple legal options.
Senior Supreme Court lawyer Abhishek Manu Singhvi stated in a social media post on Sunday that he had joined the Tata dispute, suggesting that legal proceedings could be expedited.
Singhvi stated that the essential rights of shareholder-owners could not be invalidated in the manner they had been.
“To undermine shareholder ownership rights would signify disastrous consequences for corporate governance in numerous Indian companies,” he said.
“Imposing an abrupt and entirely unjustified restriction on the ability of Tata Trusts to even convene a meeting is a separate instance of clear illegality that obstructs democratic decision-making within the Trust,” he added.
The senior lawyer, who worked closely with Ratan Tata during the Cyrus Mistry case, remarked: “Severing the over-century-old hyphenated bond between Tata Trusts and Tata Sons and separating them appears unimaginable.
“Disregarding the constant prerequisite of Trust consensus in voting and the explicit veto in provisions consistently enforced for years seems clearly unreasonable.”
On September 17, the Tata Sons board approved a resolution supporting a third term for Chandrasekaran, popularly known as Chandra, with a 4:1 vote. The only opposing vote was cast by Noel Tata, chairman of Tata Trusts and one of the nominated directors on the Tata Sons board.
During the meeting and subsequently, Noel Tata raised concerns about alleged breaches of the Tata Sons Articles of Association (AoA) concerning the veto powers of nominee directors and the casting vote on the matter.
Last month, Chandra informed the board of directors that he would not seek a third term as chairman of Tata Sons, noting that discussions on leadership had been put on hold after Noel Tata raised concerns about the performance of certain group entities, including Air India and Tata Digital.
At the Tata Sons board meeting on September 17, a resolution was proposed to appoint him for a third term. Chandrasekaran agreed to the board members’ request, with Noel Tata being the sole dissenting member.
