Tata Sons tells Noel Tata, Chandrasekaran’s reappointment is valid, rejecting his objections

Mumbai: Tata Sons rejected objections raised by Noel Tata, chairman of Tata Trusts, over the reappointment of N Chandrasekaran as chairman.

It said the Tata Sons board had approved the move by a majority and that the special procedure under its Articles of Association (AoA) cited by Noel Tata did not apply to the reappointment of an incumbent chairman.

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“The board, by a majority resolution, has validly resolved to reappoint Mr N Chandrasekaran as the chairman upon the expiry of his existing tenure” in accordance with applicable law and the company’s AoA, Tata Sons said in a September 24 letter to Noel Tata.

The company said it had acted on legal advice in interpreting the AoA and maintained that Chandrasekaran’s reappointment was valid.

The dispute centres in part on Article 118 of the AoA, which sets out a special process for the selection of a new chairman when the Tata Trusts collectively hold at least 40% of the company’s paid-up ordinary share capital.

Under the provision, a selection committee comprising nominees of the Sir Dorabji Tata Trust and Sir Ratan Tata Trust, along with other members specified in the article, selects a person for appointment as chairman. The board then appoints the person recommended by the committee. The article also provides that the same process is followed for removal of the incumbent chairman.

Tata Sons, however, said the provision did not cover Chandrasekaran’s case.

“The procedure under Article 118 of the AoA relates to the first appointment of a new chairman and not a reappointment of an existing Chairman,” the company said.

The company said the board had agreed that its legal opinion supporting the majority decision would be circulated before a press release was issued. It said an opinion from senior advocate Sudipto Sarkar was circulated as agreed.

After Noel Tata raised the issue, Tata Sons said it sought opinions from former chief justice of India Uday Lalit and former Supreme Court judge BN Srikrishna.

“These have expressed the same view as that of Mr Sarkar and thereby confirm the validity of the resolution passed at the meeting,” Tata Sons said, adding that copies of the two opinions were enclosed with the letter.

The letter also addressed the company’s annual general meeting, which was convened on August 18 but adjourned for lack of quorum.

Tata Sons said the meeting had to be adjourned because the Tata Trusts were unable to nominate a joint authorised representative as required under Article 86 of the AoA.

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Article 86 states that no quorum for a general meeting is constituted unless the required members are personally present, including at least one authorised representative jointly nominated by the Sir Dorabji Tata Trust and Sir Ratan Tata Trust.

Tata Sons rejected any suggestion that the September 17 board resolution should be linked to the failed AGM, calling such a contention “plainly untenable.”

On Chandrasekaran’s continuation as a director, the company said a general meeting would be convened under Section 152 of the Companies Act, 2013, where shareholders would consider his continuation.

The letter was signed by Tata Sons company secretary Suprakash Mukhopadhyay and copied to all directors of Tata Sons.