Sir Ratan Tata Trust may skip Thursday's Tata Trusts meeting as charity commissioner's restraint order stays

Mumbai: Sir Ratan Tata Trust (SRTT) may not be able to participate in the Tata Trusts meeting on Thursday as the Maharashtra charity commissioner has not lifted the restraint order against it, sources privy to the development told ET.

According to these sources, the office of the Maharashtra charity commissioner last week received a letter from SRTT, which sought an easing of the injunctions.

The letter has, however, also stated that the Trust retained the right to challenge the charity commissioner's order, if deemed necessary.


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Sources said that, as of August 12, the charity commissioner's office had not responded to the request. In the absence of any communique from the state regulatory authority on local trusts, SRTT could move the Bombay High Court to seek an immediate relief. "As the charity commissioner hasn't replied to the letter, it means that the injunction against SRTT continues and that it cannot participate in the August 13 meeting unless it obtains immediate interim relief against the injunction from the Bombay HC," said a source. The Bombay High Court is the appellate authority in matters related to orders of the Maharashtra charity commissioner.

The development assumes significance ahead of the Tata Trusts board meeting on August 13 and the Tata Sons AGM on August 18.

Tata Sons AGM

The absence of SRTT could potentially affect the quorum and the Trust's ability to exercise its rights in matters concerning Tata Sons. Earlier in May, SRTT, one of the two core shareholders of Tata Sons, was barred by the Maharashtra Charity Commissioner from attending meetings or taking decisions following allegations of violations of governance norms relating to life trustees.

The directive was issued by state charity commissioner Amogh S Kaloti under Section 36A(1) of the Maharashtra Public Trusts Act following complaints regarding the composition of the SRTT board and alleged non-compliance with Section 30A(2) of the Act.

Kaloti also directed the board to postpone its May 16 meeting and refrain from convening any such meeting until the Inspector's report was submitted.

Section 30A(2) governs the permissible number of perpetual or life trustees on the board. A recent amendment to the law introduced a statutory cap on the number of perpetual trustees that can serve on a public trust board.

SRTT and Sir Dorabji Tata Trust (SDTT) jointly hold a controlling 51.54% stake in Tata Sons, with SRTT holding about 23.5% and SDTT about 28%. Their combined holding gives the two trusts significant voting rights in Tata Sons.

As a result of the restraint order, SRTT cannot convene trustee meetings without specific approval from the charity commissioner, including for matters relating to its participation in the Tata Sons AGM. The situation could also have implications for the Tata Sons board. Under the Companies Act, directors liable to retire by rotation continue in office until the relevant AGM, where shareholders are required to either reappoint the retiring director or fill the vacancy. The Act, however, does not expressly address the consequences where an AGM cannot be convened because of a lack of quorum, potentially creating a legal grey area.

'1989 Share Transfer'

Separately, the charity commissioner's office in June received an email from Vijay Singh seeking an inquiry into allegations concerning the transfer of 833 Tata Sons shares from Navajbai Ratan Tata Trust to Naval H. Tata in 1989.

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Singh alleged that he was in receipt of a legal notice alleging that the transfer amounted to an illegal alienation of public charitable assets to private hands. The letter also raised concerns that a denial of the allegations authorised by a direct beneficiary of the share transfer could give rise to a conflict of interest.

The charity commissioner subsequently sought a response from Noel Tata, chairman of Tata Trusts and a trustee of the Navajbai Ratan Tata Trust. Noel Tata is understood to have replied last week, denying the allegations.

Sources added that the charity commissioner will assess all the responses and supporting documents before it decides whether the issues raised merit a probe.