Tata Trusts says Chandrasekaran reappointment resolution was invalid, rejects casting-vote argument

Tata Trusts has rejected the contention that a casting vote could validate the reappointment of N. Chandrasekaran as chairman of Tata Sons, saying the resolution failed to meet a separate voting requirement under the holding company's articles of association.

The Trusts, in a statement on Sunday, said two of their nominees sit on the Tata Sons board and that the articles require affirmative support from a majority of the directors nominated by Tata Trusts, which owns about 66% of the company. One of the two nominees voted against the resolution at the Sept. 17 board meeting, meaning the required support was not secured, it said.

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The Trusts disputed the argument that the vote had resulted in a board deadlock that could be resolved by the chairman's casting vote.

"A condition is either met, or it is not," the Trusts said, arguing that the casting vote applies only when there is an equality of votes at the overall board level and cannot override the separate requirement concerning Tata Trusts' nominees.

The Trusts said the resolution to reappoint Chandrasekaran, who has led Tata Sons since 2017, was therefore not validly passed and had no legal effect.

The dispute turns on provisions in Tata Sons' articles that give Tata Trusts' nominee directors affirmative voting rights on certain matters. The Trusts said Tata Sons had previously defended those rights before India's Supreme Court during litigation stemming from the removal of former chairman Cyrus Mistry.

Tata Sons had argued in that case that the rights were legitimate protections agreed between shareholders and reflected the Trusts' position as the company's majority shareholder, according to the Trusts' statement. The Supreme Court accepted Tata Sons' case and overturned a finding that the provisions were oppressive, the Trusts said.

Renewed Scrutiny

The latest dispute comes as Tata Sons faces renewed scrutiny over its governance and the possibility of a stock-market listing. The Trusts rejected the argument that listing would necessarily strengthen governance, saying Tata Sons had voluntarily adopted several governance practices associated with public companies, including independent directors, audit and nomination committees, related-party transaction rules and insider-trading provisions.

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The statement marks a fresh escalation in the disagreement over the governance of India's biggest business group, with the Tata Trusts arguing that the articles themselves provide the framework for resolving the board's decision rather than creating a deadlock requiring intervention by the chairman.

The Trusts said their position was rooted in the role they have played in philanthropy for more than 130 years.