'The page has turned': Noel Tata opposes N Chandrasekaran’s reappointment as Tata Sons chair

Tata Trusts chairman Noel N Tata has opposed N Chandrasekaran’s reappointment as Tata Sons executive chairman, arguing that Chandrasekaran’s August decision not to seek another term had already been accepted by the majority shareholder and could not now be reversed.

“The page has turned,” Noel Tata said in a statement presented at the Tata Sons board meeting on Thursday, after Chandrasekaran agreed to reconsider his decision and the board approved his reappointment for another five-year term by a majority vote.

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Noel Tata said Chandrasekaran had on August 12 informed the board that he would not offer himself for another term after his current tenure ends on February 20, 2027. He stressed that the decision was Chandrasekaran’s own, “freely taken and clearly expressed”, and was neither sought by the board nor the result of any review process.

The Tata Trusts, which hold about 66% of Tata Sons, subsequently accepted Chandrasekaran’s decision and asked the company to begin the process of appointing a successor through a selection committee, Noel Tata said.

“Once public, [the decision] has consequences which this Board cannot afterwards undo,” he said, pointing to the fact that Tata Group employees, lenders, counterparties, the market and the majority shareholder had proceeded on the basis of Chandrasekaran’s decision to step down.

Noel Tata also questioned whether the board could take up Chandrasekaran’s reappointment while his position as a director of Tata Sons remained unresolved. A general meeting to determine that matter could not proceed for want of quorum, he said.

We cannot put the cart before the horse

Noel Tata argued that the question of Chandrasekaran’s chairmanship was premature until the issue concerning his directorship was settled.

“We cannot put the cart before the horse,” he said, warning that a decision on the chairmanship could face legal challenge if it was later found to have been taken while Chandrasekaran’s position as a director remained unresolved.

The Tata Trusts later reiterated that position in a separate statement, calling the board’s resolution to reappoint Chandrasekaran a “legal nullity”. The Trusts said the resolution was passed with four directors voting in favour and Noel Tata voting against it.

According to the Trusts, Tata Sons’ Articles of Association require a majority of the Trusts’ nominee directors to vote in favour of the appointment of a chairman. The Trusts said the requirement applies both to a first appointment and to a reappointment, and argued that the resolution could not legally be passed after Noel Tata voted against it.

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The Trusts also said Noel Tata submitted a legal opinion from former Chief Justice of India Justice D Y Chandrachud supporting their position, but that the Tata Sons board did not take note of it.

The dispute comes after months of uncertainty over Chandrasekaran’s continuation at Tata Sons. The board’s Nomination and Remuneration Committee had unanimously recommended on September 3 that he be asked to reconsider his August decision. Chandrasekaran accepted that request at Thursday’s meeting before the board voted on his reappointment.

The leadership dispute is unfolding alongside Tata Sons’ regulatory challenges. The Reserve Bank of India has rejected the company’s application to surrender its registration as a core investment company, potentially bringing the holding company closer to compliance requirements associated with upper-layer non-banking financial companies.

Two questions

In his statement, Noel Tata said two separate issues had come before Tata Sons at roughly the same time — the company’s structure and regulatory obligations on one hand, and its leadership and succession on the other.

“They have arrived together. They are not, however, of the same kind, and they do not answer one another,” he said.

Noel Tata said the regulatory question would be determined by what Tata Sons submits to the Reserve Bank of India, the reasons it gives and the time it is allowed. The succession question, meanwhile, would be governed by the company’s Articles of Association and the procedure prescribed under them.

“The considerations which bear upon the one have very little to do with the considerations which bear upon the other,” he said.

He urged the board not to allow either issue to become an argument for the other.

“It would not serve this Company for a regulatory development to determine the outcome of a succession process, and it would not serve this Company for a succession process to shape its regulatory posture,” Noel Tata said.

The Tata Trusts said they remained committed to an “orderly and timely leadership transition” and would proceed with the selection committee process in accordance with Tata Sons’ Articles of Association.