Mumbai: Tata Trusts on Sunday fired a fresh salvo in the ongoing rift with Tata Sons over the issue of the re-appointment of N. Chandrasekaran as the Chairman of the Company, saying there was no deadlock at the board meeting on September 17 and a casting vote cannot revive a stillborn resolution.
“The resolution to reappoint Mr N. Chandrasekaran as the Chairman of Tata Sons, considered at the Board meeting on September 17, 2026, was not validly passed and has no legal effect. In the eyes of the law, it is void ab initio,” the statement said.
The statement highlights that the Supreme Court judgment in the Tata-Mistry case has upheld the protective right of Tata Trusts as the majority shareholder.
According to the statement, the Articles of Association (AoA) of Tata Sons do not leave any decision of the Board to a mere head count of Directors. They provide that no decision can be taken unless it has the affirmative support of at least a majority of the Directors nominated by the Tata Trusts, who hold approximately 66 per cent of the Company. This is a separate condition under the AoA.
There are two Tata Trusts nominees on the Board of Tata Sons. The majority amongst the two is two, not one. On September 17, 2026, one such Director voted against the resolution. Thus, the affirmative support of Tata Trusts Nominee Directors as mandated by the AoA was not given. The condition failed, and so did the resolution. The Chairman’s casting vote is available only where there is equality of votes at the overall board level. It does not apply amongst Tata Trusts’ Nominee Directors, the statement observes.
“It is now being suggested that a refusal of support amounts to a deadlock which would paralyse the Company and that the Chairman of the meeting was therefore entitled to resolve the position by a casting vote. There was no paralysis, and there was no deadlock. The Board put a question, and the AoA answered it in the negative. The exercise of a protective right conferred by a company’s own constitution is not a deadlock; it is that constitution working as it was written to work,” the statement said.
It further stated that Tata Sons is not at liberty to take this position, because it has already taken the opposite one and won in the Supreme Court. In the proceedings arising out of the removal of Mr Cyrus Mistry, Tata Sons defended these rights as a legitimate protection agreed between the shareholders, and it argued that far from being oppressive, they were in truth the Trusts’ entitlement as a majority shareholder. The Supreme Court of India accepted the Company’s case and set aside the finding that these Articles were oppressive, the statement points out.
“It is unfortunate that the Chairman of Tata Sons, a Company renowned for setting high standards of corporate governance, is contending reappointment on such an untenable interpretation of the Articles,” the statement said.
It is also suggested that listing is to be welcomed because it will bring enhanced corporate governance. That argument assumes a governance gap which does not exist. Independently of listing, Tata Sons has for years chosen to hold itself to the standards of a public company, the statement added.
Meanwhile, Tata Trusts has appointed senior advocate Abhishek Manu Singhvi for legal representation amid the escalating dispute with Tata Sons.
“In the ultimate analysis, fundamental rights of shareholder-owners cannot be nullified in the manner in which they have been. To stultify shareholder ownership rights would spell doomsday for corporate governance across hundreds of Indian companies,” Singhvi said.
(IANS)
