A leadership dispute has emerged at the top of the Tata Group after Tata Sons reappointed N Chandrasekaran as executive chairman for another five-year term, while the Noel Tata-led Tata Trusts termed the decision “illegal” and questioned the authority of the board to approve the move.
The disagreement marks a rare public rift between Tata Sons, the holding company of the $185 billion Tata Group, and Tata Trusts, which controls around 66% of Tata Sons. The dispute is not limited to the choice of chairman but extends to questions around board powers, succession planning and the proposed listing of Tata Sons.
Tata Sons said its board, at a meeting on September 17, requested Chandrasekaran to reconsider his earlier decision not to seek another term. Following this, the board approved his reappointment for five more years after a majority vote.
“The board thereafter resolved by a majority vote to re-appoint him as executive chairman for a further term of five years upon the expiry of his current tenure,” Tata Sons said in its statement.
The company also said it would begin steps to comply with applicable Reserve Bank of India guidelines and seek guidance from regulators, Tata Trusts and other stakeholders regarding compliance requirements.
However, Tata Trusts opposed the decision soon after the announcement. According to the Trusts, the resolution violates the Articles of Association of Tata Sons, which they argue require both Trust nominee directors to support the appointment or reappointment of the chairman.
Tata Trusts said four directors voted in favour of Chandrasekaran’s continuation, while Noel Tata opposed the resolution. The Trusts maintained that since one of their nominees voted against it, the decision was not legally valid.
The roots of the conflict go back to Chandrasekaran’s letter in August, in which he informed the board that he would not seek another term after his current tenure ends in February 2027.
Tata Trusts said it accepted Chandrasekaran’s decision and had asked Tata Sons to begin the process of selecting his successor. Noel Tata reportedly argued that the chairman’s decision had been voluntary and that the succession process should move forward.
Tata Sons, however, said the board later requested Chandrasekaran to reconsider his decision “in the larger interests” of the group, and he agreed to continue.
Chandrasekaran, also called Chandra, 63, joined Tata Consultancy Services (TCS) in 1987 and rose through the ranks before becoming chairman of Tata Sons in 2017. His reappointment will make it his third term as chairman.
During his tenure, Tata Group expanded into sectors such as semiconductor manufacturing, electronics and aviation, while also dealing with challenges including Air India losses, Jaguar Land Rover pressures and a cybersecurity incident at Tata Electronics.
The leadership dispute comes at a time when Tata Sons is facing regulatory pressure over a possible public listing.
The RBI had classified Tata Sons as an upper-layer non-banking financial company (NBFC) in 2022. Under the regulatory framework, such entities are subject to enhanced oversight and listing requirements.
The Tata Sons board has decided to move towards compliance with RBI requirements and consider a listing.
The potential listing has been another area of disagreement. While some shareholders see a public listing as a way to unlock value, Tata Trusts has opposed the move.
The Shapoorji Pallonji Group, which owns a minority stake in Tata Sons, has also supported listing plans, while Tata Trusts has raised concerns over the implications.
