A fresh round of legal opinions has intensified the governance dispute at the top of the Tata Group, with Tata Sons rejecting Tata Trusts’ objections to the reappointment of N Chandrasekaran as chairman.
Tata Sons has maintained that the September 17 board resolution extending Chandrasekaran’s tenure was valid under the company’s Articles of Association, citing legal opinions from former Supreme Court judges BN Srikrishna and UU Lalit. The development marks the latest turn in a dispute over how Tata Sons’ governance provisions should be interpreted.
In a letter dated September 24 to Tata Trusts chairman Noel Tata, Tata Sons rejected objections that the board had violated Articles 118 and 121 while considering Chandrasekaran’s reappointment.
Tata Trusts, which holds about 66% in Tata Sons, has argued that the resolution required affirmative support from a majority of Trust-nominated directors and that the prescribed process for selecting the chairman had not been followed.
At the September 17 board meeting, the two Trust-nominated directors were divided. Venu Srinivasan supported Chandrasekaran’s reappointment, while Noel Tata opposed it.
Four of the five directors who participated in the vote supported the proposal. Chandrasekaran recused himself from the voting process.
The disagreement now largely centres on Article 121 and whether a 1-1 split among Tata Trusts’ nominees can be resolved through a casting vote.
Tata Trusts’ position is that the provision requires affirmative support from a majority of its nominee directors and that a casting vote cannot replace that requirement.
Tata Sons has taken the opposite view.
Former Supreme Court judge BN Srikrishna concluded that the use of a casting vote was consistent with Article 121 and that the provision should not be interpreted in a manner that leaves the board unable to conduct its business.
Former Supreme Court judge UU Lalit also backed the validity of the resolution. His opinion noted that four of the five voting directors supported the reappointment and said the chairman could exercise a casting vote when the Trust-nominated directors were evenly divided.
Another point of dispute is Article 118, which lays down the process for selecting a new chairman.
Legal advice relied upon by Tata Sons argues that the provision does not apply to Chandrasekaran because the September 17 decision involved the reappointment of an incumbent chairman rather than the appointment of a new one.
Chandrasekaran’s existing term runs until February 2027.
Senior advocate Sudipto Sarkar had earlier offered a similar interpretation, according to the report, arguing that Article 118 was not triggered in the case of Chandrasekaran’s continuation.
The legal opinions cited by Tata Sons have also brought the role of nominee directors into focus. Srikrishna reportedly argued that nominee directors have statutory fiduciary duties towards the company in addition to obligations towards the entity that nominated them.
Where the two obligations conflict, the director’s duty to the company under the Companies Act should prevail, according to his opinion.
On this basis, he supported Venu Srinivasan’s decision to vote in favour of Chandrasekaran despite Noel Tata taking the opposite position.
Tata Trusts has relied on a competing legal opinion from former Chief Justice of India DY Chandrachud.
That opinion concluded that the affirmative support required from Trust-nominated directors under Article 121 was a separate condition and could not be substituted by the chairman exercising a casting vote.
The dispute therefore remains centred on two questions: whether Article 121 permits a casting vote to resolve an evenly divided vote among Trust nominees, and whether the process under Article 118 is required for Chandrasekaran’s reappointment.
The competing interpretations have added another layer to the continuing governance disagreement between Tata Sons and its controlling shareholder, Tata Trusts, with the validity of the September 17 resolution still contested.
