The dispute within the Tata Group, India's largest conglomerate, is escalating into a full-blown legal confrontation. Both Tata Sons, the holding company, and Tata Trusts, the charitable entities that own 66% of Tata Sons, have retained some of India's most prominent lawyers and senior counsel. This move indicates that despite preferring to avoid a lengthy legal fight, both sides are preparing for one.
The core of the conflict centers on the September 17 decision by the Tata Sons board to reappoint Natarajan Chandrasekaran as chairman for another five-year term, effective February 2027. Tata Trusts has challenged the legality of this decision, arguing that the resolution was not validly passed and is "void ab initio." Noel Tata, chairman of Tata Trusts and a nominee director on the Tata Sons board, voted against the resolution, while co-nominee Venu Srinivasan voted for it. The Trusts contend that a casting vote exercised by independent director Harish Manwani, who chaired the meeting, cannot validate the resolution, especially given the requirement for affirmative support from a majority of the Trusts' nominee directors. This interpretation hinges on Articles 104B and 121 of Tata Sons' Articles of Association, which were central to the 2021 Supreme Court ruling in the Cyrus Mistry case.
Legal experts and sources familiar with the situation suggest that the dispute is likely to be settled in court, as both sides hold differing interpretations of the Articles of Association. Harish Salve is reportedly advising the Chandrasekaran-led Tata Sons, while Abhishek Manu Singhvi has joined the fray on behalf of Tata Trusts. Singhvi has publicly supported the Trusts' position, citing the Supreme Court's verdict that upheld the special rights of Tata Trusts under the company's Articles of Association. The Trusts have also rejected the idea that listing Tata Sons would resolve governance issues, stating that the company already follows many practices of listed entities. This legal escalation follows a period of heightened internal conflict, including Noel Tata's opposition to a stock listing and the chairman's tenure extension, despite him chairing the shareholder controlling 66% of Tata Sons.
